Ugandans deserve minimum wage

By Joseph Bossa

We have a situation where the employee is extremely vulnerable and the employer is extremely strong

When the chairman of the National Organisation of Trade Unions (NOTU) rose to speak on May 1, during the celebration of Workers’ Day or Labour Day, as he had done on previous such occasions, he called for  a minimum wage for Ugandan workers. The Worker-in-Chief, the President of Uganda, President Yoweri Museveni, who was presiding over the ceremony replied that what was required was not an emotional demand but a discussion guided by research.

Let the discussion begin; and it need not be long. President Museveni has set the rules of the discussion: No emotional demands. However, I will not promise that my discussion will be free from emotional arguments. Here is why.

First, emotions are part of man’s make up and have their legitimate place in advancing arguments in support of his demands. Labour is naturally an emotive issue. Second, the most common mistake people who engage President Museveni make is to allow him to unilaterally set the rules of engagement and to let him change them along the way any moment they become inconvenient to him. Anyone who engages him under such terms is destined to lose the contest. Consciously or unconsciously, they throw the game. That is why we reject the President’s refrain regarding emotions and have resolved to invoke them as part of our argument in this discussion. So, for us we shall not deal.

Some discussants have suggested certain amounts of money as minimum wages.  In my opinion, it is not yet time to propose figures, that is, amounts as to what the minimum wages should be for workers outside public service. We should not run ahead of ourselves. At this point the discussion should be confined to the principle of establishing minimum wages per industry.

This writing is not supported by research in Uganda because there is a dearth of researched material on the subject. It is largely based on personal observations, so far as Uganda is concerned.

The demand for legal minimum wages, as indeed most labour matters, has moral, political and economic dimensions.

The Moral Argument

Left on their own, most employers in pursuit of maximising their profits, will pay their employees wages which will hardly meet the basic needs of food, clothing and shelter for themselves and their families. It is morally wrong to pay a worker a wage which does not approximate his effort in producing the goods or providing services to the employer. To tell a desperate worker to ‘’take or leave’’ the wage offered that is not fair is to treat that employee only a little better than a slave and turns the employer into a little better than a slave driver. It amounts to exploitation and is a moral outrage.

The Political Aspect

We have a situation where the Ugandan employee is extremely vulnerable. He is entirely on his own. Yet the employer is extremely strong, supported by the NRM government which has opted for the practice of unfettered private enterprise. The hand-caps that go with the absence of minimum wages are compounded by the fact that there is almost no trade union movement to speak of in this country to offer collective bargaining for improved wages and conditions of work. The employers are completely free from the fear of industrial action by workers withholding their labour. From occasional newspaper reports, it is suspected that most workers perform their duties in work place environments which are hazardous to their health, without protective gear, and under unregulated hours of work.

The factory inspection department of the Ministry of Labour, which would ensure the safety of workers at their workplaces, no longer functions. In fact, a stand-alone ministry of labour no longer exists but is now an appendage of the Ministry of Gender, Labour and Social Development.

The Industrial Court, which should arbitrate disputes between workers and employers, has been moribund for years and, although recently restored, is yet to fully function again.

Truth be told, we have a situation where the employer is perceived as ‘’an investor’’ who is often of a different skin colour and nationality from the employees. There are murmurs, unproven, that Ugandan workers and expatriate employees doing the same work in the same firm are paid different wages, the expatriate being paid the higher wage and enjoying better terms. If that is true, it is all legal, and in the absence of functioning trade unions it is possible. However, it gives rise to anti-immigrants sentiments and resentment. The word ‘’investor’’ has unpleasant overtones to the lower rank employees. Sometimes perceptions, even when they differ from reality, carry the day. Tolerance tends to be lower when the perceived exploiter is a foreigner. The potential for political tension in such a situation should not be hard to imagine.

I do not intend to paint all employers with the same brush. There are some employers who are concerned about their reputation and pay their workers well, even too well, by Uganda standards. The minimum wages demand is no directed at those.

The Economic Justification

There is a school of thought that in a country like Uganda, where there is a very high rate of unemployment (no figures are officially available), the introduction of a minimum wages will scare away investors and thereby causes the country lose the few jobs they might have created.

Contrary to that argument, on page 40 of The Economist of December 14, 2013 under the heading ‘’The politics of low pay: Raising the floor’’ it is stated: ‘’There is no consensus among economists about the extent to which minimum wages kill jobs. But recent research suggests that relatively low rates . . . are not harmful, and that small increases can be beneficial. They not only lift workers’ purchasing power; they make them more loyal, and so reduce the amount of time companies must spend recruiting new people.’’

In Uganda’s case, it can be argued that the better paid employees will feed better and better look after their families, send their children to school and produce a healthier and better labour force. The spin-offs could be endless. As the story cited below concludes, a rising tide can lift all boats.

In 1984, Janet L. Yellen, the current and first female Federal Chair of the Reserve Bank of America, published an article in which she described ‘’four distinct microeconomic approaches which justify the relation between wages and productivity. These approaches identify four benefits of higher wage payments: reduced shirking by employees due to a higher cost of job loss, lower turnover, an improvement in the average quality of job applicants, and improved morale.’’ (See ‘’Efficient Wage Models of Unemployment’’, The American Economic Review, Vol. 74, No. 2, Papers and Proceedings of the Ninety-Sixth Annual Meeting of the American Economic Association. (May, 1984), pp. 200-205). (See pages 30 to 36).

Who will set the minimum wages?

I am satisfied that on all three counts the case for minimum wages has been proved. What remains to be decided is who should set them and how.

Again I will borrow from The Economist where it is observed that minimum wages are subject to the fancies of politicians and recommend that they should be set by independent technocrats outside government. It is time we began enlisting our best and brightest people outside government in the crafting of policies and practices for national development. They have remained bystanders for too long.

In this country, there has been a tendency, for political gain, to adopt policies toward general election time without proper prior study. To embrace the minimum wage policy merely to gain political advantage would be, in the words of T. S Elliot in his play, Murder in the Cathedral, to do ‘’the right thing for the wrong reason’’. We should tread deliberately and carefully.

Joseph Bossa is Vice- President of the Uganda Peoples Congress party