N.P.B

Dar employers against minimum wage increase

By JOSEPH MWAMUNYANGE
Special Correspondent

The Confederation of Tanzania Industries has opposed the increase of Tanzania’s minimum wage from $41 to $140, which it says will lead to job losses.

In a strongly worded statement, the CTI said that due process was not followed in determining the new salaries.

It fears the salary increase will lead to disinvestment and relocation to more labour cost-competitive countries.

Other adverse effects of such a move would include Tanzania becoming a nation of traders, as most local manufacturing would become unviable.

Following the announcement on October 8 last year, a delegation of CTI met the minister to express their misgivings.

“Members of the CTI assured the minister that they were supportive of an increase in the minimum wage in order to restore their worker’s purchasing power, eroded by inflation since 2002 when the minimum wage was last increased,” said the CTI.

However, members expressed grave concern about the repercussions of the huge increase and the absence of due process when determining the increase.

According to the CTI, a comparative analysis of wages of countries with which Tanzania competes in the local, regional and global markets, showed that workers were not worse off.

In Kenya, the minimum wage is $79, India $68, Nigeria $45, Madagascar $28 and Nepal $27. Others Sri Lanka with $37.33, Vietnam $44, Pakistan $49.50 and Bangladesh $41. Uganda does not have a minimum wage.

The statement said: “While CTI was, in good faith, providing information to the Minimum Wage Board as directed by the minister, the notice on the salary increase was signed without considering the memorandum or availing adequate time for further consultations.”

It further said that even after the notice was given, its members continued to appeal for a review of the gazetted minimum wages and fringe benefits. In response, the Minimum Wage Board for the industrial sector invited CTI to another meeting on December 14 last year.

This time, the Board sought clarification of some of the issues raised in CTI’s memorandum of November 23, 2007.

The CTI said that GN 223/2007 makes provision for companies to present private submissions to the minister through the respective wage boards. The minister is, in effect, giving himself discretionary powers to amend the minimum wage on a case by case basis.

“CTI is of the strong view that neither the minister nor the boards have the capacity or expertise to determine what an individual company can or cannot afford to pay. Furthermore, the provision effectively usurps the powers and roles of the trade unions as negotiators,” read the statement.

It further stated that: “It will lead to lengthy bureaucratic processes and create room for corruption. It will defeat the whole meaning of a national minimum wage.”

CTI is of the view that the consultative process leading to the announcement of the minimum wage was flawed and against the spirit of the Labour Institutions Act.

Most members of the CTI deny having received the questionnaires purportedly sent out by the Minimum Wage Board. They also denied ever having met the board.

The board’s work was hurried and its findings were not validated as they were never discussed with the stakeholders before they were submitted to the minister.

Worse, the decision of the board was reached after studying a mere 6 per cent of the questionnaires that were returned.

“It is in view of the foregoing that CTI appeals to the government to review the implementation of GN 223/2007 in order to arrive at a minimum wage that is affordable to industries for the purpose of sustaining their survival and competitiveness, in line with regional and global competition while providing employment and value addition.”

CTI said poverty reduction through labour-intensive industrialisation is achieved through rural to urban migration of the poor; followed by employment of the poor at wage rates higher than those of alternative rural employment opportunities, but affordable enough to maintain the competitiveness of industries.