Let me reiterate, we NEED a minimum wage law

Last week, writing in these very pages, and in the spirit of Labour Day, I put forward my belief that we needed a minimum wage (‘It is time for a FAIR minimum wage law’). I didn’t think that it was one of my brighter (and and most revolutionary) ideas because I think it is a common sense proposition. Especially when our own Labour Code , passed in 2011, gives some guidance in the this, stating in Article 83 that ‘the interprofessional minimum wage is determined by a Decree issued by the Minister having Labour in his/her attributions after consultation with the employees and employers associations’.  If that article isnt a nudge for some sort of minimum wage, I don’t know what is.

However, in response to the article, two friends of mine, men who I believe are quite intelligent, chose to disagree. Which is quite alright. I would like to take the opportunity to share with you their reason for disagreement with me, and then put forward my response to them.

The first gentleman wrote, “ the minimum wage is a very risky proposition and should not be argued in the abstract. My position is that a minimum wage is also likely to hurt the very people it aims to protect. There are more effective and more efficient ways to distribute and allocate assistance to those in need. Minimum wage legislation acts as a tax on employment. Forcing an employer to pay more than the market rate for labour has the same effect on employer behaviour as a tax on every worker hired. Small businesses often work on thin margins and encounter difficulty during an economic downturn. What happens if their labour costs go up”?

He makes very pertinent points. He talks about “abstracts”, but let us talk about REAL people and not economic theory. Is it fair that someone who works all day, every day, earns less than fifty dollars? Well, the vast majority of househelp does no matter how wealthy their employers are. What I’m calling for isnt assistance, what I’m calling for is a fair wage for a decent day’s work. ‘Tax’ isnt a bad word and the market isnt the only thing that should determine what a proper wage is. This is simply because the market is driven by cold, hard capitalism driven by profit. If the market had its way, we would all live from hand to mouth.  Two eminent economists, David Card and Alan Krueger state in their 1995 book ‘Myth and Measurement: The New Economics of the Minimum Wage’ that the negative employment effects of minimum wage laws are minimal if not non-existent. Findings that Nobel laureates Paul Krugman and Joseph Stiglitz agree with.

Plus, I believe that better wages improves performance and worker morale. An unhappy worker will go through the motions because, truth be told, its not as if they have that much to lose anyway. Give them real incentives and you will see amazing improvements in output. And at least your househelp will stop stealing your food and selling it.

 

Increased wages often mean improved levels of saving and investment and instead of living from hand to mouth; even the poorest of the poor will be able to get ahead in life.  Which brings me to my second detractor and friend.

“ Fair minimum wage sounds great in theory but it does have an inflationary impact. At one point 100F was a reasonable amount, now that can’t even get you a one-way ride on a twegerane (taxi). The trick is to drive down the cost of living so that the 30,000 you pay her (my househelp) is able to pay for more and more each month.”

Well, isnt it sad that a genocidal government that will live in infamy had a minimum wage, while one that prides itself on progress and development, doesn’t? I can’t, for the life of me, see how the cost of living will decrease so much that fifty dollars is sufficient to live on. Plus, as long as we are net importers, and the cost of barrel of oil continues to increase (which it will), things will remain expensive.

One of my friends, commenting on last week’s article, lives in Washington DC. Well, according to US Federal law, DC worker MUST be paid not less than $7.25 an hour. I’m not going to throw a figure around, but, as the law states, its time CESTRAR (the national union of workers) to sit down with the employers union and hash out some sort of agreement on a national wage.

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2 thoughts on “Let me reiterate, we NEED a minimum wage law

  1. Jnr says:

    Sunny,

    For the most part of your article, I concur. However, there are a few points I would like to make.

    First, a minimum wage law is a luxury law (I’ll explain why I chose luxury) commonly associated with economically better-off nations. These nations pass this law primarily to address the problem of inequality among the workforce, not to address living standards…the latter is only achieved through pareto optimality. Why, you may ask! As inequality grows, the government is charged with addressing this problem by devising a policy that rewards all sets of employees who add to general output. Look at this scenario in the spects of the recent financial crisis. Governments especially here in Europe found it extremely difficult to cap bankers salaries, given that they couldn’t measure their performance output. Bankers kept on earning millions whilst making the most rediculous economic decisions. If it was possible to cap inequality from the top-bottom, believe me, this would have been done years ago.

    Secondly, introducing a minimum wage in present day Rwanda would undoubtedly deter investors that the country desperately needs. When China, Singapore, India embraked on an economic revolution, they eliminated the word ‘minimum wage’ from their policy catalogues. Allowing salary to be determined by output is a major attraction for an investor who has alternative markets at his disporsal. It is this power (in the beginning) that brings in investors, and as output increases, the power shifts to all entities of production including employees (labour) who demonstrate their value to the company in question.

    In essense, I agree with you in respect to the minimum wage, but, this is not the time for Rwanda to engage in such luxuries. They’re luxuries because as the world has become a global village, it is of little expense for a businessman to move business to places with low production costs. Outsourcing comes to mind. The UK lost about £15 billion in outsourced jobs in 2005 alone. Rwanda would not fare well. Let businesses grow, output increase, and then the workforce will have bargaining power. At the moment its next to zero.

  2. Manzi says:

    the issues raised above in your article need some hard thinking. It is not the minimum wage that is normally the issue. Rather the issues that are raised centers arround the determination of the minimum wage. Common sense tells us that if you put it hign you create unemployment, afterall wage should be equated to marginal productivity. The fass about it is that minimum wage is equated to a living wage.

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