Saturday, March 6, 2021

Botswana economy suffers as workers drag feet over low pay

With more than half of local workers reported to be on low pay, most of which are government employees, the domestic economy is anticipated to continue recording lower figures of economic growth which come as a result of low and depressed productivity.

Available figures shows that the domestic economy expanded by only 3.6 percent during the twelve months through March 2013. At the same time, the government project that it will grow by just over 4 percent in 2013 and 2014.

According to the Botswana Institute of Development Policy Analysis (BIDPA) research fellow, Monnane Monnane , failure to increase salaries of workers over the years supported by traditionally lower wages have resulted in low productivity that continues to be reported in the domestic labour market.

Monnane, whose research interests include industrial organisation, supply chain management, and strategic firm behaviour, says that failure by the government to increase salaries of workers has an impact on the level of productivity at a national level. The government employs a majority of the total labour force estimated at approximately 109 000.

The government employees, 80-90 000 of whom are represented by seven public sector trade unions have almost 5 years since they were awarded meaningful salary increase and this, according to trade unions has affected their purchasing powers negatively.

“There is need to align wages and productivity. Maybe it is high time workers are paid according to their level of productivity”, Monnane said. On the other hand the private sector has also been accused of reducing its operational costs by paying low salaries to workers. A macro economist, working for a private investment firm who spoke to Sunday Standard on the sidelines of the BIFM Conference said that his observation and assessment of the private sector is that there has been a shift from wages to profits which should have boosted investment and productivity.

Yet in the domestic market, he said, booming profits have been associated with falling investment. “This is because the sustained squeeze on wages has created a number of highly damaging economic distortions. It has sucked out demand and encouraged debt-fuelled consumption. Because labour is cheap, firms have less incentive to invest in training and become more productive, the macro economist said anonymously.

There is mounting fear that all these could results in helping Botswana becoming an increasingly low value-added and low-skilled economy.

The domestic labour market, particularly the public service has been operating in disarray since the historical wage related strike in 2011. The situation seems to be causing headache to the President, Ian Khama who recently during his annual state of the nation address pointed out that “good work ethics cannot exist where employees and employers are at loggerheads”.

While the World Economic Forum’s latest, 2013-14, Global Competitiveness report has moved Botswana up five places in their global rankings since last year; they have nonetheless once again identified “poor work ethic in the national labour force” as the most problematic factor for doing business.

Historian at the University of Botswana, Christian Makgala says that poor work ethics in Botswana has been issue of concern close to a century. He notes in his paper, ‘Discourses of Poor Work Ethic in Botswana: A Historical Perspective, 1930ÔÇô2010′ that the discourse about poor work ethic has been used by governments, both colonial and post-colonial, to criticise the Batswana as workers.

“This discourse has pointed to the erosion of a traditional ethos of self-help and self-reliance and to its replacement by a syndrome of over-dependence on the state by the people”.

However, President Khama in his latest state of the nation address said that the Government continues to promote conducive labour relations, “To address this deficiency, which is applicable to both our public and private sectors, the Botswana National Productivity Centre has developed a strategy that combines training initiatives with public education that recognises that good work ethics are not alien to us”.

The Trade Disputes Act is also reported to be under reviewed in order to establish a more efficient dispute resolution system.

Another key issue of concern that have been spoken about at length is the growing income disparities among working people, which has also been linked to the factors that are contributing severely to the country’s stagnant economic growth. Internationally, there is a growing consensus that economies built around poverty wages and huge corporate and private surpluses are unsustainable. “Creating more economic stability and more sustained economic growth depends on securing a more equal distribution of income”, declared Christine Lagarde, head of the IMF earlier this year.

Economic commentators said on the sidelines of the annual BIFM offshore Managers Conference held in Gaborone this week that the increase in earnings inequality raises concerns about the consequences for the lives of workers located at the lower end of the wage distribution, with a growing proportion of workers receiving a wage so low as to harm their ability to maintain decent living standards.

The concerns have been raised hardly a few weeks after Parliament deferred a motion that called for government to increase the minimum wage. Minister responsible for Labour, Edwin Batshu told parliament that government has engaged a consultant with the help of the International Labour Organisation to find out if there is need for the review of the minimum wage. The consulting company is expected to conclude it work in April next year.

Member of Parliament for Kanye North, Kentse Rammidi had tabled a motion which stated that there is need to align minimum wage with the cost of living. Botswana’s minimum wage is currently at 450 pula per month. Social programs workers of the Ipelegeng scheme ran by government earn a meagre P400 per month. On the other hand unofficial survey shows that Botswana has average income earnings of P4000 per month.

RELATED STORIES

Read this week's paper