Minimum Wages Series: Part 1
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Today we start a series on minimum wages with the aim of examining various fascets to the subject. Though this discussion applies to all countries, it best relates to the Zimbabwean Scenario.
A minimum wage is the lowest amount payable to employees for performing work. It is used as a social protection measure to cater for the employees’ basic needs.
The ILO advocates for the setting of minimum wages within member states through Convention No. 131 on Minimum Wage Fixing and the Minimum Wage Fixing Recommendation No 135.
The Committee of Experts on the Application of Conventions and Recommendations classifies the minimum wages into 4 broad categories which are shown in the diagram below:
In Zimbabwe, the first decade after independence was characterised by the fixing of minimum wages by the Government as was provided by the minimum wages act of 1980. Minimum wages were then announced annually on Worker’s Day.
This was later reversed with the inception of Economic Structural Adjustment Programme (ESAP) in the early 90s, which saw the labour market being liberalised.
Currently, minimum wages in Zimbabwe are determined at sectorial level through collective bargaining between employers’ associations and workers unions under National Employment Councils (NECs).
The Government, upon the advice of a tripartite Wages and Salaries Advisory Council, only fix minimum wages for domestic workers and unclassified industries which are not covered by NECs. Once set, the minimum wage will be legally binding across the entire sector.
Experiences of Other Countries
An examination of practices in some selected countries revealed that minimum wages varied according to occupation, age, geographical region and tenure of employment among other things. In most developing countries, the minimum wage does not apply to the informal sector which accounts for the majority of the employed persons.
The effectiveness of a minimum wage in developing countries thus depends mainly on the size of the country’s informal sector and the enforcement mechanisms of the minimum wage.
In practice, wages in most countries are set both nationally as well as at sectoral level. However the extent to which the wages are determined at national level and at sectoral level differs from country to country.
Examples of countries that set their minimum wages at sectorial level are: Denmark, Australia, Cyprus, Mozambique, Botswana, Zimbabwe, Lesotho and Zambia. Whilst countries that set minimum wages at national level include United States of America, United Kingdom, Belgium, Kenya, Albania and Algeria.
We start by examining countries whose wages are set nationally and then move on to those whose wages are set per sector.
In Mozambique, minimum wages are set at sectorial level for the eleven different economic sectors and ranges from 3 002 meticais ($59) a month for the public sector to 7 465 meticais ($146) a month in the financial sector.
Tripartite negotiations, where the three parties sit together for two months and negotiate the minimum wage as per sector determines the sectoral minimum wage. Confederação das Associações Económicas (Confederation of Business Association) - employers’ association of Mozambique is the single employers’ organization that sits in the tripartite commission.
As per Mozambique Labour Law 2007 (Law No. 23/2007), article 108 (5), the Government in consultation with Consultative Commission on Employment sets the national minimum wage to specific categories of employees.
In South Africa minimum wages are set at regional, sectoral and occupational/skill level though there is a recommended national minimum wage which is not mandatory. The recommended minimum wage in private sector is 2 474 Rand ($155) except for domestic and farm workers’ wages at 1500 Rand ($95).
A debate is currently underway in South Africa as to whether or not to fix minimum wages nationally. Advocates for national minimum wage argue that, a national minimum wage ensures uniformity and equity within the country whilst those opposing the notion bemoan the rigidity associated with national minimum wages and the possibility of massive job losses.
In Kenya, minimum wages are set by the government based on geographical location, age and level of skill. The lowest urban minimum wage was 11 995 shillings ($139) per month and the lowest agricultural minimum wage for unskilled employees was 4 854 shillings ($57) per month excluding allowances in 2015.
The Australian minimum wage system is based on awards. An award is a ruling handed down by the State Industrial Relations Commission which grants all wage earners in one industry or occupation the same minimum conditions of employment and wages. The process includes Enterprise Bargaining Agreements which are carried out at individual organisation level. Once established, the minimum wage would be legally binding on both employees and employers.
In the United States of America, The Federal minimum wage is $7.25 per hour. States can also set a minimum wage in which case the higher of the two will be adopted. Some territories are nevertheless exempt from the national minimum wage and have a lower wage rate.
Minimum wages vary with age in the United Kingdom though they are set at national level. For employees above 20 years, the minimum wage is £6.70 per hour ($10.16) whilst for those aged from 18 to 20 years £3.87 per hour ($5.87). For workers under the age of 18 years the minimum wage is £3.30 per hour ($5.00).
