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Picking Crumbs from the Master’s Table: How Minimum Wage Regulations have failed Protected Workers in Zambia Published by: Zambia Institute for Labour Research & Development (ZILARD) C/O Zambia Congress Of Trade Unions (ZCTU) Study commissioned by International Labour Organisation (ILO) Lusaka Office

Transcript of Master’s Table: How Minimum Wage Regulations have failed … › uploads › research_findings ›...

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Picking Crumbs from the Master’s Table: How Minimum Wage Regulations have failed Protected Workers in Zambia Published by: Zambia Institute for Labour Research & Development (ZILARD)

C/O Zambia Congress Of Trade Unions (ZCTU) Study commissioned by International Labour Organisation (ILO) Lusaka Office

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Table of Contents

Glossary of Terms ...................................................................................... 3

Executive Summary .................................................................................... 4

Acknowledgements ..................................................................................... 5

List of Acronyms ........................................................................................ 6

1.1 Introduction and Background .............................................................. 7

1.2 Objectives of the Study ..................................................................... 9

1.3 Contextual Setting, Contestations and Rationale .......................................... 9

1.4 Theoretical and Conceptual Framework .................................................... 10

1.5 Zambian Socio-Economic Context ........................................................... 12

1.6 Minimum Wage Legislative Framework in Zambia ......................................... 13

2. Methodological Approach ......................................................................... 15

2.1 Research Methods .............................................................................. 15

2.2 Study Sites and Selection of Participants ................................................... 15

2.3 Data processing and analysis - Quantitative ............................................... 15

2.4 Data processing and analysis - Qualitative ................................................. 15

2.5 Limitations of the study ....................................................................... 15

3. Main Findings of the Study ........................................................................ 16

3.1 Knowledge and perspectives by workers on minimum wages ........................... 16

3.1.2 Shop Workers .............................................................................. 20

3.2 Compliance to Minimum wage regulations ................................................. 28

3.3 Scope of coverage of Minimum Wage Regulations ......................................... 29

3.4 Consultative Structures on Minimum Wages ............................................... 29

3.5 Factors Determining Minimum Wages ....................................................... 29

4. Summary and Recommendations ................................................................. 30

4.1 Summary ........................................................................................ 30

4.2 Recommendations.............................................................................. 30

4.2.1 Implementation & Monitoring ........................................................... 30

4.2.2 Compliance of in implementation of minimum wage ................................ 30

4.2.3 Advocating for a National Living Wage................................................. 31

4.2.4 Capacity Building of Employers ......................................................... 31

4.2.5 Knowledge and Awareness among Workers ........................................... 31

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4.2.6 Data Collection and Information Support Systems ................................... 31

4.2.7 National or/and Sectoral Minimum Wage.............................................. 31

4.2.8 Strengthening the Consultative Processes ............................................. 31

References ............................................................................................. 32

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Glossary of Terms

Average wage: this is the typical wage or salary paid to workers in an occupation or industry. The average is calculated by adding up all the wages or salaries of people working in the position and then dividing that sum by the number of people working in the position. The amount received is the average salary. Minimum wage: this is the lowest level of pay established through a minimum wage fixing system which is guaranteed by law. Median minimum wage: is the median of all the minimum wages in an occupation or an industry. Living wage: it is the level of wages that allows workers to meet their own as well as dependents‟ needs. Furthermore, a living wage must satisfy more than the basic survival in terms of food, housing and clothing needs and also make provision for participation in a country‟s social and cultural life. Poverty line: is a measure used to separate the poor and the not poor. Statistics South Africa calculates the poverty line by determining the food and non-food items that are essential for daily survival. Gini coefficient: is a measurement of the national income distribution of a country‟s residents. This number, which ranges between 0 and 1 and is based on residents‟ net income, helps define the gap between the rich and the poor, with 0 representing perfect equality and 1 representing perfect inequality.

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Executive Summary Zambia has experienced years of high economic growth rates and investment. Although inflation has been brought under control, living costs continue to rise steadily. The country‟s good economic growth rates have not been matched by job creation or poverty reduction, largely because the growth have been driven by investments in mining industries and higher copper prices, which create few jobs compared to investments. High rates of unemployment, underemployment and especially youth unemployment continue are now endemic. The country has also failed to recover from the effects of liberalization, privatization, heavy borrowing. The influx of foreign investors has been unfriendly to workers, and trade union organisation remains undermined. There has been deterioration of conditions of work with the private sector preferring casual and short-term contract staff that tends to provide cheaper labour. The predominantly informal nature of the labour market presents a major challenge to the extension of social protection coverage. The existing health care system is also unbalanced in both expenditure and service delivery.

The debate on minimum wage has focused for many years on the impact of introducing and raising minimum wages on the labour market. The impact of minimum wages on the labour market has consistently attracted a large amount of attention around the world, Zambia inclusive. While minimum wage is widely contested at both academic and political levels, little attention has been devoted to understanding various mechanisms that might be effective in minimum wage setting and achieving compliance.

In view of the foregoing, the broad research question for this study was: how can we understand the various implementation mechanisms that might be effective in minimum wage setting and achieving compliance? Specifically, the study addresses the following areas of inquiry: knowledge and perceptions of workers on minimum wage; compliance to minimum wage regulations; scope of coverage of minimum wage regulation; consultative structure and factors determining minimum wages.

The research methods combined both qualitative and quantitative techniques. Both secondary and primary data (direct from the domestic workers, bus drivers, shop workers and other stakeholders such as Ministry of Labour, ZCTU, ZFE) was collected through fieldwork and a desk based literature review including review of the various policy papers and relevant documents published by national or international agencies or research institutions. The study sites included 3 bus stations, 3 markets and 12 different townships and compounds within Lusaka. The main quantitative method was based on a target representative household/community survey of 498 respondents. A total of 10 key informant interviews were conducted from Ministry of Labour, NAPSA, ZFE and ZCTU.

The study established that workers have limited knowledge of the current statutory minimum wage setting. The scope of the minimum wage is narrow and limited, the consultative structures remain weak; factors in the determination of the minimum wage are irregular. The study advocates for a national minimum wage that is comprehensive in coverage. The report also asserts in the main that in order to meet the necessity of a minimum wage and abandon the low wage economy, Zambia as a country should revisit the persistent export-oriented mineral dependent structural rigidity economic production system and raise the levels of investment in the productive sectors of the economy.

The study concludes by providing some recommendations on: grounded on persuasion approaches, workers‟ empowerment, sanction options, establishment of sectoral minimum wage, capacity building measures, and establishment of wages commission as effective and efficient mechanisms in minimum wage setting and achieving compliance.

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Acknowledgements This is a maiden study that was conducted by the Zambia Institute for Research &

Development (ZILARD). It was commissioned by the International Labour Organisation

(ILO), Lusaka Office, Zambia. The study was executed by Prof. Trywell Kalusopa, Mr.

Boniface Phiri and Mr. Edward Chibwili. We would like to thank the Zambia Congress of

Trade Unions (ZCTU) Secretary General, Mr. Cosmas Mukuka for the political guidance.

