Tanzania: Govt Seeks UDSM Help On Minimum Pay

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The Citizen (Dar es Salaam)

22 July 2008
Posted to the web 22 July 2008

Samuel Kamndaya

The Government has sought the help of the Economic Research Bureau of the University of Dar es Salaam to design sustainable minimum wage levels for private sector employees. Employment and Youth Development Minister Juma Kapuya said yesterday that the move is aimed at designing wage structures that correspond with productivity in the sector.

"ERB are currently working on the job, and we hope they will be through by the end of August. The aim is to have wage structures that correspond with productivity of workers in a given industry," Prof Kapuya told the National Assembly here yesterday.

The Government has established private sector wage boards that work on instituting new minimum wages for the private sector. The wages were raised from Sh40,000 to Sh80,000 as a compromise, after a proposed higher increase sparked the threat of retrenchments in some industries.

Retrenchments and closure of some industries were halted as the minimum wage dropped from Sh150,000 to Sh80,000, thus enabling the Government to persist in claims that more and more jobs were being created. Prof Kapuya said the study being undertaken by ERB will also establish the effects of the new wages on the competitiveness of the private sector.

On a different note, he said the Government was contemplating to revoke plot number 906/4 in Mbezi, Dar es Salaam, from the ownership of the International Medical and Technological University (IMTU) and hand it over to the National Institute for Productivity (NIP).

Prof Kapuya said this in response to comments from the Opposition, which criticised the Government on Friday for transferring ownership of the plot from NIP to IMTU.

The opposition spokesperson for employment and youth development, Mr Salim Khalfani (Tumbe-CUF), insisted on Friday that it was meaningless for the Lands ministry to transfer ownership from NIP on the grounds that it has failed to develop the land and hand it over to another institution that has yet to develop it either.

He asked the Government to explain why IMTU had failed to pay the remaining Sh18 million to NIP to validate its ownership of the plot. The minister responded that the ministry has already written to the Ministry of Education and Vocational Training regarding the money, noting that IMTU was informed over the need to finish the payments.

Prof Kapuya noted that it made no sense that the ownership was revoked from NIP while the institute has already constructed at least a house on the plot and a fence. At the same time, in three years, IMTU is yet to construct anything on the plot. "My ministry will write the Lands Ministry so that the law can take its course," he said.

Late in 2007, the Government proclaimed statutory mininum wages for different sub-sectors of the economy.

These ranged from Sh 65,000 (about US$56) a month for domestic hands to 350,000 ($302) in the mining industry - with different packages in-between.

Under the Wage Order (Government Notice No. 223 of 2007), employers were also required to pay their workers fringe benefits.

These include leave allowance, leave travel assistance, transport allowance, meal allowance, housing allowance, out-of-station allowance, and in-transit allowance.

The new salaries, which were to be paid beginning on November 1, 2007, were intended to replace the Sh48,000 wage a month for urban-centred employees, and Sh 35,000 for workers in rural areas.

ollowing protests from some employers - mainly on the grounds that higher wages had not taken into account their operational budgets at the time implementation of the directive was pushed back to January 1, 2008.

The move did not solve the problems, but only postponed them, carrying them over like a bad debt or a bad dream. In fact, even before January ended, there already were protests, both verbal and physical by way of sit-ins, lockouts and demonstrations that were associated with the new wages.

Employees who sensed they were not going to be paid the new minimum wages openly expressed their misgivings. On the other hand, employers who felt they could not meet the new wages without going bust also demonstrated their misgivings.

A few retrenched staff and otherwise got rid of some of workers, while others threatened to close shop if they were forced to comply. Where does that leave the Government, employers and employees? Up a creek without a paddle, critics would say.

Did the directive mean that an employee who was already receiving a higher salary than the newly proclaimed minimum could/would face retrogression, made to fall back to the new scales as per statute? Reportedly, the new scales were arrived at by a team of experts in the field: sectoral wage boards. The processes, we are further told, were conducted in accordance with the latest legislation on labour/industrial relations, specifically, the Labour Institutions Act, No. 7 of 2004.

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