Revisit the matters around living wage

One of the talking points from this year’s commemoration of the Labour Day was the renewed demands by leaders of the labour movement for government to enact laws that will support the adoption of a living wage.

Government has for several decades now been opposed to the introduction of a living wage. The argument has been that it is yet to study and arrive at what the ramifications of fixing a minimum wage would have on investments and the economy. 

That was one of the arguments advanced in August 2019 when President Museveni declined to assent to the Minimum Wages Bill, 2018, which had sought to empower the minister of Gender, Labour and Social Development to appoint a Minimum Wages Board to fix minimum wages for various sectors. The Bill would also have mandated the minister to announce the minimum wages annually.

Back then, Mr Museveni argued that the existing laws were “adequate and enforceable”, but there is no evidence of this.

The fact is that many of Uganda’s employers, some on whom government is lavishing incentives, including tax holidays, waivers, and bailouts, have been exploiting gaps in the Minimum Wages Advisory Board and the Wages Council Act to pay their workers indecent wages – wages that cannot accord them and their families the most basic necessities.

Some of the labourers have been seen lining up in front of the gates of some of the investors’ factories where they put in shifts of eight hours a day only to be paid as little as Shs5,000 for the day. We need to draw a line under this kind of exploitation and abuse.

Some of the arguments of those opposed to the living wage have been that it is expensive; that it will make businesses uncompetitive and might in the process shore up unemployment, but a living wage is good for the economy as a whole.

A few months ago the International Monetary Fund (IMF) made several recommendations intended to help Uganda Revenue Authority (URA) widen the tax base. The tax collectors’ plan is to grow Uganda’s tax-to-Gross Domestic Product (GDP) ratio from 13 percent to at least 18 percent by the end of the financial year FY 2024/2025. 

IMF’s recommendations and URA’s plans can only be achieved if there is an increase in the number of people on the tax registers and not by piling more taxes on the few people on it. That is why now, more than ever before, a discussion about a living wage becomes pertinent.