Why are we stuck with a minimum wage set 40 years ago?

Miners at work inside Mageragere mining site in Nyarugenge District. / File.

Repeated calls for revision of the minimum wage to reflect current economic realities have largely remained futile as the economy continues to grow and cost of living soaring.

In March 2014, lawmakers were upset by the fact that the national minimum inter-professional wage of Rwf100 per day, for the ordinary working folks, which they were informed was set in the 1970s, was still valid.

They recommended the figure to be revised upwards to protect low income earners.

But debate has dragged on and on, with no breakthrough.

Proponents of the minimum wage say the country’s current minimum wage is out of touch with present-day economic realities.

In July 2018, the Chamber of Deputies enacted a draft labour law that left it to the Ministry in charge of Labour to set a new minimum wage.

At the time, legislators advised the Minister for Public Service and Labour to indicate, in the new labour law, a new minimum wage but it was later agreed that it would be fixed through a ministerial order instead.

But, more than a year since the new law came into effect, there is no new minimum wage in place.

According to Francois Ntakiyimana, Executive Secretary of COTRAF, a labour union for workers in the mining sector, the lack of an updated minimum-wage rate is “a very serious problem” because investors exploit workers by paying them peanuts.

He recalled that, at one point in 2018, the Ministry of Public Service and Labour (MIFOTRA) “brought a proposal to us, but we did not agree on it.” Pressed for details, he said both sides did not agree on proposed minimum wages for different sectors.

Ntakiyimana said that when the new labour law was published in 2018 he was concerned because it did not come with a ministerial order setting a new minimum wage.

Setting a new minimum wage, he said, would not only benefit individual workers but the country at large because “this money would go straight into the economy, boosting business and tax revenues in the process”.

“Otherwise, how do you expect security guards, cleaners of our roads and other categories of lowly workers to pay taxes, and how do you expect them to survive since they almost certainly live in perpetual debt?” he posed.

Lack of an updated minimum-wage rate, Ntakiyimana said, has dire consequences in many aspects, including pension benefits.

For example, the 2015 law governing the organisation of pension schemes in Rwanda, he said, stipulates that basic or minimum pension does not go below half of the established minimum wage.

The absence of minimum wage is also, among others, harming the insurance sector as courts rely on minimum wages to determine the indemnity to victims.

‘Consultation is a process’

Speaking to The New Times, Faustin Mwambari, acting director-general for Labour and Employment at the ministry, said last week that a study had previously been conducted on the issue of minimum wage and, right now, consultations were underway with all stakeholders.

“Once the consultations have been concluded, a requisite Ministerial Order on the issue will be gazetted. That is the status,” he said.

He added that the consultations started last year but could not say when they will end. “It may take some time depending on when stakeholders have agreed.”

Asked how serious the ministry was taking the matter considering how long it has taken, Mwambari explained that the process is taking long because of the “importance” of the matter. “When something is very important it needs consultation with all the people involved.”

On his part, Ntakiyimana said there is need for trade unions and the private sector federation to conduct a fresh study of their own on the matter whose findings would then be discussed with government.

But he expressed reservations.

“There is no assurance that this will be done,” he said. “Since 2001, the labour code has been clear on the need for a new minimum wage but nothing has been done to date.”

He said, instead, government places more emphasis on doing business and investments. “The country kind of prioritises investors, implying that setting a minimum wage that caters for the worker is a bit of a challenge.”

This, he said, has consequences to the economy because real development can hardly be realised when workers are not protected against unfair pay.

‘Minimum wages, not minimum wage’

According to Eric Manzi, Secretary General of the Centrale des Syndicats des Travailleurs du Rwanda (CESTRAR), a coalition of trade unions, they were consulted “both as trade unions and members of the National Labour Council.”

The last time a meeting of the National Labour Council was held and they gave their inputs was around four years ago, he said, and they validated MIFOTRA’s studies on minimum wage and other issues such as macro-economic indicators.

“We had an agreement over minimum wages, not a minimum wage because we discussed different rates, I think, for about 12 sectors or professions.”

In 2016, he explained, the trade union yet again called for new minimum wage(s) to be set.

At that time, he recalled, they were promised that once the new law was in place they would revisit the matter and specifically discuss a draft ministerial order on minimum wages.

He said they held more consultations when the law came out in August 2018 and agreed on reducing proposed minimum wages from 12 or 14 sectors (or professions) to three, each domain with a minimum rate of its own.

‘No feedback’

However, from August 2018 to date, he said, trade unions are still waiting for further action in vain.

“We are still waiting, both on the proposed minimum wage rates and the ministerial order. The initial expectation was that the process would take maximum of one year after the law came into force,” he added.

But Manzi admitted that setting new minimum wage is something that requires wide consultations. “But the problem is that we don’t get feedback.”

“Our worry is that we could go up to 2030 with no new rates in place under the pretext of ‘continued consultations’. That’s a concern.”

Why minimum wages?

Minimum wages exist in most of the International Labour Organisation (ILO)’s member states. The purpose is to protect workers against unduly low pay.

According to the ILO, minimum wages help ensure a just and equitable share of the fruits of progress to all, and a minimum living wage to all who are employed and in need of such protection. Minimum wages can also be one element of a policy to overcome poverty and reduce inequality, including those between men and women.

Jordi-Michel Musoni, the president of the Energy, Water, and Sanitation Workers Union (SYPELGAZ), said minimum wages prevent the exploitation of desperate workers from employers.

For a long time, he said, the Government has boosted the private sector to enable the domestic and foreign investors to bring their capital into business and contribute to the country’s economy in many ways.

“But when there is no minimum wage, it is difficult to ensure that pay at least covers the minimum living needs like food, clothing and shelter.

“Secondly, minimum wages bridge the imbalance in social classes in ways that the middle class is more present and capable of spending in buying what the business market offers.”

Musoni said that minimum wages can also impact service delivery in ways that a worker who is able to meet the minimum living needs has the mind well set for productivity and better performance.

Pascal Habimana, 19, a security guard with one of the private security companies in Kigali, told The New Times that “life is a struggle” because he earns a paltry Rwf30, 000 per month.

He said he co-rents a one-room house in Remera, a Kigali suburb.

“We contribute Rwf10, 000 each for rent. We also share other expenses like food and other basics,” said the orphan.

Asked what minimum wage he would want, he thought for a moment and shook his head, saying: “I don’t think what I wish for is possible; but I wish the minimum I earned was Rwf50, 000 (a month).”

jkaruhanga@newtimesrwanda.com

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