13 January 2013

Rwanda: Benefits of Fixing a Minimum Wage Are Obvious

The government, through the Ministry of Public Service and Labour in partnership with the National Institute of Statistics (NIS), is now putting together data to help it update its minimum wage as mandated by the law.

Currently, the national minimum wage is a paltry Rwf 100 per day, as stipulated in the 1974 Labour Law. Workers' Unions have described the figure as "exploitative", considering the economic realities on the ground today. Tea picking and construction industries are apparently the worst affected sectors of the labour market.

The benefits of fixing a minimum wage are obvious: it boosts employee morale, which in turn leads to increased productivity and affinity to the job. By boosting productivity, it is the employer that has the last laugh all the way to the bank.

That's one way of viewing it. Another way is that raising the minimum wage will mean more money to spend for employers, which every employer has a right to avoid. Indeed, critics of the new move are already pitting it to scare away potential investors and employers.

What, then, should the way forward be? The answer should be sought in balance. Who are the stakeholders involved? Government, employers, employees, and their respective Trade Unions. These stakeholders should together evaluate and arrive at a wage figure that seeks to not only protect workers from economic exploitation, but also to build a good master-servant relationship.

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