BY BONNIE MODIAKGOTLA
The Finance and Economic Development Minister Kenneth Matambo has said that a high statutory minimum wage will lead to collapse of informal sector. At the same time, he has also described the country’s private sector as dependent on government tenders, making it static.
Matambo made these remarks on Thursday in parliament when responding to the country’s budget he delivered on February 4, which was been for the past two weeks deliberated upon by other members of parliament.
In response to the proposed P3,000 living wage by Duma Boko, leader of opposition, the minister said the government is not deliberately dismissing the idea, but it is simply not practical, and as an accountable government they have not done it because of constraints. Opposition political parties, together with other pockets of society have called for a living wage instead of minimum wage.
“It is not because we do not want to do it, definitely we also want our people to live comfortably by earning a minimum wage or as some call it the living wage. Semantics do not matter. We cannot do it now at least because we have constraints. You cannot just announce it and say we will do it on day one,” he said.
Matambo said a statutory minimum wage of P3,000 will be difficult to implement, and the response will be swift and have a negative effect on employment, as employers will be forced to pay higher wages, and the informal sector will collapse immediately.
“I am saying the net effect will surely be increased unemployment. That is what it would be. It will be almost immediately, not in the medium to long term, but immediate,” said the minister before accusing the proponents of the higher wages for political posturing by making grandiose promises since they are not accountable to anyone.
“So, this promise I dismiss it. It is really only a campaign talk. It is easy to do this if you are not accountable to anybody, it is easy. In reality if you tried it, you will have a worst situation about unemployment than we have today. That is the fact.”
When told wages are better in South Africa, the minister took great exception to the comparison. Botswana’s minimum wage is as high as P5.79 per hour, while its economically powerful neighbor recently passed a law to peg minimum wage to R20 per hour.
“Hey! South Africa, over time, South Africa. This is not South Africa, we are talking about the realities of this country,” the minister said before he went on a rampage.
Clearly annoyed with the comparison, Matambo also had to defend the country’s failure to set the target for job creation unlike the South African president who during his state of the nation address revealed the number of jobs they were targeting.
“I have no problem with the President of South Africa doing this, in South Africa he can afford to mention these figures, because he has a private sector that works. Private sector there works, it does not wait for government tenders, that is not what they wait for, they produce in order to sell internationally,” lashed Matambo.
Even more, South Africa has meaningful investors who share with the government their expansion plans, including opening of new factories, in order to export to international markets, Matambo said in defense of the Botswana government.
In their own budget they have got these figures which they give to him. Here who is giving me any figures about anything? All I get regarding the government budget is: What is in it today? What shall I benefit from the tenders? What can you give us?” he said.
“Always give and that is an unfortunate situation we are in, but I am hopeful that it will improve in due course when the private sector matures, but for now it is a private sector to have a nurse the whole time. I am not going to accept any comparison with South Africa.”
The finance minister said the country’s private sector is still in its infancy stage, and hopefully one day it will grow, while also adding that it is inward looking instead of outward looking, and its dependency on government tenders has made it static.
Paradoxically, when announcing the government budget, Matambo said the government will continue to leverage on its purchasing power to stimulate private sector growth, in turn creating jobs.
“Of the total P67.5 billion expenditure planned for the 2019/2020 financial year, P22.4 billion, or one-third is for paying salaries and allowances for those employed in the public service, while the balance of P45.1 billion or 66 percent will be available for government procurement of goods and services from the private sector. This is a significant amount availed by government to spur growth of the economy, and create employment opportunities,” the minister said at the time.