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Private sector wins battle on wage rise
2008-01-13 10:17:45
By Imani Lwinga
The private sector has won its battle against the government’s decision to raise the minimum wage for its employees, after Labour, Employment and Youth Development Minister John Chiligati agreed to trim down the earlier pronounced wage by almost a half.
The commercial, industrial and trading sector noted that the increase was over 300 per cent, putting Tanzanian wages well above those of direct competitors such as Kenya, China, Bangladesh and India.
With such a wage bill, the country would fail to attract global investors as locally manufactured goods and services like tourism would be priced out of local and international markets.
It warned that some businesses would be forced to close down and fuel unemployment and deepen income poverty.
They also pointed out that the increases in the minimum wage and electricity tariff raised production cost sand would make Tanzania less competitive in the world market.
A recent study by the Confederation of Tanzania Industries (CTI) shows the upward review of statutory minimum wage alone from 48,000/- to 150,000/- will eat away manufacturing industry’s unit selling price margins by between 73 per cent and 800 per cent respectively.
The government’s decision to reduce the minimum wage has come after a series of consultations with CTI. In their December 21 meeting, the two sides agreed to reduce the minimum wage from 150,000/- to 80,000/- for labour intensive and export-oriented industries.
CTI says the decision by the government would save a number of industries from closure, particularly textile industries.
Chiligati said the government reached the decision in order to rescue some of the industries that were in the danger of collapsing from the new wages.
With increased wages, it was expected that some businesses would lay off workers, while others would pass the increased cost to the end consumer.
Industries would be uncompetitive in the local and external markets and the inflation rate was bound to increase.
The government has been urged to widen consultative representation in fixing minimum wages by including CTI, TCCIA instead of TUICO and ATE alone.
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