60% of Ugandans earn Shs200,000 per month

Of every 10 households in the country, six are financially struggling. As a result, 60 per cent of households can barely afford basic commodities. 

And did you also know that half of about 20 million people engaged in gainful employment get a monthly payment of Shs200,000 or less? When you factor in the rising cost of living emanating from the escalating inflation, the survival picture gets grimmer and dimmer. 

These disturbing findings are contained in the National Labour Force Survey (NLFS) 2021 shared by Uganda Bureau of Statistics during the dissemination workshop held in Kampala recently.
Labour issue experts, sector analysts and government policy and economic managers describe the terribly low wages as a reward for labour as “peanut and unfortunate.”

“About 50 per cent of Ugandans in paid employment earn some Shs200,000 or less and that is properly reflected in our findings,” the Uganda Bureau of Statistics (UBOS) principal statistician Micheal Ogen said in an interview after presenting  the labour force report.

This simply means in a span of 30 days, you get paid an average of Shs500 per day for the 8-14 hours shift you put in your work. 

The report also revealed that 49 per cent of the working age population were outside the labour force, but worrying perhaps is that about 45 per cent felt discouraged and therefore didn’t go hunting for a job. 

It should be noted however there is a slight increase in wages once the payment is constituted to both In-kind and Cash. 

According to the NLFS, the average monthly earnings once the two are combined goes to Shs250, 000—even then still remain miserably low. Surprisingly though, many employees, despite the shocking low levels of wages, seem satisfied with their work, according to the survey.  

Revealing perhaps, nearly 60 percent of households’ financial situation was what the report describe as “not well-off” with just 2 per cent reported being well-off financially. 

Minimum wage
In an interview with Prosper Magazine last week, the Member of Parliament representing Workers, Mr Charles Bakkabulindi, the problem is lack of proper legislation on minimum wage - the lowest remuneration that employers can legally pay their employees. 

“The problem of low pay is largely because we don’t have a minimum wage - the price floor below which employees may not sell their labour,” Mr Bakkabulindi told Prosper Magazine.

He continued: “There is need to standardise payment, basing on sectors. If this happens, then there will be a minimum wage for domestic workers, for government workers, industrial workers, and agricultural sector workers.”

In another interview with the National Organisation of Trade Unions (NOTU), the largest national trade union centre in the country with 25 affiliated unions, Mr Usher Wilson Owere, the low wages is much more of a structural problem.  

According to Mr Owere, “there is need for more jobs in the market” as there are too few jobs to go around for everybody, including between 400,000 – 800,000  young people who enter the job market annually, for a mere 80,000 new jobs each year.

Then, he noted, the government should ensure that the money earned by employees doesn’t get substantially consumed by taxes, but instead they should retain it to boost their purchasing power.

In a sideline interview with the acting National Social Security Fund (NSSF) managing director, Mr Patrick Michael Ayota, the impact of low wages is manifested in the Shs17 million an average saver retires with after years of savings. Already, 70 per cent of workers have no access to any form of social protection, with only 18 per cent, according to the findings being covered under NSSF.

For those working in the public sector (government), Mr Owere indicated that a collective bargaining agreement was negotiated with government four years ago with an aim of seeing to it that the lowest government worker by now should be earning a minimum of Shs1 million. Sadly, the collective bargaining agreement has never been implemented.

“We are still grapping with the minimum wage because there is still no will from the government to make it happen. But we are trying our level best to see that various unions negotiate for better pay. As the umbrella body, we shall support that move,” he said. 

Middle income status myth 
But for the executive director of Akina Mama wa Afrika, Ms Eunice Musiime, the whole low wage issue debunks the attainment of middle income status.  

Speaking at the sidelines of a High Level Multi Stakeholder Workshop on Feminist Economics and Tax Justice last week on Tuesday, Ms Musiime, a lawyer and development specialist wondered how half of the working population that earns a paltry Sh200,000 ($54) per month can be in the middle income countries league.  
 
In his 2022 State of the Nation Address, President Museveni, following years of middle income status eluding the country, bellowed: Congratulations!

He noted that despite locust invasion, the rising waters of the lakes, the floating islands, the landslides, the terrorist bombs, the Covid-19 pandemic and now the rising commodity prices largely caused by the Russian invasion of Ukraine, the country still managed to find its way into the middle income status.

According to President Museveni, with the economy then standing at $45.7 billion (Shs176 trillion) by the exchange rate method and at $131.6 billion (Shs507 trillion) by the Purchasing Power Parity (PPP) method, according to Mr Museveni means the GDP per capita is $1,046 (about Shs4 million) which is slightly beyond the entrance points for the lower middle-income status of $1,036 (about Shs3.9 million).

Government strategists speak
The Deputy Secretary to the Treasury, Mr Patrick Ocailap, said the prescription to low wages lies in increasing production which will in turn grow the economy that will then generate enough revenue to go around.

Given the fact that the government is essentially not the largest employer the best we can do is to put in place policies that will expand the growth of the economy and be able to make firms more competitive and profitable. 

“Once the private sector do well as a result of the polices that will spur growth, then the incentives to increase payments will follow suit.” 

He continued: “The government is trying to do what it’s supposed to do. I can tell after 5 years from now with the Parish Development Model would have made available about Shs5 trillion going directly into that improving production, coupled with other supportive government programmes, the issue of the wages will be dealt with.

“We care about the low income of Shs200,000 and that is why I don’t sleep. We are busy making sure the PDM works out because it is the answer to many things, including the wage issue,” says Mr Ocailap. 

In a sideline interview last week on Tuesday, the National Planning Authority Resident Consultant, Dr Marios Obwona was of the view that the working population deserves better payment for their labour which is among the key factor of production. 

However for Ugandans to command the kind of wages that are worth a mention,  he says, “productivity concerns must be addressed.”

According to Dr Obwona, the 90 minutes a day Ugandans spend in traffic congestion, which translates to 450 minutes or 7.5 hours a workweek, has an impact on productivity which negatively impacts on the wages. Coupled with the rising inflation now at 10.7 percent and related economic pressures, he says all this erodes the value of the wages. But, “How many hours do Ugandans productively put into work to deserve better remuneration?

And the answer might be found in the NLFS.  For example, the report shows that the purpose for Internet use is mainly for social networking (96%), followed by Information (68%) then entertainment (48%).  Only 17 per cent use it for Business. And nearly 30 per cent use it for academic work and 10 per cent use it to such for online jobs.
 
As a way forward, Buy Uganda, Building Uganda (BUBU) will, according to Dr Obwona help in boosting industry growth which in turn will result into more job creation and ultimately better wages. 

And so he says is value addition, which by all means: “Guarantee premium price for agricultural products, translating into better pay.”