‘Scraping’ work permits healthy for EAC

“We should not begrudge those of us looking to better themselves elsewhere but we should provide incentives for them to stay here. We, in Rwanda, are removing work permits and restrictions on professionals coming to work in Rwanda.

“We should not begrudge those of us looking to better themselves elsewhere but we should provide incentives for them to stay here. We, in Rwanda, are removing work permits and restrictions on professionals coming to work in Rwanda.

These were words of President Paul Kagame during the recent Common Wealth Business forum in Kampala. He was announcing that Rwanda plans to scrap work permits for East African professionals.

The President’s argument is that easing immigration policies will help to cover the gaps in the labour markets.

“The need for professionals remains a challenge for Rwanda, East Africa and Africa. We lose professionals as soon as we make them and then borrow to fund foreign expatriates who effect little technological transfer and leave after their contracts are up,” Kagame said, adding that “it is up to African governments to work out policies to attract and keep professionals.”

Generally, work permits are allocated by a national government to foreign workers, and require a job offer prior to immigration.
For example every citizen of the European Union (EU) has the right to work and live in another member state without being discriminated against on grounds of nationality.

This is what Presidents Kagame is trying to spearhead and agitate for in the region.

According Public service, skills development and labour minister Prof. Manasseh Nshuti, in Rwanda specifically, “there is need for more engineers, medical staff, teachers and accountants,”

Nshuti says that Rwanda has been charging foreign workers between Frw200,000 and Frw700,000 per year and he notes that this annual charge will cease, soon starting from early next year.

He adds that this will help Rwanda meet COMESA and EAC requirements of free movement of factors of production among member states.
He said that teachers need to be increased despite the initial acquisition of 100 teachers from the democratic republic of Congo

Chairman of the East African Kategaya said the Common Market with its key planks of facilitation of free movement of labour, capital and the right of establishment, would further promote increased productivity, wealth creation, competitiveness, and enhance the entrepreneurial capacity of the private sector and lead to better standards of living for East Africans.

Free movement of persons is one of the fundamental freedoms guaranteed by Community Law in Europe. It is perhaps the most important right under Community Law for individuals, and an essential element of European citizenship.

In Europe this freedom has existed since the foundation of the European Community in 1957 and there’ a right to look for a job in another Member State, the right to work in another Member State, the right to reside there for that purpose.

Rights even go to the extent of remaining there, the right to equal treatment in respect of access to employment, working conditions and all other advantages which could help to facilitate the worker’s integration in the host Member State.

How ever in Africa and East Africa in particular there’s insufficient flexibility in wage levels to allow supply and demand to work. In a perfect world, wages adjust to a level that generates full (formal) employment.

There is also need to acknowledge that East African informal sectors employ the majority of the population in the region. The demand for workers in the formal sector therefore is always very low regionally.

So this discrepancy between demand and supply causes loss of revenue to organizations and loss off wages by the employees especially when they can’t get paid or being paid less because the supply by far exceeds demand.

The main problem is the low development of the private sectors in East Africa. These are supposed to be the Major employers of labour. However underdevelopment of these sectors leaves governments to play the role of employment of most factors of production labour inclusive. 

Again considerting east Africa, graduates are always required to have experience of a certain period in order to earn themselves jobs in government institutions apart from the police and military. Questions that have been asked frequently with no answers are where the experience is learnt from or which one comes first between experience and work.

Now whether the work permits are scraped in East Africa or not, the level of unemployment is likely to remain the same because the informal sector still leads and private sectors’ development is also still very low.  

This is because the private sector can create a competitive atmosphere for labour and competitive compensation for that labour.

Returns to labour are always dependent on the productivity of that labour. The overall productivity of the firm, which is generated by the mix of labour, capital, land, technology, management, and any other inputs to the production process, is also important to worker remuneration, but in less direct ways.

Competition is one area that does seem effective in reducing these wage-productivity gaps. Specifically, those firms engaged in international trade, meaning they face far greater competition in product markets, are more disciplined in their labour market interactions.

Of course this does not imply that in those economies where there is greater international competition, unemployment is non-existent and everyone is prosperous. It also does not mean that these countries have noticeably more flexible labour market arrangements.

But it does mean that competition disciplines firm behaviour in beneficial ways, and reduces the impact that paying excessive premiums has on aggregate demand for labour.

Achieving greater and fairer competition in an economy is no easy task. It requires a judicious mix of a range of policies, some of which are politically difficult. This includes allowing greater international competition in product markets, and greater flexibility and competition in labour markets.

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