The workers that participated in the study as well as the research assistants are also

acknowledged.

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List of Acronyms

CSO Central Statistical Office

GDP Gross Domestic Product

ILO International Labour Organisation

MLSS Ministry of Labour and Social Security NAPSA National Pension Scheme Authority SADC Southern African Development Community

SAPs Structural Adjustment Programs

UNDP United Nations Development Programme ZCTU Zambia Congress of Trade Unions ZFE Zambia Federation of Employers

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1.1 Introduction and Background For many years, the debate on minimum wage regulations has focused on the impact of introducing and raising minimum wages on the labour market. The impact of minimum wages on the labour market has consistently attracted a large amount of attention around the world, Zambia inclusive. Most empirical studies seem to fairly and uniformly point to the existence of small negative effects of higher minimum wages on employment and unemployment. In fact, Minimum wage is one of the most used tools for affecting the wage distribution on the labour market. It is believed that minimum wage is provided by law in 90% of the world‟s countries. Nonetheless, across countries, its implementation varies in both approach and effectiveness. Current evidence indicates that approximately half of ILO member states with minimum wage systems have national minimum wages; while the other half has differentiated minima. Studies also show that setting a minimum wage as a matter of policy is a contentious political issue and object of contestation among the government, trade unions and employers organizations owing to its potential redistributive effect. According to ILO, minimum wage is defined as “the minimum sum payable to a worker for work performed or services rendered, within a given period such as hourly, daily or monthly rate which may not be reduced either by individual or collective agreement (and) which is guaranteed by law”. According to the ILO Convention No. 131, the primary purpose of such a minimum wage is to provide protection for wage earners against “unduly low wages”. Accordingly, a minimum wage aims to set a floor to the distribution of wages, below which no worker can legally be paid. Moreover, the “fundamental purpose of minimum wage fixing should be to give wage earners necessary social protection” (ILO 2014). More recently the ILO has stressed the importance of “adequate protection in accordance with the Decent Work Agenda” and noted that for a minimum wage to be “meaningful” it must “be set at a level that covers the needs of workers and their families, while taking into account economic factors” (ILO 2015). Therefore, as observed in this study and elsewhere, minimum wages are also a means through which to reduce inequality and encourage labour productivity. Stark statistics and reality points to the fact that low wages are a prime contributor to poverty and breeds misery for large sections of the working class – referred to as the working poor. It is thus instructive to state that the primary goal of any minimum wage policy is to increase the incomes of those at the very bottom of the wage scale through a distribution of national income. According to several studies conducted around the world, the policy tries to ensure that every worker is paid at a level of income that enables him or her to maintain a minimum living standard above the bare subsistence level that employers are keen to maintain. A minimum wage is thus generally seen as a way to dealing with poverty unravelled by the capitalist production system which it is unable to deal with. The policy also tackles income inequality as wages and salaries are the main components of income. Thus wage compression will reduce the gap between those at the top and bottom of the wage scale as it will lift the wage of those at the very bottom. Thus in a social dialogue, government, employers and trade unions should in a tripartite be concerned about a minimum wage policy that would hopefully reduce industrial and social unrest. The minimum wage ensures that everyone benefits from the success they work together to achieve and provides decent wages, especially in industries where previously low wages were common. The minimum wage ensures that work is valued properly, shows employees recognition for their performance, and lays the foundation for continued prosperity and success in individual countries while strengthening social cohesion. This is important because when we do not appreciate work, we undermine our common foundations Minimum wage “regimes can be established on the basis of multiple minima, differentiated by sector, region and/or occupation; on the basis of one national minimum

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wage that applies across the broad; or with some combination of the two…set by either government decree or through engagements between the social partners, or a combination of both” (Isaacs, 2016:1). Zambia does not have a national minimum wage regulation but sectoral minimum wage regulations that are determined by the Minister of Labour from time to time. The current minimum wage rates were reviewed in 2012 amid an outcry from the Zambia Federation of Employers (ZFE) who considered the action of the Minister to review minimum wages with limited consultations as having been done in bad faith and would possibly lead to job losses. This outcry and argument is not new. Many employers around the world argue that the introduction of a minimum wage would have a negative effect on employment levels in that if wage costs are “unreasonably” increased, employers will be forced to reduce the number of workers employed due to higher labour costs. It is also argued that increase in the minimum wage will rapidly increase inflation. Further, they argue that increases in the real value of a minimum wage will be an artificially set the price of labour above its value thus lowering levels of productivity. However, research elsewhere in the world does not support this. Minimum wages do not aim to raise employment levels – for that, other policies are needed – but a national minimum wage can be implemented without significant employment effects. These findings are supported by an extensive international literature, showing the success of minimum wages in reducing poverty and inequality without negative employment impacts. It is evident that if statistical modelling was undertaken for Zambia, the results would not be different. This evidence “confirms the logical assumption that firms and the economy adjust to higher wage costs through a variety of mechanisms and that higher wages – particularly for low-income households – can spur a positive growth- and output-enhancing demand stimulus”. (Isaacs, 2016:ii). This therefore aimed to build a case about minimum wage regulations in Zambia in order to mobilise support around the need for inclusive participation of tripartite partners and ensure regular review or indexing of minimum wages to protect incomes of vulnerable and protected workers. The International Labour Organization (ILO) and several minimum wage experts prefer a single national minimum wage because it (Isaacs, 2016:1):

covers all workers;

is easier to enforce and enjoys higher compliance;

benefits all workers equally (while sectoral minima have been shown to

discriminate against vulnerable groups such as women and youth);

can be set to serve broader policy objectives such as the reduction of poverty

and inequality;

can be set to take account of workers‟ needs and macroeconomic growth; and

impacts, not only narrow sectoral considerations.

Zambia ratified the ILO Minimum Wage Convention 131 of 1970 in 1972 and the Convention is in force. The Convention is domesticated through the Minimum Wages and Conditions of Employment Act Cap 276 of the Laws of Zambia. The Act empowers the Minister of Labour to review minimum wages from time to time. Minimum wages only cover shop workers, domestic workers, and General Workers implying that a large part of the work force is not covered by minimum wages.

It is also true that Zambia is characterised by a huge informal economy implying that the majority of workers are vulnerable and subjected to poor working conditions that perpetuate the triple challenge of high poverty, inequality and unemployment. Due to the huge informal economy, social protection coverage is also narrow, mainly covering workers who are in formal employment.

Earlier assessments have shown that despite providing for minimum wage determination,

the Minimum Wage Act does not provide for regular review and this has been fraught with

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minimum wages determined by Minister of Labour from time to time with limited

consultations with labour organisations. There have also been concerns regarding the

narrow coverage of minimum wage orders, which are limited only to shop workers,

domestic workers, and General Workers. Yet the labour market has wider dimension that

includes exploited workers in agriculture, construction, etc. Thus domestication over the

years has not been realised and workers continue to bear the full brunt of neo-liberalism

reducing them to unemployment inequality and poverty.