For China, minimum wages are specific to regions or provinces. There is no separate legislation on minimum wages though there are some provisions on the minimum wage promulgated by the Ministry of Labour and Social Security in 2003. The Ministry of Labour and Social Security, China Entrepreneur Association and the All-China Federation of Trade Unions are involved in setting minimum wages
Today we start a series on minimum wages with the aim of examining various fascets to the subject. Though this discussion applies to all countries, it best relates to the Zimbabwean Scenario.
The ILO advocates for the setting of minimum wages within member states through Convention No. 131 on Minimum Wage Fixing and the Minimum Wage Fixing Recommendation No 135.
The Committee of Experts on the Application of Conventions and Recommendations classifies the minimum wages into 4 broad categories which are shown in the diagram below:
In Zimbabwe, the first decade after independence was characterised by the fixing of minimum wages by the Government as was provided by the minimum wages act of 1980. Minimum wages were then announced annually on Worker’s Day.
This was later reversed with the inception of Economic Structural Adjustment Programme (ESAP) in the early 90s, which saw the labour market being liberalised.
Currently, minimum wages in Zimbabwe are determined at sectorial level through collective bargaining between employers’ associations and workers unions under National Employment Councils (NECs).
The Government, upon the advice of a tripartite Wages and Salaries Advisory Council, only fix minimum wages for domestic workers and unclassified industries which are not covered by NECs. Once set, the minimum wage will be legally binding across the entire sector.
Experiences of Other Countries
An examination of practices in some selected countries revealed that minimum wages varied according to occupation, age, geographical region and tenure of employment among other things. In most developing countries, the minimum wage does not apply to the informal sector which accounts for the majority of the employed persons.
The effectiveness of a minimum wage in developing countries thus depends mainly on the size of the country’s informal sector and the enforcement mechanisms of the minimum wage.
In practice, wages in most countries are set both nationally as well as at sectoral level. However the extent to which the wages are determined at national level and at sectoral level differs from country to country.
Examples of countries that set their minimum wages at sectorial level are: Denmark, Australia, Cyprus, Mozambique, Botswana, Zimbabwe, Lesotho and Zambia. Whilst countries that set minimum wages at national level include United States of America, United Kingdom, Belgium, Kenya, Albania and Algeria.
We start by examining countries whose wages are set nationally and then move on to those whose wages are set per sector.
In Mozambique, minimum wages are set at sectorial level for the eleven different economic sectors and ranges from 3 002 meticais ($59) a month for the public sector to 7 465 meticais ($146) a month in the financial sector.
Tripartite negotiations, where the three parties sit together for two months and negotiate the minimum wage as per sector determines the sectoral minimum wage. Confederação das Associações Económicas (Confederation of Business Association) - employers’ association of Mozambique is the single employers’ organization that sits in the tripartite commission.
As per Mozambique Labour Law 2007 (Law No. 23/2007), article 108 (5), the Government in consultation with Consultative Commission on Employment sets the national minimum wage to specific categories of employees.
In South Africa minimum wages are set at regional, sectoral and occupational/skill level though there is a recommended national minimum wage which is not mandatory. The recommended minimum wage in private sector is 2 474 Rand ($155) except for domestic and farm workers’ wages at 1500 Rand ($95).
A debate is currently underway in South Africa as to whether or not to fix minimum wages nationally. Advocates for national minimum wage argue that, a national minimum wage ensures uniformity and equity within the country whilst those opposing the notion bemoan the rigidity associated with national minimum wages and the possibility of massive job losses.
In Kenya, minimum wages are set by the government based on geographical location, age and level of skill. The lowest urban minimum wage was 11 995 shillings ($139) per month and the lowest agricultural minimum wage for unskilled employees was 4 854 shillings ($57) per month excluding allowances in 2015.
The Australian minimum wage system is based on awards. An award is a ruling handed down by the State Industrial Relations Commission which grants all wage earners in one industry or occupation the same minimum conditions of employment and wages. The process includes Enterprise Bargaining Agreements which are carried out at individual organisation level. Once established, the minimum wage would be legally binding on both employees and employers.
In the United States of America, The Federal minimum wage is $7.25 per hour. States can also set a minimum wage in which case the higher of the two will be adopted. Some territories are nevertheless exempt from the national minimum wage and have a lower wage rate.
Minimum wages vary with age in the United Kingdom though they are set at national level. For employees above 20 years, the minimum wage is £6.70 per hour ($10.16) whilst for those aged from 18 to 20 years £3.87 per hour ($5.87). For workers under the age of 18 years the minimum wage is £3.30 per hour ($5.00).
For China, minimum wages are specific to regions or provinces. There is no separate legislation on minimum wages though there are some provisions on the minimum wage promulgated by the Ministry of Labour and Social Security in 2003. The Ministry of Labour and Social Security, China Entrepreneur Association and the All-China Federation of Trade Unions are involved in setting minimum wages
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