Uganda’s Minimum Wage Bill: A case of an ectopic pregnancy?

Whilst the past three years have stretched governments’ resource envelopes worldwide, they have equally tested their capacity to innovate and re – evaluate policies and interventions in order to provide safety nets for the most vulnerable. 

This year alone, two East African member states – Kenya and Tanzania – have moved for an upward revision of their minimum wage thresholds; posting a 12  percent and 23.3 percent increase respectively. 

By increasing the minimum wage, Kenya’s President, Uhuru Kenyatta, premised his decision on the need to ‘…cushion our workers against further erosion of their purchasing power…’ Such developments bring me to the discussion of establishing a minimum wage in Uganda. 

As commodity prices and the cost of living soar in the country, I couldn’t help but reflect on Uganda’s journey towards instituting a minimum wage. What happened to the Minimum Wage Bill? Did we lose the ball just when we had the goal in sight? Have our priorities long moved on from the interests of the nation’s workers?  

Following the passing of the Minimum Wage Bill by Parliament in 2019, Arinaitwe Rwakajara stated that ‘People cannot dictate what they wish to be paid and therefore live at the mercy of their employers, something we set out to correct with this bill.’ 

This statement undoubtedly pointed out the power imbalance in employment relations – which, more often than not, breeds exploitation of workers, particularly in a country with high unemployment levels.  

The Bill, in its objective, aspires to rectify this anomaly by putting in place a mechanism for the determination of a minimum wage that is fair to both the employers and employees.

 Unfortunately, President Museveni did not assent to the Bill. Ultimately, the Ministry of Gender, Labour and Social Development was directed to review a report prepared by the Minimum Wages Advisory Board on the implications of fixing a minimum wage on investment and the economy. Close to three years later, the Ministry’s report is yet to be seen.  

But perhaps most important at this stage – when the discussion of establishing a minimum wage appears to have caught a cold – is revisiting the basics. What exactly is a minimum wage and what underpins its existence?

 According to the International Labour Organisation, a minimum wage is the minimum sum of money payable to a worker for work performed or services rendered within a given period.

 Uganda’s minimum wage currently stands at an obsolete 1984 value of Shs 6,000 – an amount that has since been devalued and doesn’t match the country’s cost and standard of living.  

Amongst the justifications presented for the establishment of a minimum wage is that it protects vulnerable workers from extreme levels of low pay, alleviates poverty through income redistribution, boosts workers’ productivity and fosters economic growth. Shouldn’t our policy makers therefore treat such a prospect with utmost urgency? 

Not when the prospect faces immense opposition. Opponents of the minimum wage have asserted that the arrangement would inevitably increase the cost of production and therefore likely foster unemployment; thereby proving counterproductive to its objectives. 

Far from it however, research has shown that by and large, introducing a minimum wage has small negative employment impacts or no statistically significant negative impacts. On the other hand, the link between fixing a minimum wage and poverty alleviation is undeniable. 

The point of concern, therefore, ceases to be whether we need a minimum wage but that we arrive at a figure that is fair to both employees and employers as the Bill aspires. 

This, without doubt, requires that all stakeholders, armed with evidence, come to a roundtable and arrive at a decision that’s amenable. 

Although establishing a minimum wage cannot singularly solve the country’s income inequality or poverty woes, it will, in the long run, serve as a cog in alleviating the same; and more importantly, ensure that workers get fair compensation for their labour.

Brian Kiira, Programme Officer - Business and Human Rights Initiative for Social and Economic Rights (ISER)