Labour Act (Chapter 28:01) Section 6 (1)(a) provides that “No employer shall pay any employee a wage which is lower than that to a fair labour specified for such employee by law or by agreement made under this Act” and Section 6 (2) further provides that “ Any person who contravenes subsection (1) shall be guilty of an offence and liable to a fine not exceeding level seven or to imprisonment for a period not exceeding two years or to both such fine and such imprisonment”. Thus the enabling labour legislation clearly provides employees with a right to be paid a ‘fair wage’.
However, there is no definition of the term ‘fair labour’ but inferences may be drawn from the fact that the Act goes on to specify that such a wage should be specified by law or by agreement. In essence, there are two sectorial branches of labour in Zimbabwe namely the Public sector and the Private Sector. How the wages for these two sectors are determined, revised and negotiated are fully discussed below.
Section 65(1) of the Constitution of Zimbabwe provides “Every person has the right to fair and safe labour practices and standards and to be paid a fair and reasonable wage”. Again, the Constitution does not define what a fair and reasonable wage is. This lack of precision in the legislation has left the poor employees at the mercy of the employers who in light of the prevailing high unemployment rate and economic meltdown, has enjoyed labour exploitation to the fullest. The law in Zimbabwe only protects the employee’s right to a fair wage and not a living wage. This paper seeks to uphold the worker’s rights by advocating for a legislation and system that guarantees workers entitlement to a living wage as opposed to a fair minimum wage.
What are wages and why are these important?
According to the International Labour Organisation (ILO) Convention 95, wages are “remuneration or earnings, however designated or calculated, payable in virtue of a written or unwritten contract of employment by an employer to an employed person for work done or to be done or for services rendered or to be rendered“. These wages are to be expressed in terms of money and are fixed by mutual agreement or by national laws or regulations.
Wages are the major focus of collective bargaining between employers and employees. Similarly wages, sometimes, lead to conflict between the two sides. Wages can be a source of deprivation and discrimination especially when non-payment of wages leads to unpleasant results like labour bondage or forced labour. Similarly, non-payment of due wages in time exposes workers to financial problems.
What is Minimum Wage?
According to ILO, minimum wage is the “minimum sum payable to a worker for work performed or services rendered, within a given period, whether calculated on the basis of time or output, which may not be reduced either by individual or collective agreement, which is guaranteed by law and which may be fixed in such a way as to cater to the minimum needs of the worker and his/her family, in the light of national economic and social conditions”. This definition makes two points;
- Minimum wage is the minimum amount of money that should be paid to a worker. It is a floor; workers and employers, through collective agreements, can raise the floor but they can’t reduce the minimum wage.
- Minimum wage is guaranteed under law. And it is fixed by the government, usually in consultation with employer and employee organizations, in such a way as to cater to the minimum needs of workers and their families in the light of national economic and social conditions. This means that minimum wage is subject to change in response to the so-called national socio-economic conditions.
Why is Minimum Wage an important policy instrument?
According to ILO, the fundamental objectives of establishing a minimum wage is to “prevent the exploitation of workers at the hands of employers, to promote a fair wage structure (the UN Covenant on Economic, Social and Cultural Rights also calls for fair remuneration), to provide a minimum acceptable standard of living for low-paid workers and eventually alleviate poverty, especially among working families”. Minimum wage is a universal policy instrument and is applicable in 90% of the countries.
Minimum Wage has a small unemployment effect for workers with low skills however, this stands balanced by the positive effect that minimum wage has in raising the incomes of low paid workers and increased consumption which ultimately creates more employment. Minimum wage is also considered a powerful instrument in reducing wage inequality and raising the wages of vulnerable workers including women, youth and non-unionized workers. Similarly, minimum wage is also helpful in reducing poverty as minimum wages in developing countries benefit more the workers, belonging to poor households, by raising their low incomes.
How are Minimum Wages set?
There are two basic mechanisms to set minimum wage in a country. Either the government, after consultation with social partners, sets a statutory minimum wage for the whole country (or region) or it is set through collective bargaining (at sectoral, occupational and national levels). Minimum wage varies in countries on account of age, region, occupation, industry and even job tenure. In most of the developing countries, minimum wage is not applicable to the huge informal sector. While setting the minimum wage, ILO C131 recommends taking into consideration both social factors (needs of workers and their families, cost of living/inflation, social security benefits) and economic factors (creation of employment, productivity, competitiveness etc.). Minimum Wage has not to be set at such a high level that drives firms out of competition or stifles measures for job creation.
Zimbabwe does not have a national minimum wage but rather sectoral minimum wages in the private sector. In the public sector, the minimum wages are determined by the Civil Service Commission and the Government. Thus, ultimately as alluded above, there exists two different systems of collective bargaining (CB) and wage determination in Zimbabwe, one for the public sector and the other for private sector as shall be discussed in this paper.