This report is divided into four main sections. Section one provides the background on the

minimum wage, objectives of the study, ccontextual setting, contestations and rationale;

The theoretical and conceptual framework; Zambian socio-economic context; minimum

wage legislative framework in Zambia is presented. Section two outlines the methodology

approach indicating the research methods, study sites, selection of participants, data

collection, processing, analysis and limitations of the study. Section three presents the

main findings. The summary and recommendations are discussed in Section four.

1.2 Objectives of the Study

The main overarching question that prompted this study is that despite Zambia being

signatory to the ILO Minimum Wage Conventions and minimum wage regulations being in

place, wage levels in Zambia remain low while poverty, inequality and unemployment

continue to rise.

The specific objectives of the study were to:

Review how the minimum wage regulations have evolved in Zambia

Examine how the Minimum Wage Act can provide for regular review of minimum

wages.

Examine how an effective system/structure can be established that will ensure

regular review of minimum wages.

Establish how the scope of coverage of minimum wages can be expanded beyond

shop workers, domestic workers, and General Workers.

Analyse how the huge informal economy can leverage on Minimum Wage.

regulations to address the triple challenge of unemployment, poverty and

inequality.

Establish how minimum wage regulations can be an avenue for extending social

protection coverage to the informal economy.

Propose recommendation on how the minimum wage can implemented effectively.

1.3 Contextual Setting, Contestations and Rationale There are some on-going controversies about minimum wage as a matter of policy in Zambia. The popular perception is that despite Zambia being signatory to the ILO Minimum Wage Conventions and minimum wage regulations being in place, wage levels in Zambia remain low while poverty, inequality and unemployment continue to rise. Domestication of these conventions over the years, has not been realized and workers continue to bear the full harsh reducing them to unemployment, inequality and poverty. Zambia being characterised by a huge informal economy underscores the need for effective minimum wage regulations that would limit the exploitation of workers. Some studies conducted in other developing countries and industrialized countries report that the presence of legal provisions for minimum wage does not guarantee that it will actually

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protect the workforce. The findings suggest that the minimum wage needs further implementation mechanisms besides the traditional legislative top – down approach in order to serve as a useful and legitimate instrument of labour market regulation.

The need for minimum wage regulations cannot be overemphasized considering the large and growing informal economy and widespread irregular employment. Thus there is need for effective and efficient processes, procedures and systems to be put in place for wage determination in Zambia, particularly for the protection of informal sector workers who constitute the large majority of workers. The underlying regulation in this regard is the minimum wage Act Cap 276 of the laws of Zambia. Analysis of this regulation and the institutional arrangements in order to determine the extent to which minimum wage regulations are applied in Zambia is important in order to appreciate their relevance and far reaching implications of their applicability.

It had constantly been argued that wage levels for workers in the informal economy were not in tandem with increases in the cost of living. But in contrast it had also been acknowledged that a Minimum Wages Act was a guiding tool that circumvented exploitation of workers by employers.

On the other hand, it was observed that revision of minimum wage rates usually resulted into discontent either from employers‟ organizations or from employees‟ organizations depending on the extent of the review. Thus, it is necessary to analyze the extent to which consultations were undertaken to understand why such discontents were persistent. It was also noted that despite minimum wage regulations being in place, conditions of service for some workers covered by collective bargaining agreements were poorer than the conditions prescribed in minimum wage regulations. In this regard, it is also pertinent to analyze why some conditions of service remained below provisions of minimum wage regulations. It is also important, therefore, to identify underlying factors contributing to irregular review of minimum wage rates.

In view of the foregoing, the broad research question for this study was “how can we understand the various implementation mechanisms that might be effective in minimum wage setting and achieving compliance. Specifically, the study was to look at the following areas of inquiry:

• Knowledge and perceptions on minimum wage. • Compliance to minimum wage regulations. • Scope of coverage of minimum wage regulations. • Consultative structures • Minimum wage setting. • Challenges and limitations faced in extending social protection coverage to the informal sector

The study will make recommendations on policy options that may help in minimum wage setting and identifying effective mechanisms.

1.4 Theoretical and Conceptual Framework Theories of development emphasise the need for economic growth to have a direct and positive link to the wellbeing of people in society. The purpose of economic growth is to translate into improved welfare of the people in society. It is in this regard that Amartya Sen, the 1998 Nobel Laureate in economics, argues that

“….economic growth cannot be sensibly treated as an end in itself”.....and that.....”development has to be more concerned with enhancing the lives we lead and the freedoms we enjoy” (Michael P. Todaro; 2008).

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Therefore, for economic growth to translate into improved well-being of the people, effective and well targeted redistributive policies must be instituted and implemented. Such policies must aim to address income inequalities by ensuring inclusive growth. It is acknowledged that poverty eradication is not merely a question of pushing for more welfare grants, but of raising the levels of work security, income security, and social security for the working poor who are situated both in the formal and informal economy. The poor should be provided with capacities to work themselves out of poverty by enhancing their participation in the economy so that they contribute as well as benefit from economic growth. The main challenge in this regard is to ensure that the working poor are accorded the opportunity to participate in economic production as well as benefit from the work of their labour. To ensure a fair share of the gains from economic production between employers and workers, minimum wage regulations are some of the effective policies and mechanisms to ensure shared gains.

The International Labour Organization and many labour economists believe that „labour force‟ should not be considered as a production input and the income of the workforce must not be set by the outcome of supply and demand in the labour market, because the welfare of human beings is the ultimate goal of economic growth and development (ILO; 2011). In this regard, labour should not be regarded as a „commodity‟. Economic systems must guarantee living wages for decent work. Minimum wage legislation is one of a number of important mechanisms used to support workers against the risk of absolute poverty caused by market wages. For years trade unions have maintained that labour is not a commodity but rather an

asset. Workers create wealth and that work is basis of life and an expression of that life.

Labour cannot therefore just be sold at what main stream neo-liberal economists would

call a price as basis for its value. Many organic labour scholars and activists will argue that

the premise of this still holds in that the expansion of capital or the valorization of capital

(where value is actually formed in the production process) comes from the relationship of

the workers (labour) to the commodities they produce or the service they provide. This is

so because capital does not expand of its own accord. It requires human intervention to

do so, through the forms of labour. This is true even in the cases such as the current

emerging complex and abstract financial transactions and formations in capital that allows

for investment with the promise of future profits and interest payments1.

Therefore, our paradigm recognizes the fact that the historical and systemic imbalanced

production systems driven largely by capitalist interests still persist in Zambia. It also

implies both formal and informal workers are trapped and embedded in vicious systemic

and structural rigidities in the global production systems. In that regard, the minimum

wage should be seen within the context of what other scholars have called the “structural

transformative social policy” conceptual framework. This framework can be used to

underscore a normative approach (of equality and solidarity) and cuts across production,

protection, reproduction, redistribution and social cohesion functions when dealing with

minimum wage determination. The recognition is that the minimum wage is an integral

part of the structural socio-economic policy spectrum. Thus, ideally, given the mass based

poverty and social deficits in Zambia, it will require an active socio-economic production

systems that reduces poverty, contributes to asset redistribution to address the underlying

structural basis of poverty and social exclusion.

