BusinessDay

Minimum wages in Africa need a boost

There is unquestionably a critical role that labour income plays in the journey to the sustainable development of any nation. The ability to earn a decent wage goes a long way to beautify one’s sense of livelihood while making such individuals disposed towards helping others.

Governments or institutions usually set minimum wages, and they serve as a wage floor below which employers may not pay their workers. According to the International Labour Organisation, minimum wages are set to ensure that workers are properly positioned to cover their basic needs. Usually, a nationally decided minimum wage sets a single economy-wide wage floor that moderates the overall average wage rate for the entire economy.

When minimum wages are set too low, then workers will be unable to meet their basic needs and those of their dependants. Also, low aggregate wage levels are detrimental to growth because low earnings will result in low consumption and aggregate demand.

Adopted as part of the 2030 agenda for sustainable development by the United Nations General Assembly in 2015, the Sustainable Development Goal target 10.4 admonishes member countries to “adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality”. Hence, governments and institutions in member countries are implored to pursue labour laws that serve the interest of all workers. They are also expected to ensure that adequate review of existing laws and the creation of newer minimum wage laws are carried out to promote wage inclusiveness and reduce inequality among workers at various levels.

For instance, in 2014, the national minimum wage was introduced in Cape Verde, while the same was introduced in Mauritius in 2018. South Africa, in 2019, implemented a new national minimum wage law that helped the workers maintain a decent living standard while improving their productivity levels. Kenya and Namibia have also been reported to be implementing reviews and making necessary adjustments to their minimum wage policies.

Read also: Nigeria’s economic reality makes mockery of N30,000 minimum wage

However, there are some other African countries where the minimum wage level is abysmal. Workers have to settle for slave wages amid unbearable economic conditions in these countries. In these countries, there is evidence of high inequality, driven by low wage rates and large wage differentials between the rich and the poor. Also, the high level of inequality prevalent in these economies has contributed to a retarded growth trend and a bruised social structure.

The minimum wage is about 6,000 Ugandan shillings per month (approximately $0.17) in Uganda. On a per-year basis, the average worker in Uganda earns up to $95. The East African country, whose population is 21,778,000, has an average life span of 42.9 years.

The low life expectancy rate of Ugandans points towards the direction of an overlaboured and poverty-stricken population whose living standard may be unworthy of what any human should be exposed to in the first place. The last time that the country’s minimum wage was reviewed was in 1884.

With $1,054.00 as the total yearly Gross National Product, the Central African Republic (CAR) has an annual minimum wage of 420,000 CFA francs. This ranks the country as the 122nd out of 197 nations worldwide. Every month, a worker in the CAR is entitled to 35,000 CFA franc (or $58.81) per month or up to 218.75 CFA franc ($0.37) per hour. With a population of 3,615,000, the average lifespan of a Central African Republican is 44 years.

In Rwanda, no set minimum wage is nationally determined. Most of the time, labour wages in Rwanda are determined by mutual agreements between the employer and the employee.

These agreements can often lead to a skewed outcome, often favouring the employer. The average minimum wage ranges from 500 to 1,000 Rwandan francs per day, or $0.83 in the tea industry, while the average daily pay in the construction industry ranges from 1,500 to 5,000 Rwandan francs (or $2.50 to $8.30).

Under the Malawian Employment Act, workers are entitled to a minimum wage of 50,000 Malawian Kwacha (MWK) per month or 2,380 MWK per day. This pay grade degenerates to hourly earnings of $0.85. Besides public holidays, sick and maternity leaves, there are no other statutory leaves available under the Malawian labour structure.

For Guinea Bissau, the minimum wage totals 19,030 CFA francs or $30 monthly. Therefore, in a year, an average worker in Guinea Bissau can earn up to $993.00. Each worker in the country is usually compensated with a bag of rice included with their take-home pay.

Undoubtedly, African governments can do better with minimum wage legislation in various countries. Appropriate minimum wage levels have been proven to reduce inequality and drive growth directly.

For instance, in Latin America, Indonesia, Russia, China, India, and Europe, improved minimum wage laws have helped boost formal and informal sector performance through workforce motivation.

Furthermore, decent minimum wage levels can be helpful in the fight to bring poverty as low as possible. In a recent research study on Thailand and the Philippines, for instance, it was discovered that a 1 percent increase in the minimum wage helped to reduce poverty by 0.5 percent.

African governments must realise the importance of prioritising decent wage legislation if their nations must experience inclusive and people-oriented growth. This is especially true for many nations in which growth experiences have been exclusive of a larger proportion of the population whose informal activities are mostly unaccounted for in official national statistics.

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