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BY VICTOR BAATWENG & BONNIE MODIAKGOTLA
Given the growing unemployment roll in Botswana, many employers continue to enjoy bargaining power over the desperate job seekers, resulting in declining wages in the past several years – official figures shows.
The latest formal employment figures from a survey carried by the national statistics agency – Statistics Botswana and published in May 2019 pegs the employment growth at 0.9 percent between September 2018 and December 2018. The same survey shows that Employee earnings increased from P6, 347 in September 2018 to P6, 533 in December 2018, which is an increase of 2.9 percent.
Fast forward to this week, the Botswana government unveiled the new minimum wage structure, months after being pushed towards a tight spot, facing pressure from some quarters of the society who views the prevailing minimum wage as modern day slavery.
Infact just less than 12 months ago, the government was sent scuttling for cover when the main opposition party, Umbrella for Democratic Change (UDC), lambasted the government for enabling a low pay environment.
The UDC is going into the looming general elections promising a minimum pay almost three times the highest rung of the minimum wage schedule.
Possibly shunning the UDC P3000 minimum wage suggestion, the government on Wednesday through the ministry of Employment, Labour Productivity and Skills Development announced that it has hiked the wage rates by 17 percent. On absolute terms, this translates to gains nothing over P1 per hour across various sectors. A press statement from the government enclave indicates that the new basic minimum wage has been set to P6.77 per hour for almost all the regulated trades, except for domestic service and agricultural sector, whose minimum pay is pegged at P1, 000.
MIDDLE FINGER TO THE MIDDLE CLASS
In March 2018 emotions boiled over with the workers at one of the country’s leading retail companies - Choppies Enterprises’s hyper store located at the Westgate Mall in the capital Gaborone downing tools and demanding for a better pay.
At the time it was reported that the Choppies Enterprise employees along others from the retail sector earns as little as P900 per month. The latest revision will see retail sector workers pocketing a little extra of P0.87 per hour worked. Other players in the mass grocery sub-sector include Botswana Stock Exchange listed Sefalana Holdings as well as South African retail giants Pick n Pay, Spar and Shoprite amongst others. The retail sector currently employs 50 521 Batswana, 26 895 of them being male while the remaining 23 626 are female.
While Botswana’s trade labour laws currently favours minimum wage which is revised on annual basis, BOFEPUSU – the Botswana Federation of Public Parastatal and Private Sector Unions says it advocate for living wage as compared to minimum wage.
Workers and employers around the world continue to argue over the issue of a minimum wage. Workers on one hand say they want to receive a minimum “living” wage that permits them to meet the most basic needs of life such as food, clothing and shelter. Employers, on the other side say that high labour costs will affect their company’s profitability and its value to shareholders.
In the middle, governments worry that they will lose trade, investment and tax revenues if labour costs within their borders go too high.
In June 2018, Shaun Nthaile, an opposition legislator, proposed a motion in parliament to introduce a decent living wage of at least P3, 000, with the higher wage seen as a remedy for years of low pay against rising living costs. However, the motion was muzzled and rejected by the ruling party, which commands the majority of legislators.
Instead, Tshenolo Mabeo, minister of Employment, Labour Productivity and Skills Development, said the issue of minimum wages and living wages is before the ministry of Finance and Economic Development, which is doing the research and assessment. He said they are looking at the issues of minimum wage and living wage, and only after they have concluded their assessment, his ministry will take it further to see how they can solve the issue.
Mabeo added that International Labour Organisation has assisted the Botswana government with a report focused on finding figures that could give a picture of the shortcomings of minimum wage. He revealed that the report indicated that a major challenge identified has been lack of data.
Whilst in Botswana there is a general call for a significant hike in wages, an economic commentator and managing director at Econsult Botswana – Dr Keith Jefferies cautioned against that in 2018. He said at the time that if the minimum wage is raised too much it could lead to unemployment.
GOING NOWHERE SLOWLY...
Jefferies, the former Bank of Botswana deputy governor possibly subscribes to the notion that a huge hike in minimum wage would result in companies that have a large portion of their workforce on minimum wage being unable to bear the cost of the increase resulting in job losses.
On how urgent Botswana needs to attend to the issue of wage gap given recent developments in the labour sector, Dr Jefferies says, “I think here is argument for raising the minimum wage, although I do not know by how much, given that the share of GDP being paid in wages has been declining and inequality is high”.
As it prepares to usher in new administration in October 2019, Botswana remains with a challenge to bridge the wage inequality gap, and improve overall living wage for entry-level, unskilled and semi-skilled workers.
The latest revised wages have however drawn a wave of criticism, particularly on social media. Chiefly among the concerns is that the new pay would not have much impact on the worker’s salary. A worker already paid on the highest rate of P5.79 per hour, working eight hours per weekdays gets a monthly pay of P927, and with the new adjustment, the pay only picks to P1, 080.
The criticism might stall the ruling party’s momentum as it ramps up support from workers’ for the general elections expected in four months. Under the administration of President Mokgweetsi Masisi who came in power in April 2018, the government has been pandering to voters, targeting workers who have complained of stagnated wages in the last decade. Part of the charm offensive included adjusting salaries for unionised workers, while the law enforcements agencies got a huge bump in pay as the salary structures were altered.
Besides jobs creation, workers’ welfare has become a major talking point going into the general elections. While the economy has been growing at a steady pace, and corporate earnings rising, the opposite has been happening in the labour market.
This has fuelled opposition parties’ campaign based on increasing workers’ wages, and reverse the years of income inequality which they say has been perpetuated by the ruling party’s policies that put business interests ahead of citizens’’ welfare.