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Friday, 11 October 2013

Minimum Wage U-Turn

Government has allegedly u-turned on the minimum wage because some sectors such as agriculture and tourism are struggling to pay the minimum wage. According to labour Deputy Minister Rayford Mbulu, Labour Minister Fackson Shamenda will “soon” issue a new statutory instrument outlining new sector-based minimum wages. In July 2012, GRZ increased minimum wages by 67%, with back-dated effect, without prior consultations. Back then Shamenda rejected sector-based minimum wages as being complicated.

The minimum wage legislation appears not to have been implemented by many organisations. The Union of Commercial and Industrial Workers of Zambia (NUCIW) recently revealed that Shoprite Checkers management have ignored Government's directive to implement the minimum wage. Those that have “implemented” have moved to reduce other perks to ensure the impact remains neutral.

Instead of increasing enforcement the government is backtracking and now considering differentiated minimum wages based on sectors. This is rather surprising because such an approach is discriminatory against some sectors. More important it appears government is trying to plan the economy by artificially imposing differences in the cost of labour across the economy. It is interesting to note that the very few countries in the world have this sector based minimum wage policy. And for obvious reasons!

Chola Mukanga | Economist 
Copyright © Zambian Economist 2013

1 comment:

  1. The minimum wage has generally not been implemented in the agricultural sector. Those who are union members are using the union wage (which is considerably lower) and the small scale sector is using free market rates which are lower still. If it was enforced the job losses would be in the range of about 70% of jobs in the sector. Agriculture being the largest employer this would be fairly awful. Those employers who can, are mechanising as much as they can, which is against the national need for more employment. Either a sector based minimum or a much lower minimum is the only solution I can see. We can't raise food prices much without losing our entire market to imports.


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