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Tuesday, 15 December 2009

A living wage?

An interesting report last week that government is renewing the quest to revise the current K268,000 minimum wage. The problem is that the current minimum wage falls significantly below the basic food basket. Any new minimum wage must have some real punch whilst ensuring it does not lead to negative effects. The question therefore becomes what should the living wage be? There are those of course who will always oppose any minimum wage e.g. here and here.


  1. I am among those who Cho says "will always oppose any minimum wage". Why? Because, while being concerned for the welfare of 'workers', I am even more concerned about the unemployed, and raising a statutory minimum wage is bound to reduce the number of jobs on offer.

    I find it hard to understand how people of good will can concentrate on the interests of the employed, who are already championed by powerful and influential trade unions, while overlooking the needs of the jobless. How will their 'basic needs' be met?

    Alas, the unemployed have no champion and no organisation to represent them, so they tend to be voiceless.

    That sounds like theory, so let's consider a practical suggestion. It comes from a book, 'Jobs for the Jobless' by a South African writer, Eustace Davie, and it recently won an international award for ideas that benefit the poor.

    This is the proposal, of which the judges said “One single idea can be much more powerful than a thousand actions and this is a perfect example”.

    The book proposes that unemployed people should be allowed to decide for themselves what amount of wages and what conditions of employment they find acceptable, and to negotiate with prospective employers on that basis.

    The book proposes that anyone who is unemployed for six months or more should have the right to a Special Exemption (SPEX) Certificate, valid for two years, that exempts the certificate holder from statutory labour laws. An important condition of the exemption, contained in the proposal, is that written contracts specifying the most important conditions of their employment agreements be entered into between SPEX holders and their employers. At the expiry of the stipulated contractual period, the employee can then renegotiate with the employer as to whether the SPEX proposal should fall away and be replaced by working conditions in terms of existing labour legislation.

    Small firms are the most likely potential employers of the young, inexperienced, unskilled, old or otherwise disadvantaged jobless people. Governments should grant Special Exemption Certificates to the unemployed thus encouraging such firms to employ the jobless and thereby to reduce unemployment.

  2. The labour laws in Zambia are too complicated.

    You have to pay 3 pin per day for lunch. That's 25% of a minimum wage workers pay right there.

    You have to pay 10 pin per month for transport. There are rules for what the employer has to do if an employees child dies. 50 pin + 50KG bag of bunga.

    I know if I had a kid who died, I don't want my boss to give me a 50KG bag of bunga.

    I think they should raise the minimum wage and remove the complicated benefits.

    The most problematic law for employers though is that you can't fire someone or lay them off without giving them a one time payout of 2 months pay for every year they have worked for you.

    Is that paid at their current wage, or at the wage they were earning 10 years ago? Say if someone has worked for you for 10 years and you want to give them a pay raise, do you have to add that on to the two years of pay you already owe them?

    I have heard of people who change their staff regularly to avoid being liable for this. If you have a lodge, but the economy collapses and no tourists are coming then you can't afford to pay people but you also owe people a huge one time payout.

  3. Speaking of people not being able to pay things. I know of three people who are not getting paid at all.

    One works for the Ministry of Human Resources in Lusaka.

    My landlady's milling company is not paying anyone this month.

    Another lady is working at an ARV clinic but isn't on the payroll. She went to Lusaka and they said they would add her any day now.

    What's up with that???

  4. A recent article by David Henderson on the late Paul Samuelson contained the following.

    "One of the best and punchiest statements in the 1970 edition was his comment about a proposal to raise the minimum wage from its existing level of $1.45 an hour to $2.00 an hour: "What good does it do a black youth to know that an employer must pay him $2.00 an hour if the fact that he must be paid that amount is what keeps him from getting a job?"


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