Collective Bargaining in the Public Sector – Wage Determination Process in the Public Sector
Section 20 (1) of the Public Service Act states that the Civil Service Commission (CSC) shall be engaged in regular consultations with recognized Public Service Associations with regards to the conditions of service. According to the Public Service Act the role of the associations ends with consultation alone, meaning the associations do not have the final say in terms of the actual salaries and allowances paid to civil servants. The final say on salaries, allowances and benefits, according to Section 203 (4) of the Zimbabwean Constitution rests with the President. Section 203 (4) states that in fixing the salaries, allowances and other benefits of the civil service, the CSC must act with approval of the President given on the recommendation of the responsible Minister for Finance in consultation with the Minister responsible for the Public Service. Following the directive of the President, the CSC can then enter into any agreement with the employees.
Clearly, this means that there is no effective collective bargaining in the public sector since the role of the CSC ends with consultation alone and they do not have the final say in terms of the final outcome of salaries and allowances for public sector wages. This means workers in the public sector do not have the right to collective bargaining since they are forced to accept what is finally determined by the President.
Collective Bargaining in the Private sector
Collective bargaining for all workers in the private sector and state enterprises (parastatals) is governed by the Labour Act (Chapter 28:01). Section 74 (2) indicates that trade unions and employers and employers’ organisation may negotiate CBAs on any conditions of employment which are of mutual interest to the parties. Section 74 (3) (a) makes a provision for negotiating rates of remuneration and minimum wages for the different grades and types of occupations. This means that the workers and the employers can negotiate and agree on any issue as long as it relates to conditions of employment.
In this regard, sectoral National Employment Councils (NECs) were established to determine sectoral wages which are legally binding to all employers and employees falling within the scope of the sector or industry, irrespective of whether the employers or employees belong to the respective trade union or employers’ association. The NECs comprises of equal representatives of employers drawn from a registered employers’ organization or federation of employers’ on one hand, and representatives of employees drawn from a registered trade union or federation of trade unions. The NECs play a critical role in Zimbabwe’s industrial relations and social dialogue. Some NECs also administer their own medical and pension schemes for their specific sector, for example the National Employment Council for the Harare Municipal Undertaking has Harare Municipal Medical Aid and Funeral Services. In relation to minimum wages, what the employer and employee organisations agree during collective bargaining negotiations becomes binding between the parties.
If parties fail to agree on the minimum wages to be paid, the matter is referred to voluntary arbitration where an arbitrator gives an arbitral award. The arbitrator’s award is final in nature and can not be appealed against. However, a party which seeks to challenge the arbitral award can only do so through an application to the High Court for the setting aside of the award. If the award is not challenged or if it is upheld by the High Court upon challenge, then what is awarded in the arbitral award becomes the minimum wage payable to employees within that particular undertaking.
Thus once the employer and employee organisations come up with the minimum wages payable, that becomes binding and unless that Collective Bargaining Agreement is repealed or amended, the employer will be obligated to pay the wages specified therein. This approach is with respect not very favourable to the employees in most instances. It goes without say that a contract of employment is not one which is balanced, the employer always have a bargaining power over the employee(s) simply because the employers controls the means of production. Thus, practically, employers use their financial muscle to subdue all trade unions that may seem to properly advance the interest of the employees.
Like wise, employers are most likely to terminate the contracts of employment of any employee who may want to be vocal and active in support of wage increases and advances employees rights at the workplace. This is more so given the fact that employers can terminate any employee’s contract of employment on notice (for no cause) in terms of Section 21 (4b) of the Labour Act. In addition, Collective Bargaining has been hampered down by lack of proper knowledge and training as well as the negotiation power and resources on the part of many trade unions in Zimbabwe. Suffice to mention that many trade unions financially depends on Union dues from their members which are supposed to be deducted by the employer from the employee’s salary and remitted to the trade union which the employee would be part of. In most instances, employers flout the law by simply withholding the Union dues thereby causing the trade unions to financially suffocate.
Thus, what the legislation considers to be a fair and reasonable wage is that which the President declares for the Public sector and what the Collective Bargaining Agreements contain in the Private sector. With all due respect, there is no consideration to the reality on the ground. Basic commodities continue to increase in prices periodically, but no adjustments can be immediately implemented on the workers wages. In the end, the wages are essentially fair on paper but in reality, workers are becoming poorer and poorer as they can not copy with the rate of inflation in the country.
Thus it is arguably true that in both the public sector and in the private sector, there is no strong legal framework within which the rights of employees to receive a reasonable wage, yet alone a living wage in face of the economic hardships that Zimbabwe is facing can be relied on.
WHAT IS A LIVING WAGE
In the context of Zimbabwe, the living wage is equivalent to the Poverty Datum line (PDL). The PDL is the minimum amount of money required by a family of 5 in order to meet the minimum basic requirements of life per month. Living family wage in Zimbabwe was 575.00 USD/Month while Living wage Individual was at 305 USD/Month in 2018. With the formalisation of the multi-currency system in 2019 and the liberalisation of the market by the Reserve Bank Governor, exchange rates between the USD and RTGS balances and RTGS Bonds has skyrocketed and RTGS continues to loose value, yet, all non managerial employees in Zimbabwe are being paid their wages in RTGS. The net effect of this development is that many of the Zimbabwean workers are not anywhere near the PDL set in 2018 of USD 305/month per individual. Thus living standards for ordinary employees continue to deteriorate with an unprecedented spead.
