The Civil Society for Poverty Reduction (CSPR) says the revised minimum wage might lead to job losses and undermine its objective of increasing people’s disposal income because it was not done in line with economic fundamentals.

On September 10, 2018, government’s revised upward minimum wage for domestic, shop and general workers in the country took effect, following the issuance of statutory instruments No. 69 of 2018 covering domestic workers; statutory No. 70 of 2018 covering shop workers and statutory No. 71 of 2018 provides for general application of all protected workers.

Minister of Labour and Social Security Joyce Simukoko, who announced the revision of the minimum wage, disclosed that domestic workers would now receive a gross salary of K993.60 from K522.40, while minimum wage for grade one shop workers and general workers has risen from K1,132 to K1,698.60.

Simukoko warned that employers would face the wrath of the law if they failed to pay the new structure of remuneration, saying the revision of the minimum wage was long-overdue as the last revision was only done in 2012.

But commenting on the matter with News Diggers!, CSPR executive director Patrick Nshindano noted that the minimum wage revision did not take into account robust economic simulations and was rather arbitrary.

He argued that the revision was not done in line with economic fundamentals and might lead to job losses, while undermining its objective of increasing people’s disposal incomes and reduce poverty.

“CSPR fully supports the need to revise the minimum wage upwards as a measure to tackle the increasing cost of leaving. But we are concerned that the current revision was not done in line with economic fundamentals and might lead to job losses and undermine its objective of increasing people’s disposal incomes and reduce poverty. It’s not arguable that the cost of living in Zambia has drastically increased since the last minimum wage revision in 2012, whilst incomes remained static or grew at a sluggish rate, hence eroding disposal incomes and making standards of living of most Zambians, especially those on the lower income brackets, unbearable. It is, therefore, justified that government revises the minimum wages to be able to deal with inflation over the years. CSPR is, however, concerned that this revision did not take into account robust economic simulations and was rather arbitrary,” Nshindano said.

“The best way to deal with inflation is to ensure that there is match or higher wage growth, which should be supported by growth in national productivity. Of biggest concern to CSPR is that the Zambian economy has not fully recovered from the 2015 slump and continues to grow at a sluggish pace and any growth in wages should be supported by economic productivity; failure to do this would result in a shift in the structure of labour characterised by retrenchments in a bid to maintain lean structures that match to output. This could undermine efforts to create jobs and fight poverty.”

Nshindano called on government to ensure that it put in place domestic economy stimulating measures, which could range from fiscal to market-oriented incentives to support enhanced productivity and growth in wages.

“As CSPR, we had categorically submitted to government that they needed to ensure that due diligence was done before setting the minimum wages informed by robust economic simulations in terms of impact, which we doubt was undertaken. However, given that the revision has been undertaken, we call on government to ensure that they put in place domestic economy stimulating measures, which could range from fiscal to market-oriented incentives that will support enhanced productivity to support growth in wages,” said Nshindano.

“Further to this, we note with concern that Zambia continues to have one of the lowest labour per capita productivity, which undermines economic growth and also discourages the setting up of industries due to high labour costs in comparison to other countries. This may lead to businesses moving labour intensive industries to other regions and use Zambia as a mere trading centre, hence exporting the much-needed jobs. In this vein, we call on Zambians to also adopt a positive attitude towards work and ensure they match per-capita productivity to wages. Job creation is one of the key measures towards poverty reduction and government needs to ensure that it focuses on the broad fundamentals of stimulating domestic private sector growth to support both the numbers, but also the quality of the jobs, which includes, among other things, level of wages.”