Statutory instrument 81 of 2020 Gazetted recently by Public Service Labour and Social Welfare Minister Professor Paul Mavima set a minimum wage for Zimbabwean employees at ZWL$2549.74 (US$101.96 at the interbank rate) per month. The setting of the minimum wage as well as its timing were both met with disregard by business and employees.
Zimbabwe Confederation of Trade Unions President Peter Mutasa immediately shot out at the announcement criticising the amount. He cited the consumer basket and pointed out that in Zimbabwean dollars the minimum wage should more realistically be around ZWL$55000 (USD$400 at the interbank rate). The gulf is a wide one. Peter Mutasa also rightly called out the Minister for unilaterally declaring a minimum at a time when the nation was busy fighting with COVID-19, saying there were bigger priorities to deal with at the present moment such as health services and the care of health professionals at the frontline of this war. In addition, he bemoaned the fact that the ministry seems to have ignored negotiations that were ongoing about a minimum wage.
The statutory instrument did make exceptions for agricultural and domestic workers who we are informed separate arrangements will be made for. The instrument also allows for those businesses which are incapable of meeting the minimum wage to make applications to the ministry for a waiver of the minimum wage regulations in their business. With the size of the informal sector in Zimbabwe and the high unemployment rate, this news is but a drop in the ocean. The government can barely enforce existing laws let alone be ones. While the idea of the informal sector has people thinking of vendors and small micro-business owners there are a large number of people employed in informal businesses. Perhaps to add to the lack of importance of the announcement it is was done at a time when the nation is on lockdown and as Mr Mutasa noted the nation and the world at large have bigger concerns.
We’ve looked at the minimum wage at the interbank rate however the interbank rate has not done a good job of disturbing foreign currency in the nation. The parallel market has taken that role and though the market is currently in a state of disarray, using the last rate we had on a normal business day (42.5 on the 27th of March according to Zimrates.com)the minimum wage of ZWL$2549.78 equates to US$57.88. According to Mr Mutasa trade unions had been negotiating for a wage equivalent to US$230.
The nation is currently on a lockdown in the wake of COVID-19. With many businesses being forced to shut down for 21 days the effects of this lockdown on our citizens who largely earn hand to mouth has been clear to see. So much so the government has been forced to make about turns on the sale of alcohol, the fresh produce markets and international money transfer agents. While it has been fine all along for employees to earn meagre wages perhaps this period will have people thinking a little bit more about the importance of a living wage. There is, of course, no guarantee that if employees earned more all or any of them would indeed channel the extra income to savings and emergency funds. However, those who would’ve done so would certainly be in better positions during the lockdown period.
Business was also displeased with the minimum wage statutory instrument. Employers’ Confederation of Zimbabwe (Emcoz) president Israel Murefu weighed in saying the minimum wage would put pressure on businesses that were struggling economically as things stand. “While some sectors are able to pass on the cost to their customers there are some that may not be able to do that. These will experience severe hardships from a cost perspective and may need to apply for an exemption.” Murefu said.
Murefu said the confederation would’ve preferred a sector-specific minimum wage arrangement that would take into account the various complexities different industries are faced with. He too questioned the timing of the statutory instrument given the lockdown and the fact that it was as yet unclear how the nation would emerge from the lockdown and the COVID-19 pandemic.