In theory, a living wage is no different to a minimum wage. Both set a binding “floor” on wages, below which no employee can (legally) be paid. But in practice there are several differences between minimum and living wages, in their value, purpose, and adjustment. In an ideal society however, a living wage is set higher than a minimum wage and may be “pegged” to (fixed as a percentage of) some other measure of living standards, such as average weekly earnings. This ensures that the living wage holds its relative value over time.
Essentially, while the minimum wage sets a bare minimum, the living wage aspires to be a socially acceptable minimum. Typically, this is seen as a level that keeps workers out of poverty. It is thus the considered view of the author that in light of the economic instability that Zimbabwe is currently experiencing and the large informal sector, the legislature should progressively move from the minimum wage base approach to a living wage base approach to ensure protection of employees (both in the public and private sectors) against exploitation and perpetual poverty.
However, the point at which workers fall into poverty varies widely, due to differences in family responsibilities, and complex interactions between low wages and welfare payments. These factors necessarily affect how the level of the living wage would be set and adjusted. The idea to shift to a living wage follows a string of bad news about pay. Many vulnerable workers have been denied their minimum entitlements by employers. Wage growth is so slow that even the Government has opted to pay what it termed ‘hardship allowance’ to its workers in the public service. However, this is not a sustainable model as it lacks clarity and enforceability as it is paid entirely at the discretion of the employer and the percentage is so low such that it can not provide a cushion which a living wage would have otherwise provided. More so, workers are getting less of the national income, as capital owners increase their share.
Living vs. minimum wages in other jurisdictions.
Australia’s national minimum wage is set each year by an expert panel of the Fair Work Commission (FWC). The panel receives submissions from a wide range of organisations and conducts research to inform its decisions. Increases to the minimum wage are based on objectives enshrined in law. These refer to different factors, including business competitiveness, employment growth, and the needs of the low paid. There is no specific mention of poverty in the current objectives. Nor is there a fixed relationship with any other measure of living standards.
In other countries, minimum wages and living wages co-exist. In the United States, long periods can pass without increases in the federal minimum wage, as there is no mechanism for its regular adjustment. This has led many local governments to set their own mandatory living wage ordinances, above the federal (and state-level) minimum wages.
The situation is different in the United Kingdom, where the Low Pay Commission recommends a national minimum wage increase each year. Even there, the movement for a voluntary “real living wage” has strong support from employers.
Would a living wage help the poor?
Regrettably, poverty is the reality for many of Zimbabwe’s mid and low-paid workers especially with the multi-currency system currently prevailing where almost all non-managerial employees in Zimbabwe are receiving wages in RTGS form while many basic needs including food stuffs are now being pegged in USD. It therefore follows that a worker will have to buy foreign currency in the form of USD or South African Rands at an exorbitant exchange rate, they use the forex to buy basic needs. Thus in practice, very few, if any, Zimbabwean workers are earning up to the poverty datum line as set in 2018. Some struggle to make ends meet and go without basic necessities, such as meals and heating – particularly those in single-income families.
Neither the current minimum wage, nor the proposed living wage, is a pure “anti-poverty” tool. This is because the poorest people do not have paid jobs – often due to the rate of unemployment in Zimbabwe which is still very high and other serious socioeconomic disadvantage. However, it can be arguably concluded that a living wage helps those who rely on paid work (their own or someone else’s) for an income. The intention of a living wage is therefore not to eradicate all poverty, but to end poverty among those who work – “the working poor”.
This laudable ambition is complicated by differences in personal and family circumstances. A living wage cannot vary from person to person, yet low-paid workers are not all alike: some live alone, some have children, and many are in dual-income families.
Who should a living wage be set for?
The income needed to prevent poverty is inevitably much higher for workers with families than for those who live alone. In Australia, The Social Policy Research Centre (SPRC) produces “budget standards” that show the minimum income required by different types of families to reach a healthy living standard. Their evidence has been widely used by the ACTU and other advocacy groups in submissions to the Fair Work Commission. According to their analysis, an employed single adult currently needs A$597 per week (before tax, and including housing costs) to live healthily. A couple with two young children needs almost twice as much: A$1,173. The national minimum wage is currently A$695 for a full-time worker. So, according to the SPRC’s research, that worker already earns enough for a healthy life if they live alone, but not nearly enough if they have a family. This highlights the difficulty of setting a single living wage that would universally prevent working poverty.
It is however, respectfully submitted that if Zimbabwe follows the Australian approach, it will at least help provide a guide necessary to map a proper wage base rather than the present scenario where the Government has adopted an non intervenist approach with regards to the private sector by the creation of NECs and too restrictive wage negotiation approach with regards to the public sector where the final decision is with the President.
ARTICLE DONE BY KUDAKWASHE MASIYENYAMA [LLBs (Hons) (UZ)] Associate at GAMBE LAW GROUP [91 David Livingstone Ave, Harare] Contact: Cell – 0776828788; Tel – (263-242)251247/251357-9; Email – firstname.lastname@example.org & email@example.com; website – www.glg.co.zw