1 See more by Simon Hardy at: http://marxisttheory.org/battle-of-ideas/

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In this context, this report stresses the need for a comprehensive thinking that sees the

minimum wage as part of holistic paradigm shift that recognises a broader and tactical

disengagement from deepened neo-liberal globalisation and the re-engagement of the

global partnership that recognises the role of the developmental State. The study also

reiterates the fact that minimum wage setting must not be driven by the promotion of a

capitalist agenda that reinforces enclave forms of resource exploitation and allocation

that only perpetuates underdevelopment and poverty.

In addition, central to this analysis is an understanding of the distribution of power. As

observed by other scholars, the relative holding power of different groups and

organizations contesting the distribution of resources underscore how the minimum wage

setting is driven. Khan (2010) aptly alludes to this and asserts that “holding power is partly

based on income and wealth but also on historically rooted capacities of different groups

to organize...a political settlement emerges when the distribution of benefits supported

by its institutions is consistent with the distribution of power in society, and the economic

and political outcomes of these institutions are sustainable over time”. This report adopts

the combination of these theoretical and conceptual perspectives in discussing the search

for effective mechanisms that would guarantee the minimum wage a tool for reducing

inequality and poverty in Zambia.

1.5 Zambian Socio-Economic Context Zambia was reclassified by the World Bank as a lower middle income country in 2011 after posting consistent economic growth of more than 6 per cent per year since 1999. Zambia lost the middle income status in the mid-1970s following the global economic crisis emanating from the oil supply shock of 1972 following the Israeli-Arab war. Being a copper mining and exporting economy (that still accounts for about 75% of total export earnings to date), the copper price collapse in 1975 triggered an economic crisis that resulted in debt crisis in the 1980s and culminated into the change of government in 1991. The new government in 1991 embarked upon far-reaching socio-economic and structural reforms under the support of the IMF, World Bank and other bilateral donors to help the country achieve macroeconomic stability through market liberalization and privatization programs – that for the first time in a generation resulted in single digit inflation being recorded from 2006. The results of these reforms have been mixed but one major outcome has been the fact that since the privatization of the mining industry was completed in 1999/2000 fiscal year, the economy has to-date posted positive economic growth upwards of 6% (at 2010 prices) up to 2014 and then at about 3% per year since then. The other effect has been that much of that growth has not been accompanied by structural transformation nor an increase in the economy‟s capacity to create decent job opportunities to absorb the ever increasing labour force – with the informal economy still accounting for about 84% of the labour force in 2014. Zambia has high rates of unemployment, youth unemployment, and underemployment. It indicates considerably deficits in employment creation. The latest estimation from 2017 of unemployment rate was at 11.9% of the labour force. Unemployment was much more common in urban areas than in rural. There are slightly less men than women as unemployed. The youth unemployment is quite high at 16.3%. Of this age group, men have a higher unemployment rate than women. Urban youth unemployment is a large problem. As with most other African countries, the formal sector in Zambia grows too slowly to absorb the estimated more than 300,000 young people entering the labour market each year. Therefore, many end up in precarious and informal jobs. The unemployed youth also create political and economic tensions. Underemployment is also

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very high. Much underemployment is due to seasonal changes in rural activity, but underemployment was also high in urban areas. The scope of coverage of Social Protection is quite limited in Zambia. The predominantly informal nature of the labour market presents a major challenge to the extension of social protection coverage. The existing health care system is unbalanced in both expenditure and service delivery. The government has to some degree removed the payment of user-fees in rural areas for primary care. This has led to 50% increase in the use of medical facilities in these areas. The government has scaled up its provision of Antiretroviral Treatment (ART) in public institutions at a highly subsidized cost.

The structure of the Zambian economy in 2015 (see figure 1-3) is dominated by services with wholesale and retail trade contributing 18.4 percent; community, social and personal services 16%; construction 13 percent; financial services 12%; transport, storage and communications 10%; mining and quarrying 10 percent; agriculture, forestry and fisheries 10 percent; manufacturing 8 percent2; etc. Economic growth has been concentrated in capital-intensive industries such as construction, mining, financial services and transport. It has largely by-passed the majoity of Zambians who subsist on agricultural and survivalist urban informal economy activities. Accordingly, the 2015 Living Conditions and Monitoring Survey (LCMS 2015) results show national headcount poverty rate at 54.4% and extreme poverty at 40.8%. For rural areas head count poverty was estimated at 76.7%.3 Figure 1-3: Structure of Real GDP by Sectoral Contribution, 2015

Source: Zambia Human Development Report, 2016

1.6 Minimum Wage Legislative Framework in Zambia Minimum wages are the lowest statutory level of remuneration permitted. Setting the minimum wage is, therefore, part of Government‟s responsibility to ensure economically acceptable employment standards for categories of workers who are vulnerable to exploitation. In the case of Zambia, this responsibility is provided for in the Minimum Wages and Conditions of Service Act, Cap 276 of 1997. Section three of this law grants powers to the Minister of Labour to prescribe wages and conditions of employment for

2CSO (Central Statistical Office). 2014. Living Conditions Monitoring Survey. Ministry of Finance and National Planning: Lusaka. 3 See http://www.zamstats.gov.zm/report/Lcms/LCMS%202015%20Summary%20Report.pdf (visited 30

January 2017).

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vulnerable workers whose wages are constrained by the excessive market power of employers. In this view, the Minister of Labour has been setting minimum wages for vulnerable workers4 through issuance of Statutory Instruments. Initially, this started with general workers. In recent years, the categories of vulnerable workers covered under minimum wages had been expanded to include shop and “domestic workers”5. Thus, the review of minimum wages in 2012 also came with the introduction of a minimum wage order for domestic workers.

In practice, the Minister of Labour usually undertakes some consultations with tripartite partners before reviewing minimum wages. However, the extent and relevance of such consultations had always been put to question considering that the Minister had exclusive powers to review minimum wages.

Analysis of the TCLC Technical Committee Report6 (2012) on minimum wages shows that the consultative process for setting minimum wages has been inadequate and usually resulting in dissatisfaction either from the employers‟ organisation or the workers organisation. In emphasizing the need for consultations, the report states that:

“………, the challenge has been that the provisions of the SIs have not been comprehensive enough to cover all occupations and industries while on the other hand their revision has been irregular. In addition, the method used to arrive at the figures for the minimum wages has not been clear to all stakeholders while the process has also not been seen to be consultative” (Sector Based Minimum Wage Report, 2012).

Further analysis of the report gives the impression that the mechanism and process of minimum wage setting in Zambia brings about unique challenges. This is in line with the commitment made by government to resolve all issues concerning minimum wage setting to ensure that wages reflect the economic needs of workers as well as taking the interests of employers into account. The report shows that the Tripartite Consultative Labour Council resolved and agreed to introduce sectoral minimum wages unlike the current minimum wage framework that only covers shop workers, domestic workers and general workers.

