Opinion
It is time for a FAIR minimum wage law

Everyone loves a public holiday and I’m no different. I mean, who doesn’t want a reason NOT to go to work? Call me lazy, but as you do so remember the old English adage, ‘don’t throw stones if you live in a glass house”.
Labour Day is a bit different for me though. It isn’t enough for me to loll in bed all day, waking up just to eat. I take some time out of my day to talk to the one person I employ, my househelp. Yesterday I asked her what the biggest issues the average worker had. It doesn’t take a genius to figure out what she said. “Wages”.
Mind you, before you lynch me, I believe that I am a good employer and pay decent wages. Especially when one considers what the going rate for domestic service is. But I think that in itself is the problem. Domestic workers on average receive about fifteen thousand francs a month. Fifteen. That is about the price of a bottle of good wine. And mind you, these men and women often work from dawn to dusk. I’ve asked colleagues at work what they pay their domestic workers, and I’m still to be bested when it comes to wages. I’m not blowing my own trumpet because, truth be told, I still feel quite sheepish whenever I hand over the money. I mean, how can someone possibly live on thirty thousand francs? That is what I call simple pocket money. But somehow she pays rent and utilities, buys food and airtime. All the while raising a young son. That is a miracle on par with turning water into win.
Why don’t I pay her more? Because I’m human and therefore inherently selfish, no matter what I tell myself. Enter the State. It is only the state that can act as a civilising factor. So, let’s look at what the Rwandan state says about wages; luckily for us the state sentiments are hidden in plain sight, in the Labour Code.
The present Code, which was passed by Parliament last year, states in Article 83 that ‘the interprofessional minimum wage is determined by a Decree issued by the Minister having Labour in his/her attributions after consultation with the employees and employers associations’. Guess what? This ministerial decree is still pending and therefore our minimum wage laws are still the ones that were used in Juvenal Habyarimana’s administration. Do you know what the minimum wage was then for someone older than nineteen years of age? One hundred francs a DAY. Sure things might have improved but, according to doingbusiness.org (an International Finance Corporation and World Bank online resource), the minimum monthly wage is $18.5 dollars. That’s absolutely peanuts and we should be ashamed of this.
We cannot create an equitable society if we don’t protect the very weakest. A proper minimum wage, that factors in inflation and cost of living, will allow everyone to live some semblance of the Rwandan dream. Sure, someone living on minimum wage will not afford to do all their shopping in Nakumatt but then, who can? A fair minimum wage will allow even the poorest to live in some dignity. It doesn’t make sense that someone who earns wages above half a million francs a month then goes home and pays their househelp a wage they cannot live on. How do you expect our lowliest workers to save a little money and improve their lots in life? It is cruel fact that some Rwandans are simply cursed to spend their days in some form of poverty. But this fact can and SHOULD change. Mr. Minister, sign into law a minimum wage decree that doesn’t make poverty a yoke that cannot be extricated. Fair wages for an honest day’s work I say.
Contact email: sunny.ntayombya[at]newtimes.co.rw Twitter: [at]sannykigali Blog: sunnyntayombya.wordpress.com
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Comments
Thanks for your article Sunny. Minimum wage is a very risky proposition and should not be argued in the abstract. Please allow me to comment here:My overall position is that a minimum wage is also likely to hurt the very people it aims to help. Furthermore, there are more effective and more efficient ways to distribute and allocate assistance to those in need. More importantly, it may affect the ability of lower-skilled workers to secure a job because employers will be reluctant to employ them if the minimum wage is higher than the value of what they can contribute. These workers would be denied the opportunity to work for a lower wage that reflects their skills and ability, even if they wish to. Furthermore, companies that are unable to pass on the additional wage cost may become uncompetitive and decide to move out of Rwanda, taking away jobs from Rwandans. Contrary to what Sunny believes, instead of helping low wage workers, a minimum wage may lead to a lose-lose-lose situation: for our economy, the company, and most importantly, the workers whom we are trying to help. Secondly, minimum wage legislation acts as a tax on employment. The minimum wage does not grow on trees: it is the employer who has to pay the top-up. Forcing an employer to pay more than the market rate for labour has the same effect on employer behaviour as a tax on every worker hired. Thirdly, Small businesses often work on thin margins and encounter difficulty during an economic downturn. What happens if their labour costs go up? Often neglected in debates on the minimum wage is the actual amount. If the minimum wage is set near the equilibrium wage for the poorest workers, there may be no effect on employment in the short term - but there may be no effect on living standards either! On the other hand, a significant increase in wages will make a big difference to the quality of life for those still employed, but the economic effects will be commensurately greater. It is therefore wrong for Sunny to mislead people by such a scary proposition. Research clearly indicates minimum wage does not specifically help the poor. Not all low-paying jobs go to poor families. Minimum wage legislation also applies to the child of a wealthy family doing a temporary job before going to university. Why should wealthy households benefit from a measure designed to help the poor? Additionally, it might lead to inflationary effects. What happens when companies, shops and restaurants have an additional tax levied on them? Some of the costs may be passed on to the consumer. So the cost of living will go up. Even the corner shop has to employ people: they, too, will become more expensive. We may end up back at square one, with the new cost of living exceeding what the old minimum wage can provide for. Do we then increase the minimum wage again? And what does this do to our overall economic competitiveness? There should be more debate on minimum wage if we are indeed serious about rapid economic transformation, instead of making such sweeping and uninformed comments. It is even scarier thinking that I never touched the EAC angle – we could be wiped out. The economic race has gotten tougher than ever before, and any slight miscalculation, Rwanda is effectively out of the game.I am sorry, Sunny, this is simply the harsh reality. You just can't have your cake and eat it too!
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Legislation does not change hearts and it will have to be enforced which will cost. You can be a leader by paying a fair wage to your employee and setting an example.
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