A minimum wage for workers

By Flavia Nassaka

Is it what Uganda really needs?

Nelson Kajura likes his job as a primary school teacher. But at Shs250,000 per month it does not pay enough to cater for his family of six  in an urban area. The ever increasing rent and prices of commodities and services also eats into the real value of his pay cheque.  As a result he has to find ways to complement his meagre earnings. He devotes his weekends, when he would be expected to rest or revise his work and prepare lessons for the next week, to working as an emcee at ceremonies like weddings and birthday parties. As a result, his productivity is quite low.

Teachers in Uganda are not unionised workers, but it is for people like Kajura who earn far less than is adequate to sustain them that National Organization for Trade Unions (NOTU) has been pushing the government to revise and implement a minimum wage policy.

The issue of minimum wage is nothing new to Uganda.  A minimum wage was last set at Shs6, 000 per month in 1984. Later in 1995, the Minimum Wage Advisory Council recommended that the wage be increased to Shs75, 000 per month for unskilled workers and rolled upwards accordingly.   Since then, unionists have been pushing in vain for the government to fix the wage at Shs250, 000 even when parliament voted in favour of a motion moved by MPs Arinaitwe Rwakajara (Workers) and Paul Mwiru (Jinji Municipality) for the minimum wage in 2011.  In 2013, the MPs were even granted leave of Parliament to draft a private members’ Bill that would form the basis for the proposed Minimum Wage Bill 2011. However, the Bill has continued to gather dust on the shelves of parliament.

This continued failure by the government to establish a minimum wage contravenes ILO Minimum Wage Fixing Machinery Convention, 1928 (No 26) which Uganda accented to  in 1967.

Article 1 of this convention states that “each member of the ILO which ratifies this convention undertakes to create or maintain machinery whereby minimum rates of wages can be fixed for workers employed in certain trades or parts of trades in which no arrangement exists for the effective regulation of wages by collective agreement or otherwise and wages are exceptionally low.”  Now, however, there is hope that the government could start moving to resolve the issue of low paid workers. The optimism comes after cabinet finally approved the appointment of the Minimum Wage Advisory Board following a paper presented to them by Muruli Mukasa, the Minister for Gender, Labor and Social Development a few weeks ago.  The development is despite President Yoweri Museveni persistently speaking out publicly against a minimum wage. At the latest May 1 Labour Day celebration in Kisoro District, he appealed to workers “to be patient”.  He said the government has been working to repair a broken country and needed to prioritise national security, infrastructure, and energy to grow the economy.

““I want us to have a dialogue with trade unionists so that we agree on what is important for our country; is it the infrastructure or the big salaries,” he said.

The advocates of a minimum wage argue that it is a critical labor standard meant to ensure a fair wage for the country’s lowest paid workers that is a wage that enables one live a descent life.

Bigirimana’s promise

Despite, the President’s reservation the Permanent Secretary in the Ministry of Labour and Gender, Pius Bigirimana, on June 2 announced to the 104th Session of the International Labor Organisation (ILO) conference in Geneva, Switzerland that the country was preparing to set up a minimum wage for workers.

Among other things required of Uganda by ILO is the enforcing of occupational health and safety measures in addition to functionalising the Industrial Court.  In an interview with The Independent on June 10, Bigirimana said the government was setting up the Minimum Wage Advisory Board. He said recruiting was going on for board representatives of workers, employers, and the government.

“Once recruitment is done, the approved wages board will be expected to complete its work, the recommendations of the board shall be presented to cabinet again for approval before end of this month.”

Bigirmana, however, noted that the full functioning of a minimum wage policy will be a gradual process as there is need to undertake a comprehensive study on the wage trends in different sectors of the economy. This will involve analysing employment trends, cost of living, and wage trends by profession and geographical regions.

He said experts in the principles of establishing wages per industry will to establish the exact figures of what the minimum wage should be for workers.

Who needs a minimum wage?

