Trade unions urge review of salaries

Labour unions have urged the government to prioritize raising workers’ salaries to address the high cost of living before implementing proposed increases in pension contributions. Their reactions come amid the government’s proposed pension reforms that are due to take effect in January 2025. They include increasing monthly pension contributions from the current 6 per cent of an employee’s monthly basic salary to 12 per cent of their monthly gross salary. ALSO READ: Mandatory pension contributions to double in January Also, the pension contribution rate is expected to gradually increase further to 20 per cent of the employee’s gross salary by the year 2030, and will be split equally between the employer and employee, as Rwanda Social Security Board (RSSB) – the administrator of the mandatory pension scheme – indicated in a statement on November 28. According to the Ministry of Finance and Economic Planning, the reforms are expected to ensure long-term sustainability of the pension fund, improve the living conditions of the existing retirees and ensure social security for future generations. Labour unions expressed concern over a lack of consultation with workers’ representatives so that they provide inputs to proposed changes, instead of imposing them on employees – for which the pension scheme ideally exists – as contributors and ultimately beneficiaries. ALSO READ: Labour union appeals for pay rise amid high cost of living Africain Biraboneye, the General Secretary of Rwanda Workers’ Trade Union Confederation (CESTRAR) said that normally, increasing pension contribution rate per se is okay, as long as the employee is guaranteed more retirement benefits. “However, it comes when we have been indicating that there is a need for reforms for salaries to match prices on the market. Increasing [pension] contribution rate will result in the reduction of the even small pay an employee has been receiving, which will affect living conditions,” he said. “We think that it should be carefully considered with the participation of all stakeholders as it is done for labour law [review] whereby representatives of employers and employees are consulted and provide their inputs on their behalf,” he observed. ALSO READ: Should RSSB increase pension contributions? Eric Nzabandora, president of Labour Congress and Workers’ Brotherhood in Rwanda (COTRAF Rwanda) said that they have been advocating for setting up a minimum wage that responds to the current market realities but this has not yet been done. He added that while they have been pushing for increasing workers’ salaries to deal with the rise in the cost of living, no solution has been provided to that end. For Nzabandora, increasing pension contributions to come from the small remunerations an employee has been getting, should not be a priority, but rather, it should follow the raise in workers’ pay and their ability to meet their basic needs amid the current high cost of living. He held that it is an employee’s salary that is mainly factored in while determining the pension benefits they will get during retirement, rather than contribution rate. “When an employee’s salary is small, they will not get significant retirement benefits,” he said. As RSSB made many investments using employees’ contributions (savings), and therefore, Nzabandora said, it should show how they are managed and contribute to social security. He added that they want to understand how RSSB arrived at the proposed pension contribution rates. Labour unions concurred that there should be consultations with employees or their representatives for evidence-based decisions that consider a common ground. Employees should be involved in pension-related decisions Nzabandora decried the fact that workers’ representatives were not consulted regarding the proposed pension reforms yet they concern them as the contributors to the social security scheme. Again, he said, employees are not represented in terms of how RSSB makes investment decisions, despite paying contributions to the scheme. As employees contribute to the social security body, they should also have a say in the decisions regarding contributions – such as through their representatives – so that they provide their ideas before proposed changes are presented to Cabinet [for approval], Nzabandora suggested. While briefing journalists on new reforms on December 2, RSSB Chief Executive Officer Regis Rugemanshuro said that the social security fund (which is pension scheme dominated) currently has about Rwf2.6 trillion in assets. The social security fund is healthy, Rugemanshuro observed, indicating that from 2019/20 to 2023/24, RSSB’s net assets increased by 15 per cent compounded annual growth rate. He added that it registered more than Rwf418 billion in net income (profit) in 2023/24, of which he said Rwf240 billion came from its return on investment which he said was at 11 per cent. ALSO READ: Pension body looks to triple profit by 2025 According to Rugemanshuro, only nine per cent of public and private sector workers in Rwanda are covered by the mandatory pension scheme. This implies that about 90 per cent of Rwanda’s working population is employed in the informal sector and is therefore outside the scheme coverage.

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Trade unions urge review of salaries