Minimum wages in Africa, not a cure-all for poverty | Africa | DW | 08.10.2013
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Minimum wages in Africa, not a cure-all for poverty

40 percent of Africa's working population earn barely enough to survive. Many countries have reacted by introducing a minimum wage, with mixed results.

The sound of waves softly slapping against the shore, a white beach stretches into the distance. This is what lures thousands of tourists every year to the island of Zanzibar. They bring plenty of money with them. A double room in the Ndame Guest House on the island's east coast costs 80 euros ($109) a night in the high season. Many of the hotel's staff earn 65 euros - for a month's work.

That's the official miminum wage in Zanzibar. Parliament is currently considering whether to double the amount. The German manager of the Ndame Guest House, Sina Heidmann, shakes her head at this. She believes such an increase will result in jobs being cut. "The more money we pay, the more people we'll have to dismiss," Heidmann told DW.

Nevertheless, Heidmann admits that even though her employees' wages have doubled in the past three years as a result of increases in the minimum wage, business is still good.

Palm trees and a beach on the island of Zanzibar (dpa)

A minimum wage is offically in force on the island of Zanzibar

But, she adds, a minimum wage only makes sense if it is imposed everywhere. It's an open secret in Zanzibar that the officials responsible for checking such things are often corrupt, with the result that some rival businesses can ignore the law without being penalized. Another problem is the shadow economy which is not being kept in check and where laws also are disregarded.

Harsh reality

Not far away, Hamed Hassan Aboud sits in his new restaurant. His staff of six are all either friends or relatives. He profits from the fact that the state does not have the resources to check on all small businesses. "A minimum wage cannot function, especially not in a small village like this," Aboud says. "There are other costs too, like gas and electricity. A waiter can earn a maximum of 30 euros a month." Some of Aboud's staff earn only 25 euros a month, that's half the official minimum wage. Aboud says if the minimum wage were strictly imposed, many people would be out of a job. Many economists share this view.

For Barbara Riedmüller, however, this is just blatant propaganda against the minimum wage. A political scientist, she has spent several years studying the topic.

Hamed Hassan Aboud in his restaurant in Paje, Zanzibar (Photo: Adrian Kriesch)

Hamed Hassan Aboud says imposing a minimum wage would mean job cuts

She points to a recent study by a team at Berkley University in the US. Its analysis of the US labor market found that employers there did not react to the introduction of minimum wages by laying off staff.

"If we look back in history we see that, in general, achievements like regulated working hours and wages as well as social security safeguards for workers all had to be fought for," Riedmüller said in an interview with DW. In Africa, control mechanisms are often too weak. Workers' rights have generally not been institutionalized, the unions lack clout. "That's a problem in most African countries, with the exception of South Africa," Riedmüller said.

Indeed, South Africa can look back on a relatively long history of trade unionism. In the past the unions' power was particularly evident during pay negotiations in the mining sector. Lately, workers in other sectors have become more unionized.

The South African experience

At the end of 2012 farm workers in South Africa's Western Cape wine-growing region demonstrated for higher wages. After a farm owner fired shots at the protesters, the situation threatened to escalate. At the center of the dispute was the minimum wage. Workers were demanding a daily wage of 11 euros, some were taking home just under half that amount. "I have a wife and six children. How are we supposed to manage with so little money? People are starving with these wages," one demonstrator complained. Following the protests, the government raised the minimum wage to 7.50 euros, not least because of the pressure brought to bear by the unions.

Farm workers in a field in South Africa

South African farmers say they don't earn enough to make ends meet

"South Africa has the highest levels of inequality in the entire world," says Patrick Carvan, spokesman of the country's largest union federation COSATU. "Of course a minimum wage doesn't completely abolish those levels of inequality but it does give a big push to the bottom levels and it's a very important part of the struggle to create a more equal and fair society."

This view is shared by the International Labor Organization (ILO). It recommends that governments should consider carefully where a minimum wage should be pegged and adjust it regularly.

ILO gives Africa good marks

Although youth employment in South Africa stands at more than 50 percent, Benjamin Stanwix from Capetown University sees positive developments as the result of the introduction of a minimum wage in a number of sectors. It enables poorly qualified and poorly paid workers to improve their quality of life, he says. There are also societal pressures. "If everyone else in your region pays a minimum wage, then you are more likely to do so as well," Stanwix adds.

The pros and cons of having a minimum wage are a topic in many African countries. A general minimum wage has been introduced in about a third of countries on the continent, some two-thirds have minimum wages in certain sectors. This gives Africa a good position in international rankings, says the ILO.

However the organization warns that a minimum wage alone is not going to defeat poverty and inequality in developing countries. Additional measures are also needed such as improved social security systems.

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