On the other hand, a policy paper on socioeconomic issues from the Zambia Congress of Trade Unions (ZCTU) showed a number of concerns and suggestions on how to address challenges of minimum wage setting and enforcement (ZCTU; 2012). Some of the issues the policy paper identified and outlined included the challenge to ensure compliance from the employers, weak labour legislations and lack of capacity by the Ministry of Labour to enforce the regulations. In general, the study shows that the regulatory framework for minimum wages are weak and do not provide for adequate consultations with stakeholders. As earlier stated, the Minimum wage Act empowered the Minister of Labour to issue Statutory Instruments to review minimum wages. To what extent the Minister consulted with stakeholders remained a matter of debate because the minimum wage law did not compel the Minister

4 Vulnerable workers in this case refer to workers who are not capable of negotiating their employment contracts and have no union representation. 5 Under this regulation, domestic work constitutes any kind of work performed in a household. This could

include general cleaning, gardening, and driving, among others. Thus, a domestic worker was defined as any person who performed any of the household duties under an employment relationship. 6 The Technical Committee Report of 2012 on minimum wages was presented to the TCLC of 21 December 2012. The report was compiled by a technical team that constituted representatives from the government, employers and unions.

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to consult. Such lack of clear guidelines and consultative structures more often resulted in conflict of interest among tripartite partners whenever minimum wages were revised.

2. Methodological Approach The research methods, study sites, selection of participants, data collection, processing, analysis and limitations of the study are discussed below.

2.1 Research Methods

The methodology combined both qualitative and quantitative techniques. Both secondary and primary data (direct from the domestic workers, bus drivers, shop workers and other stakeholders) was collected through fieldwork and a desk based literature review including review of the various policy papers, relevant documents published by national or international agencies or research institutions; peer- reviewed journal articles, policy documents of governments and other international agencies as well as relevant project reports from other cooperating partners.

2.2 Study Sites and Selection of Participants

The study sites included 3 bus stations, 3 markets and 12 different townships and compounds within Lusaka. The main quantitative method was based on a target representative household/community survey of 498 respondents. A total of 10 key informant interviews were conducted.

2.3 Data processing and analysis - Quantitative

The research team ensured data integrity (handling, transport and storage) throughout the study period. In addition, careful and detailed records of all interviews were maintained in each site. Epi-Data, a quantitative data-entry and processing software, was used to enter the data. To ensure the quality of the data-entry process, frequent and adequate checks were built into the design of the data-entry screens. Two clerks entered the data, validated by a researcher using a double-entry validation process built into Epi-Data, which allows for comparison of two datasets for consistency and accuracy. The data were exported to SPSS for further cleaning and analysis.

2.4 Data processing and analysis - Qualitative All interviews, with appropriate consent, were recorded. The researchers took notes during the group discussions. The interviews were subsequently transcribed and translated verbatim. Themes and sub-themes identified formed the basis of the coding structure for the transcripts, which were analysed manually. The transcripts were thoroughly read to identify emerging themes and sub-themes, which were then examined, referenced and grouped. This process led to the interpretation of the data and report writing.

2.5 Limitations of the study The subject of minimum wage is a complex one and requires a lot of resources and time to document the various relationships and interlinkages than was allocated to this study.

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Basically, this study represents a first attempt at unpacking deeper and pervasive minimum wage setting mechanisms and challenges that was undertaken over a relatively short period. The other limitation was the inability to undertake comprehensive interviews with all the stakeholders and the employees covered by minimum wage regulations. This was also because of limited time and resources. Despite these limitations, the findings of the study give a valid and reliable interpretation of the current situation relating to minimum wage setting and implementation in Zambia.

3. Main Findings of the Study The main findings of the study focussed on the following:

Knowledge and perspectives minimum wage by workers (bus drivers, shop workers and domestic workers) on minimum wages

Compliance to minimum wage regulations;

Scope of coverage of minimum wage regulation;

Consultative structure on of minimum wage; and

Factors determining minimum wages.

3.1 Knowledge and perspectives by workers on minimum wages

In assessing the knowledge and perspectives by workers on minimum wages, three

categories were workers affected by minimum wage implementation namely bus drivers,

shop workers and domestic workers were studied. The proceeding section presents these

findings.

3.1.1 Bus Drivers Table 3.1 below is a percent distribution of the bus drivers interviewed by sex, age, marital status and education level. There were no female bus drivers. The data shows that a higher proportion of bus drivers interviewed were in the age groups 35 – 39 and 30 – 34 years (28.7% and 23.4%, respectively). The majority of the bus drivers interviewed (89.4%) are married monogamously. Half of the bus drivers (50%) interviewed had some secondary education with about 22% having completed primary education.

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Background characteristic Percentage Count

Age in years

15 - 19 0.0% 0

20 - 24 5.3% 5

25 - 29 13.8% 13

30 - 34 23.4% 22

35 - 39 28.7% 27

40 - 44 17.0% 16

45 - 49 7.4% 7

50 - 54 4.3% 4

55+ 0.0% 0

Sex

Male 100.0% 94

Female 0.0% 0

Marital Status

Married monogamously 89.4% 84

Married polygamously 1.1% 1

Cohabiting (Not married but

living with partner) 0.0% 0

Never married 3.2% 3

Divorced/Separated 5.3% 5

Widowed 1.1% 1

Education

Never been to school 1.1% 1

Some primary 7.4% 7

Completed primary 22.3% 21

Some secondary 50.0% 47

Completed secondary 16.0% 15

Higher than secondary 3.2% 3

Table 3.1 Background Characteristics of Bus Drivers

The data from figure 3.1a below reveals that 65% of the bus drivers interviewed did not

know anything about minimum wage compared to 33% who knew something. Furthermore,

responses to the question on how well informed the bus drivers‟ felt about minimum

wage, a high proportion of them indicated that they did not feel very well informed at all

(70.2%) followed by 23.4% who felt that they were not informed, then 5.3% who felt that

they were well informed and only 1.1 % felt that they were very well informed.

The drivers that responded that they knew something about minimum wage were further

asked how they got to know about minimum wage. About 12.9% said through friends

followed by 12.4% through TV advertisements then 2.8% radio advertisements, 2.4 through

employer, 1.0% government officers, 0.6% newspaper advertisements and 0.2% union.

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The data from figure 3b above shows that 90.4% of the bus drivers interviewed did not know the legally prescribed minimum wage in their sector. Further, responses to the question whether in their view, their monthly wage was within the prescribed minimum wage in their sector, 56.4% said No, 34% Don‟t know and only 9.6% said Yes.

Figure 3.1C below shows the percent distribution of statements best describing how the bus drivers felt about minimum wage regulations. A high proportion of bus drivers reported that they could know more about minimum wage regulations and would like to be able to find out more (93.6%) followed by those that said they didn‟t know much and they are not interested (3.2%) then by those that said they could know more but they didn‟t feel the need to (2.1%) and lastly by those that reported they knew a lot about minimum wage regulations (1.1%).

The few bus drivers that said they knew something about minimum wage regulations, were further asked how they got to know about the regulations. About 6.7% said through friends followed by 3.4% through TV advertisements then 2.8% employer, 1.6% through radio advertisements, 1.4 through the union, 0.6% through government officers and 0.2% newspaper advertisements.