For Wilson Owere, the chairman general of NOTU, the minimum wage is overdue as it is important in the fight against poverty. Owere says by not implementing good labour laws, the government has been losing revenue since poorly paid workers cannot pay taxes or consume.

But Museveni has always told its advocates that setting a minimum wage would scare away potential investors from the country. This is despite Kenya and Tanzania, which are the biggest economies in the region, having a minimum wage policy.

In Kenya, President Uhuru Kenyatta used the May 2 Labour Day occasion to announce a 12% raise in the average urban minimum wage to KShs 15,357 (Approx. UShs 520,000) in Nairobi, Mombasa and Kisumu, and to Kshs12,136 (Approx.UShs410,000).  That excludes housing allowances.

In Tanzania, the minimum wage is between TShs100,000  (Approx.Shs150,000) per month for lowest paid workers in agriculture, domestic servants, and small companies, and TShs400,000 (Approx.Shs600,000) in other sectors like telecoms, mining, and financial institutions. The minimum wage for a domestic worker (house girl/boy) is between Tshs 40,000 (UShs60,000) and TShs120,000 (Approx. UShs180,000).

In Uganda, the lowest domestic workers are not paid a salary at all and only get food, lodging, and occasional basic medical care. Some are paid as low as Shs15,000 a month. Some government workers, including teachers like Kajura, get as little as Shs250,000 which is about half of the minimum wage in Kenya. This means that implementation of a minimum wage policy in Uganda will lead to a doubling of the wage bills for employers. Those opposed to a minimum wage bill say it could lead some employers to quit.

But advocates of the minimum wage, including Workers MP Sam Lyomoki and Owere counter Museveni by arguing that investors need to give fair returns to the local workers inform of good wages. They also need to recognise that organised labour motivates people to be more productive as happened in the developed world. Lyomoki says if workers are involved and a minimum wage set above the poverty line and indexed to inflation can help mitigate workers exploitation.

But Musa Lwanga, a research analyst based at the Economic Policy Research Center (EPRC) in Kampala, says he understands why the president has always been against the wage. He says labour has moral, political and economic dimensions and that, although politicians are struggling to improve workers’ incomes, they may in fact just make things worse.   Lwanga explains that workers’ unions and MPs have continued looking at the minimum wage as a human right and ignoring Uganda’s economic reality. He says unemployment in Ugandan is at 62% of the labour force, people are mainly employed in the informal sector, and those who work in offices have no formal relationships with their employers.

“With all the rosy things about the minimum wage, it’s not the best option for our economy. The problem is not just the wage. We are better off improving the working conditions than fixing a wage that will lead to unemployment and confusion considering that we have many sectors and many modes of payment,” he says. While in most developed countries workers are paid per hour, in Uganda most people are paid per month, others per work done, and only a few per hour. In such a setting with the regional disparities and many sectors which will require different minimum wages, it’s likely to cause confusion.

He says the new wage system apart from depriving workers and employers of the freedom of contracting, some people may be driven out of business if the wages are set way above the capacity of a particular company or industry.

Since not all countries have developed through using minimum wage, Lwanga says Uganda should first focus on improving working conditions by implementing the basic principles of ensuring that workers get an annual leave and also work for the recommended hours.  Such incentives like giving medical insurance can also guarantee the health of works hence leading to productivity. Such rights can only be advocated for through workers unions which are, unfortunately, not well developed in Uganda.

On June 11, when the National Development Plan phase II (2015/2016 – 2019/ 2020) was launched during the budget speech ceremony, the Finance Minister Matia Kasaija noted that among the gaps that need to be redressed during the next five years is labour productivity.

He said for the next five years government will focus on, among others, increasing per capita income from US$788 to US$1039  and reducing the poverty rate from 19.7% to 14.2% and inequality co-efficient from 0.443 to 0.452 by 2020.  Many workers say that hopefully, among the many ways to achieve these goals, a place can finally be found for a minimum wage.