Minimum wage is long overdue

Recently, Parliament passed the Minimum Wage Bill 2015 allowing for the determination of a minimum wage based on the different sectors of the economy. The Bill, among other things, provides for the establishment of minimum wages boards by Finance minister, mechanisms for determining minimum wages for each sector, duties, powers and functions of the board and the procedures for determining the minimum wage.

When accented into law by the President, it will imply that Shs130,000 is to be the lowest amount that employers can legally pay their workers per month. This would replace the outdated minimum wage of Shs6,000 that was set in 1984.

Following the knock off of two zeroes from the Uganda Shilling in 1987, the revised monthly minimum wage was Shs60 (about $4.35) – substantially below the poverty line of $1 or $31 per day. There has been no minimum wage and the need for an adequate one has been long awaited.

Minimum wage practice is extensive across the world with nine in10 countries having some sort of minimum wage. Virtually, all EU countries and 97 per cent countries in the Americas, have it and the lowest use is in Africa (89 per cent of countries) and 73 per cent in Arab countries. The respective enactment by Uganda is supported by the policy framework.

The National Development Plan (NDPII) together with the National Employment Policy, recognise its relevance. It is also intrinsically and inseparably linked with Sustainable Development Goal 8 aimed at decent employment as well as the international Labour Organisation overarching objective of having a minimum wage of protecting the workers from exploitation by employers.

Uganda has also ratified several conventions concerning minimum wage. Arguably, any employee earning below the proposed minimum wage, is in the category of working poor. While the national poverty line of $1 per day translates into $31 (Shs110,000) monthly, the international poverty line of $1.99 would be much higher than the minimum wage.

The Uganda National Household Survey in 2016 revealed that only 38 per cent of the nine million employed Ugandans were in paid employment. The median monthly wage was Shs168,000 per month, and for the rural area (76 per cent of the population contributing 89 per cent of the national poverty) was Shs120,000 per month.

Overall, six in 10 of the employed work force were in vulnerable employment often characterised by inadequate earnings, low productivity and hard conditions of work that undermine workers’ fundamental rights. The struggle of the poorest population is getting worse, with poverty increasing (more than 8 million Ugandans) and inequality rising. Vulnerability is also on the increase given that Uganda has no unemployment benefits and limited penetration of any sort of social protection.

While the minimum wage law is commendable, the actualisation will be complex.
Dr Enock Nyorekwa Twinoburyo, [email protected]