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Figure 3d below shows that about 89% of the bus drivers reported that their monthly wage was not enough to meet their monthly household necessities. Only 11% of the drivers said that their monthly wage was able to meet their monthly household necessities. The bus drivers, whose monthly wage was not enough to meet their monthly household necessities, were further asked what their other source(s) of income were. The majority of them reported: 1) Household trading 2) Traditional group lending (Chilimba) 3) Micro loans 4) Borrow from friends 5) Kaloba.

That the bus drivers and their respective host communities are highly poverty afflicted can also be seen from their expenditure profiles. Table 3.1b shows multiple responses on priority expenditures among the bus drivers. The table shows that 100% of respondents mention food as their top most priority expenditure. Expenditures on accommodation and school fees come distant second and third, respectively. The very high number of times food is mentioned as the top most priority expenditure item implies very high levels of vulnerability among the affected households. The LCMS 2015 results show a very high urban poverty rate of 76.6% that has largely remained static since the mid-1990s.

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Table 3.1b: Top three priority expenditures.

Expenditure type

Number of times item mentioned As % of respondents

Food 94 100.0%

Accommodation (Rent) 68 72.3%

School fees 48 51.1%

Groceries 22 23.4%

Clothing 18 19.1%

Soap 17 18.1%

Toiletries 10 10.6%

Partner 1 1.1%

Other 1 1.1%

Figure 3.1F below, shows that about 93.6% of the bus drivers reported that given an opportunity they would like to join a trade union. Only 4.3% of the drivers said NO; while 2.1% said that they didn‟t know.

3.1.2 Shop Workers

Table 3.2 below is a percent distribution of the shop workers interviewed by sex, age, marital status and education level. There were more male shop workers interviewed than females (79.7% and 20.3%, respectively). The data shows that a higher proportion of shop workers interviewed were in the age groups 35 – 39 and 30 – 34 years (25.0% and 19.5% respectively). Less than half of the shop workers interviewed (45.3%) are in married monogamous marriages while about 16.4% were in polygamous marriages. The higher proportion of shop workers have completed secondary school (38.3%) followed by those who have had some secondary schooling (32.0%). Contrary to the bus drivers, about 6% of the shop workers have gone higher than secondary.

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Background characteristic Percentage Count

Age in years

15 - 19 2.3% 3

20 - 24 18.0% 23

25 - 29 18.8% 24

30 - 34 19.5% 25

35 - 39 25.0% 32

40 - 44 13.3% 17

45 - 49 2.3% 3

50 - 54 0.8% 1

55+ 0.0% 0

Sex

Male 79.7% 102

Female 20.3% 26

Marital Status

Married monogamously 45.3% 58

Married polygamously 16.4% 21

Cohabiting (Not married but

living with partner) 3.1% 4

Never married 28.1% 36

Divorced/Separated 5.5% 7

Widowed 1.6% 2

Education

Never been to school 0.0% 0

Some primary 9.4% 12

Completed primary 14.8% 19

Some secondary 32.0% 41

Completed secondary 38.3% 49

Higher than secondary 5.5% 7

Table 3.2 Background Characteristics of Shop Workers

When asked if they knew anything about minimum wage, the data from figure 3.2a below, reveals that slightly more than half (51%) of the shop workers interviewed said NO as compared to 48% who said Yes. Further, responses to the question on how well informed the shop workers felt about minimum wage, slightly less than half (49.2%) indicated that they did not feel very well informed at all followed by both 21.9% who felt that they were not informed and those who felt that they were well informed, respectively. Only 7 % of the shop workers felt that they were very well informed and this is higher when compared to the bus drivers.

The shop workers who responded that they knew something about minimum wage were further asked how they got to know about minimum wage. About 25.6% said through friends followed by 20.4% through TV advertisements then 12.8% radio advertisements, 8.4 through the union, 5.0% though government officers, 2.6% through newspaper advertisements and 1.2% through the employer.

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The data from figure 3.2b above shows that 72.7% of the shop workers interviewed did not know the legally prescribed minimum wage in their sector. This percentage is significantly lower as compared to that of the bus drivers. Further, responses to the question whether in their view, their monthly wage was within the prescribed minimum wage in their sector, 71.1% of the shop workers said No, 18.0% said Yes and about 11% said Don‟t know. The percentage of the shop workers who think that their monthly wage is within the legally prescribed minimum wage in their sector is almost double that of the bus drivers signifying that the they are more knowledgeable on minimum wage issues when compared to the bus drivers.

Figure 3.1C below shows the percent distribution of statements best describing how the shop workers feel about minimum wage regulations. A high proportion of shop workers reported that they could know more about minimum wage regulations and would like to be able to find out more (77.3%) followed by those that said they knew a lot about minimum wage regulations (10.3%) then by those that said they could know more but they didn‟t feel the need to (7.8%) and lastly by those that reported they didn‟t know much and they are not interested (4.7%).The percentages of the shop workers who said that they knew a lot about minimum wage regulation and those that said they could know more but didn‟t feel the need to were significantly higher when compared to the bus drivers.

The shop workers, who said that they knew something about minimum wage regulations, were further asked how they got to know about the regulations. About 28.6% said through friends followed by 18.4% through TV advertisements then 8.8% radio advertisements, 6.4 through the union, 6.3% though government officers, 4.0% through newspaper advertisements and 1.2% through the employer.

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Figure 3d below, shows that about 88% of the shop workers reported that their monthly wage was not enough to meet their monthly household necessities. Only 11% of the shop workers said that their monthly wage was able to meet their monthly household necessities. It worth noting that the percentage of the shop workers who said that their monthly wage was not enough to meet the monthly household necessities is significantly similar to that reported by the bus drivers. The shop workers whose monthly wage was not enough to meet their monthly household necessities were further asked what their other source(s) of income were. The majority of them reported: 1) Traditional group lending (Chilimba) 2) Micro loans 3) Borrow from friends 4) Household trading 5) Kaloba.

As observed from the bus drivers, similarly the shop workers and their respective communities are highly poverty afflicted can also be seen from their expenditure profiles. Table 3.2b shows multiple responses on priority expenditures among the shop workers. The table shows that about 80% of the shop workers mention food as their top most priority expenditure. Expenditures on accommodation and school fees come second and third, respectively. The very high number of times food is mentioned as the top most priority expenditure item implies very high levels of vulnerability among the shop workers‟ households.

Table 3.2b: Top three priority expenditures.

Expenditure type Number of times item mentioned

As % of respondents

Food 102 79.7%

Accommodation (Rent) 94 73.4%

School fees 52 40.6%

Groceries 30 23.4%

Clothing 22 17.2%

Soap 21 16.4%

Toiletries 10 7.8%

Partner 4 3.1%

Other 3 2.3%

Figure 3.2F below, shows that about 88.7% of the shop workers reported that given an opportunity they would like to join a trade union. Both 5.6% of the shop workers said NO and don‟t know, respectively. The percentages on the opportunity to join a trade union are both very high and significantly similar for both the shop workers and bus drivers.

