Spotlight on fair living wage

Landmark discussions kicked off yesterday on the possible establishment of a national minimum wage to tackle high levels of income inequality and poverty.

The talks, hosted at the office of the labour commissioner, focused on a feasibility study commissioned with assistance from the International Labour Organisation (ILO) on a minimum wage for Namibian workers.

“The state is aware of the fact that the issue of minimum wages is not an easy topic, hence we do not expect an easy discussion,” labour ministry executive director Bro-Mathew Shinguadja said at the opening of the one-day workshop.

The study found that although poverty rates in Namibia fell dramatically, from 58% of households in 1993/1994 to 18% in 2015/2016, and the percentage of households in extreme poverty fell from 47% to 11%, the extreme poverty rate in 2015/16 was one percentage point higher than in 2010/11.

In 2015/16 about 6% of Namibians could not afford the minimum calorie requirement of 1 200 kilocalories per day and estimates suggest that three-quarters of Namibians cannot afford conventional housing.

Based on Namibia's 2014 decent work country profile, it is estimated that a third of employees in Namibia receive very low wages. The report found that more women than men earned low pay.

The study notes that poverty places limits on consumption as a driver of economic growth and includes a quote by economist Ha-Joon Chang, who said: “The best way to boost the economy is to redistribute wealth downward, as poorer people tend to spend a higher proportion of their income.”



One for all

Shinguadja said a national minimum wage would benefit the whole economy, and not only individuals and their families.

“The real socio-economic development of each country is dependent on how the workforce is treated, including remuneration for its labour force,” he pointed out.

According to him, a minimum wage helps countries to ensure fair competition and enhances productivity.

Furthermore, it creates certainty for workers, financial institutions and service providers alike and improves the state's tax base.

The ILO director for Zimbabwe and Namibia, Hopolang Phororo, said people often over-emphasise the negative effects of a national minimum wage on employment levels, but evidence shows the opposite.

She said a minimum wage ensures that all workers are paid fair wages and there is evidence of spill-over effects for other low-income brackets.

Crucially, a minimum wage can reduce poverty and income inequality among working families.

She said the ILO study provides evidence-based policy advice on minimum wages, public sector pay, wage bargaining and gender pay gaps.



A living wage

Tim Parkhouse of the Namibian Employers' Federation (NEF) said one of the questions was whether a national minimum wage would be affordable, especially considering the current state of the economy.

He said it was important to bear in mind that social benefit payments would trickle back into the economy.

Another consideration is not to set the minimum wage too low or too high.

Ultimately, Parkhouse said, the cost of living would play a role in determining a minimum wage.

The researchers who conducted the study in 2017 found that most respondents were in favour of a minimum wage, but felt that its likely impact on poverty reduction and unemployment should be investigated.

One of the most worrying findings of the research was a possible decrease in the number of domestic workers if a minimum wage was implemented.

JANA-MARI SMITH