By Charles Ntumwa
Those members of Zambian Economist, who read the article by Jessica Achberger on the minimum wage, must have felt (as I did) angry and dismayed, at what the Zambian Government had done. An increase of this size is unheard of in the developed world, apart from the precedent set up by President Truman many years ago back in 1950 when the national minimum wage in United States was raised by 87%. Zambia is a developing country, with the economy just beginning to bear some fruit. Largely due to the help of the Chinese who need our minerals for their development back in China.
It was only when I turned to see what had been written in the report published in the Times of Zambia that I found the full details of the increase.I was pleased to find that the Government had put some thought to this increase by targeting a small group of workers - regarded by the Government as vulnerable poorly paid and lacking a union to represent them. This reasoning made me feel proud to be a Zambian. The employers and businesses do not come under this category. They will pick themselves up, brush themselves off and move on. It is going to be a bit tough, but they have more resources compared to the group referred to above.
This area, which belongs to both economics and social policy is hotly debated by professionals, businesses and Government alike. It is the responsibility of the Government to see that the resources of the country are fairly shared, both by the rich and the poorly paid members of our society. Failure to do this, the Government face troubles looming ahead. The price to be paid later will by far be greater. It is not everybody who agrees with these sentiments. Some people strongly believe that minimum wage destroys jobs, particularly the young and those without experience. Many researchers have concluded that minimum wage policy actually creates more jobs than the opposite view expressed by others. Let us look at what was found by researchers both in United Kingdom and United States.
As early as last year (MSN Money - 10/10/2011) two respectable institutions, expressed their views on this subject. Sam Bowman, researcher at Adam Smith, said that ''too many politicians have failed to realise they cannot change the laws of economics any more than they can ban gravity. Wages are a function of productivity, and therefore, no external forces were needed to determine how much each employee should be paid, apart from the real price of productivity and the material cost of the goods and services rendered.'' He asserted that for every 10% increase in Minimum Wage causes 1-3% rise in youth unemployment. Dr. Faiza Shaheen, Senior Researcher on Economic Inequality, at the New Economics Foundation said that ''minimum wage ensures a decent floor''. Meaning that the market cannot drive wages down to a level where people cannot sustain a basic living. She also argued that it was not true to say that minimum wage destroyed jobs, because there was no such evidence to support that allegation.
A research study carried out by Professor Mark Stewart at Warwick University (1999 -2002) concluded with this statement: ''The effect of the introduction of the minimum wage on probability of employment is insignificantly different to zero for all four demographic groups and in all three details used''.
The American Researches have shown similar result outcomes. In 1950 when President Truman increased the minimum wage by a massive 87%, no one found significant job losses. Equally true, the result was the same, when Congress raised the minimum wage in 1967 by 28%, carried in two stages. A bigger Research which was carried out by Allegretto and colleagues Michael Reich and Arindrajit Dube who studied data on young employment from 1990 to 2009, they found that, ''minimum wage increases in the range that have been implemented in the United States do not reduce employment among young people''.
Lastly, but not the least in 2007 five hundred and fifty Economists signed a statement calling for increases in Minimum Wage. The fact that they were not all specialists in Labour Law was considered to be irrelevant.