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3.1.3 Domestic Workers

Table 3.3 below is a percent distribution of the shop workers interviewed by sex, age, marital status and education level. There were more female domestic workers interviewed than males (84.4% and 15.6%, respectively). The data shows that a higher proportion of domestic workers interviewed were in the age groups 25 – 29 and 35 – 39 years (20.3% and 18.8% respectively). More than half of the domestic workers interviewed (52.2%) are married monogamously with about 2.9% are in a polygamous marriage and 19.2% never married. The higher proportion of domestic workers have completed primary school (30.8%) followed by those who have had some secondary schooling (30.4%). Only 2.5% of the domestic workers have gone higher than secondary: this percentage is lower than that reported by both the bus drivers and shop workers.

Background characteristic Percentage Count

Age in years

15 - 19 6.2% 17

20 - 24 12.7% 35

25 - 29 20.3% 56

30 - 34 17.8% 49

35 - 39 18.8% 52

40 - 44 13.0% 36

45 - 49 8.0% 22

50 - 54 2.9% 8

55+ 0.4% 1

Sex

Male 15.6% 43

Female 84.4% 233

Marital Status

Married monogamously 52.2% 144

Married polygamously 2.9% 8

Cohabiting (Not married but

living with partner) 0.7% 2

Never married 19.2% 53

Divorced/Separated 17.4% 48

Widowed 7.6% 21

Education

Never been to school 4.3% 12

Some primary 21.4% 59

Completed primary 30.8% 85

Some secondary 30.4% 84

Completed secondary 10.5% 29

Higher than secondary 2.5% 7

Table 3.3 Background Characteristics of Domestic Workers

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When asked if they knew anything about minimum wage, figure 3.3a below, reveals that significantly more than half (72%) of the domestic workers interviewed said NO as compared to 26% who said Yes. Further, responses to the question on how well informed the domestic workers felt about minimum wage, significantly more than half (71.0%) indicated that they did not feel very well informed at all followed by 17.8% who felt that they were not informed and 10.5% who felt that they were well informed. Less than 1 % of the domestic workers felt that they were very well informed and this is significantly lower when compared to the shop workers.

The few domestic workers who responded that they knew something about minimum wage were further asked how they got to know about it. About 6.6% said through friends followed by 5.4% through TV advertisements then 3.8% through radio advertisements, 2.0% though government officers, 1.6% through newspaper advertisements and 1.2% through the employer.

The data from figure 3.2b above, shows that 79.3% of the domestic workers interviewed did not know the legally prescribed minimum wage in their sector. This percentage is significantly lower as compared to that of the bus drivers and significantly higher when compared to the shop workers. Further, responses to the question whether in their view, their monthly wage was within the prescribed minimum wage in their sector, 61.2% of the domestic workers said No, about 15% said Yes and about 24% said Don‟t know. The percentage of the domestic workers who think that their monthly wage is within the legally prescribed minimum wage in their sector is higher than that of the bus drivers but lower when compared to the shop workers.

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Figure 3.1C below shows the percent distribution of statements best describing how the domestic workers feel about minimum wage regulations. A high proportion of domestic workers reported that they could know more about minimum wage regulations and would like to be able to find out more (83.3%) followed by those that said they could know more but didn‟t feel the need to (9.8%) then by those that said they didn‟t know much and they were not interested (4.7%) and lastly those that said they knew a lot about minimum wage regulations (2.2%).The percentage of the domestic workers who said that they knew a lot about minimum wage regulation was slightly higher than bus drivers but significantly lower when compared to the domestic workers. On the other, the percentage of those that said they could know more but didn‟t feel the need to, were significantly higher when compared to the bus drivers but slightly lower when compared to the shop workers.

The domestic workers, who said that they knew something about minimum wage regulations, were further asked how they got to know about the regulations. About 6.6% said through friends followed by 5.2% through TV advertisements then 4.8% through radio advertisements, 1.4 through the union, 1.3% though government officers, 1.0% through newspaper advertisements and 0.7% through the employer.

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Figure 3d below shows that about 90% of the domestic workers reported that their monthly wage was not enough to meet their monthly household necessities. Only 10% of the shop workers said that their monthly wage was able to meet their monthly household necessities. Interestingly, the percentage of the domestic workers who said that their monthly wage was not enough to meet the monthly household necessities is significantly similar to that reported by both the shop workers and bus drivers. The domestic workers, whose monthly wage was not enough to meet their monthly household necessities, were further asked what their other source(s) of income were. The majority of them reported: 1) Traditional group lending (Chilimba) 2) Micro loans 3) Borrow from friends 4) Household trading 5) Kaloba. The other sources of income of the domestic workers are very similar with those of the bus drivers and shop workers.

As observed from both the bus drivers and the shop workers, similarly the domestic workers and their respective communities are highly poverty afflicted can also be seen from their expenditure profiles. Table 3.2c shows multiple responses on priority expenditures among the shop workers. The table shows that 100% of respondents mention food as their top most priority expenditure. Expenditures on accommodation and school fees come second and third, respectively. The very high number of times food is mentioned as the top most priority expenditure item implies very high levels of vulnerability among the shop workers‟ households. The LCMS 2015 results show a very high urban poverty rate of 76.6% that has largely remained static since the mid-1990s.

Table 3.2c: Top three priority expenditures.

Expenditure type Number of times item mentioned

As % of respondents

Food 260 94.2%

Accommodation (Rent) 100 36.2%

School fees 94 34.2%

Groceries 40 14.5%

Clothing 35 12.7%

Soap 28 10.1%

Toiletries 20 7.2%

Partner 10 3.6%

Other 8 2.9%

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Figure 3.3F below, shows that about 85.5% of the domestic workers reported that given an opportunity they would like to join a trade union. About 7% of the domestic workers said NO while 7.6%.

3.2 Compliance to Minimum wage regulations

The ZCTU policy paper (2012), state that labour laws are widely ignored by most employers and that it is not uncommon to find many employers claiming that they pay their employees the stipulated minimum wage even though this does not include employees‟ transport, lunch and housing allowances (ZCTU Policy Paper, 2012). The paper further adds that a good number of multinational companies which have collective agreements resort to paying employees‟ wages equivalent to the minimum wage meant for non-unionized workers. This could partly explain why conditions of service for some unionized employees continue to fall below the stipulated minimum wage rate despite their conditions of service being determined through collective bargaining processes.

The other weakness identified in the regulations is non-compliance by employers to pay statutory contributions to social security schemes. The paper states:

“Despite the NAPSA Act being mandatory, incidences of employers failing to remit NAPSA contributions are widespread and the failure to enforce compliance with such statutory contributions has left many workers vulnerable because they lack social security coverage (ZCTU Policy Paper; 2012)”.

As a result of non-remittance of contributions, it is widely perceived that retirees become destitute immediately they leave employment due to lack of social protection or inadequate pension benefits. The ZCTU policy paper further adds that the government of Zambia has failed to come up with social protection schemes to cover a large number of people in the informal economy thereby exacerbating the dual challenge of poverty and income inequality. This continued problem partly rested on the limited capacity of the Ministry of Labour to conduct comprehensive inspections to ensure that employers comply with statutory requirements relating to labour.

