Labour expert Herbert Jauch said with collective agreements continuing to conclude with wage increases below the inflation rate, workers are faced with a dire situation in terms of their real wages and purchasing power.
He was speaking on the eve of of Workers’ Day, which will be commemorated around the world on Monday.
“Not receiving even inflation adjustments on their already low salaries means that they and their families who depend on the workers’ incomes, slide deeper into poverty,” Jauch said.
Jauch said what makes matters worse is the fact that most Namibian workers are not covered by trade unions and collective bargaining. Currently, only four sectors have minimum wages in the country.
The security sector’s minimum wage is set at N$8,75 per hour for entry-level positions, while personnel who have been employed for two years or more are paid N$10 per hour. The rates in the construction sector vary depending on the category of workers. In agriculture, the minimum wage is set at N$4,62 per hour, with farmworkers also entitled to either food or N$500 for rations.
Domestic workers are paid a minimum of N$1 564.39 per month.
Due to the high unemployment rates and the desperation for jobs among most Namibians, Jauch says even the existing minimum wages for security guards, farm workers, domestic workers and construction workers are sometimes violated.
He says although these minimum wages are quite low (ranging from about N$8 to N$16 per hour), there are many reports of ruthless employers simply using workers’ desperation to pay them below the minimum wage.
“This shows how difficult it is for workers to just survive.”
He emphasised that this situation is particularly severe for workers in low paying jobs who were struggling to make ends meet long before the Covid-19 pandemic.
This means that the ideal of a living wage, as mentioned in Article 95 of the Constitution, is a mere pipe dream for most workers.
He warns that the consequences of this situation could be dire, with poverty and inequality on the rise.
“We need to address this issue urgently and take steps to ensure that all workers are paid a living wage, regardless of their job or sector,” Jauch emphasised.
Labour Resource and Research Institute (LaRRI) director Michael Akuupa has raised concerns about the impact of inflation rates, including those of borrowing, on Namibia’s citizens.
Akuupa said the middle class and low earners are being hit particularly hard, with wages and adjustments not being able to keep pace with inflation and rising debt costs.
“Wages and adjustments have not been able to cater for inflation and soaring debt costs. Where increments were made, it did not cater for upward moving inflation and rising interest rates.”
Akuupa said even civil servants have not had significant increments over a prolonged period of time, adding that the last 3% increment was not enough to counteract the impact of rising inflation and interest rates.
He highlighted that workers in smaller towns may be paid below sector minimum wages.
He noted that the construction sector, in particular, has not fully recovered from its crash 10 years ago, while enforcing compliance in the domestic sector is challenging due to its nature of operation.
Akuupa raised concern about Namibia still not having a national minimum wage, despite a commission set up to explore the possibility of implementing one in February 2021.
Akuupa has called on the government to provide subsidies on certain commodities to provide relief to Namibian workers.
Without intervention, Akuupa warns that the situation is likely to worsen, with more difficult times ahead for many citizens.
NATIONAL MINIMUM WAGE DELAYS
Meanwhile, the commission tasked with exploring the possibilities of a national minimum wage submitted its report to labour minister Utoni Nujoma on 25 March 2022.
According to acting executive director in the labour ministry Otniel Podewitz, Nujoma has thoroughly analysed and scrutinised the report, but still wants to conduct further consultations with social partners before submitting it to the Cabinet for endorsement.
“It should also be noted that Namibia has to comply with the international labour standards on minimum wage and other related instruments,” Podewitz said.
RIPPLE EFFECT
RisCura Consulting investment consultant Jesaya Hano-Oshike warns if wages fail to keep pace with rising inflation, it could result in a decline in the overall quality of life for Namibians and businesses struggling to maintain sales numbers.
“Unfortunately, if wages were to rise this would increase the input costs of businesses leading to another round of price hikes,” Hano-Oshike said.
To be profitable, the price of goods or a service provided needs to include the cost of running the business, which includes salaries. If salaries go up, so does the cost of running the business, he said.
“In order to remain profitable, the business may need to increase prices. If it happens to businesses across the economy, this will lead to an increase in overall prices,” Hano-Oshike said.