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Due to poor funding to the Ministry of Labour, it is perceived that a multitude of challenges have emerged ranging from inadequate staffing, lack of resources to undertake inspections, and generally inadequate capacity of available labour inspectors to enforce legislations because they did not have prosecuting powers. Employers in this case are perceived to have emerged stronger and well-coordinated in protecting their plight and interests.

3.3 Scope of coverage of Minimum Wage Regulations

Based on the interviews with key informants from ZCTU, ZFE, Ministry of Labour, there is general consensus among all tripartite partners to introduce sector based minimum wages. This is commendable because the existing orders only cover shop workers, general workers and domestic workers. This narrow coverage not only limits the application of minimum wages but also undermines the relevance of different economic environments under which various economic players operate. The idea of sector based minimum wages underlines the importance of acknowledging that different sectors have different productive capacities which affects wage setting in different ways. Therefore, the parameters determining wage setting in this regard may differ from sector to sector, emphasizing the need for sector based minimum wages

3.4 Consultative Structures on Minimum Wages

Earlier comparative studies on how minimum wages are set and implemented in South Africa and Kenya show that, unlike these countries, one of the challenges affecting implementation of minimum wages in Zambia is the absence of consultative bodies such as the wage commission or Wages Council. The absence of such consultative bodies that can facilitate debate and consensus building among tripartite partners undermines adequate consultations that might foster consensus before the final review of minimum wages is done by the Minister of labour. Although the role of the Wages Council in Kenya is limited to advisory, the importance of such a body is to provide the platform for debate to narrow potential polarization of interests.

3.5 Factors Determining Minimum Wages

From a content analysis of policy and legislative documentation, shows that over a period of time the review of minimum wages has been irregular and inconsistent to the changes in economic factors in Zambia. For example, before the recent review was done in 2012, the last review was done in 2010. However, up until now there has been no review. Further, in addition to the inconsistent and irregular reviews of the minimum wages order, the revised rates have failed to prescribe the basic minimum level of income that can enable a worker meet basic necessities. This is so because, although economic factors are taken into account when determining minimum wages, the final minimum wages rates are not adequate and substantial to help workers meet basic needs. Moreover, there had been no regular review of minimum wages to protect the erosion of incomes of protected workers against inflation. In addition, even though the issues of sustainability and productivity are also taken into account in minimum wage determination, there are no clear guidelines or models provide parameters on which minimum wages are set. The absence of such clear guidelines underscores the questions of objectivity in the setting of minimum wage by government.

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4. Summary and Recommendations

4.1 Summary There is general consensus from literature and empirical evidence that the minimum wage is a powerful weapon for the trade union movement and other stakeholders in the fight against poverty wages and income inequality. Zambia has a legislated general order on minimum wage for various groups of workers but does not have a National Minimum Wage. The workers affected have limited knowledge of the current statutory minimum wage setting. The scope is narrow and limited, the consultative structures remain weak; factors in the determination of the minimum wage are irregular. The study advocates for a national or sectoral minimum wage that is comprehensive in coverage. The report also asserts in the main that in order to meet the necessity of a minimum wage and abandon the low wage economy, Zambia as a country should revisit the persistent export-oriented mineral dependent structural rigidity economic production system and raise the levels of investment in the productive sectors of the economy. The implementation of an industrial and agricultural strategy that promotes viable value chains that would enhance employment opportunities and promote decent work is critical. The report that asserts that implementation of a minimum wage should be an integral part of a package of far-reaching industrial policy (and other) interventions as well as the reorientation of macroeconomic policy. In this way high investment, high productivity and high employment can be accompanied by higher wages. The minimum wage therefore is just one measure amongst many to overcome the triple challenges of unemployment, poverty and inequality. Several inward labour friendly policies and strategies that centre are suggested below.

4.2 Recommendations The following are some of the recommendations arising out this study:

4.2.1 Implementation & Monitoring

The study has established that there is continuous disrespect of the current legislation thus rendering them ineffective. The monitoring system should guarantee the detection of non-compliance. Considering the challenge of enforcing compliance of the minimum wage regulation, it is imperative to strengthen labour laws. Therefore, labour laws should be reviewed to protect workers from continued exploitation .This requires an overhauling of the system of implementation, monitoring and imposing of sanctions as it currently is very weak within the Department of Labour. Furthermore, sanctions should be set such that they act as an effective deterrent for employers. Government should strengthen the Ministry of Labour so that it can effectively supervise the world of work to ensure social justice and shared prosperity for all. The capacity of the Ministry of Labour must be strengthened to ensure that effective inspections are undertaken so that compliance is adequately enforced.

4.2.2 Compliance of in implementation of minimum wage The study has established that most employer do not comply with the statutory implementation of the minimum wages in Zambia. There is therefore an urgently need an effective implementation strategy that should take a persuasion approach by building public support for the minimum wage, and targeting employers so that they comply voluntarily.

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4.2.3 Advocating for a National Living Wage

The study established that the current minimum wages are actually poverty wages. There is need for the trade union movement to continuously advocate for a national living wage. A national living wage is the level of wages that allows workers to meet their own as well as dependents‟ needs. Furthermore, a living wage must satisfy more than the basic survival in terms of food, housing and clothing needs and also make provision for participation in a country‟s social and cultural life. 4.2.4 Capacity Building of Employers It is clear that there is lack of capacity among employers in dealing with the minimum wage implementation. Capacity building measures should be taken so that employers are informed of the minimum wage, and how to apply it in their organisations.

4.2.5 Knowledge and Awareness among Workers

The study established that most of the workers had limited knowledge regarding the minimum wage statutory setting and that the trade unions were not the main source of information on minimum wage. This implies that workers should be empowered so that they can denounce violations of the minimum wage law and also enforce their rights by themselves. Trade unions should therefore take a proactive role in this regard.

4.2.6 Data Collection and Information Support Systems The study established that there is paucity data on minimum wages and poor national data/information support systems. Governments should improve data collection on the results of the implementation strategy and make this information available to the public. The Department of Labour should take a lead. 4.2.7 National or/and Sectoral Minimum Wage Zambia should establish sectoral minimum wages. The current minimum wage orders for shop workers, general workers and domestic workers do not take into account sectoral differences, ignores the difference in the capacity of employers to pay and do not take into account differences in productivity levels. In addition, the current minimum wage regulations such as the Shop Workers Order excludes a range of categories of workers who can greatly benefit if they were not excluded from the application of the same regulations. In view of this, sectoral minimum wages are recommended to take into consideration sectoral differences.

4.2.8 Strengthening the Consultative Processes

Zambia needs to establish the wages council or commission. The TCLC in its current form cannot adequately address challenges of minimum wage setting in terms of ensuring exhaustive consultations. Due to the overwhelming powers of the Minister of Labour to determine minimum wages, acceptability of new minimum wage orders by social partners will continue to be a challenge. In this respect, there is need to establish a wages council which would serve the purpose of consensus building and play an advisory role to the main TCLC and ultimately the Minister of Labour.

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