It’s true that wage increases boost workers’ morale, motivating them to improve their performance in the workplace, but more than encouraging them to improve productivity, they also provide a better lifestyle for families and, consequently, for society as a whole.
In Mozambique, the saga of raising minimum wages is always characterised by demands, complaints and even demonstrations by workers, who consider their salaries to be insufficient. A month ago, the Executive approved a new table of salary increases that generally vary between 3.3 per cent and 10.53 per cent for private sector employees.
In order to delve deeper into this issue and better understand the impact these increases are having on the lives of the working class, DE spoke to some economists, who are unanimous in stating that the new salaries are far from satisfying the most basic needs of private sector employees, as they do not cover inflation.
‘The 3.3 per cent pay rise is already below last year’s average inflation. This means that it reduces the purchasing power of the group that has had this increase. Now we need to know what the level of productivity was in each sector so that it can really be compensated for this salary increase,’ began the economist and coordinator of the Mozambique programme at the International Growth Centre (IGC) of the London School of Economics (LSE), Egas Daniel, pointing out that “for those who had, for example, a 10.53% increase, we first need to remove the part that corresponds to inflation and compare the remainder with the increase in the sector’s performance to see whether or not it was fair.”
The source goes on to explain that ‘in general, historically, salary increases in Mozambique, although they almost always cover inflation, which is not the case with the 3.3 per cent, they fail to compensate for the sector’s performance in the logic of allocating half of the growth in the area of activity to the salary increase. This is no longer the case, which suggests some violation of the agreed formula for calculating salary increases that was in force at least until 2023, unless it has been changed.’
Egas Daniel – economist
‘The current minimum wage would need to be multiplied five times in order to reach the minimum to cover the basic food basket for 30 days. Now, it’s clear that raising wages to these levels isn’t prudent if productivity factors aren’t taken into account, although there’s every complaint that the wage doesn’t cover the basic food basket. In other words, it means that we will only be able, in the long term, to allocate wages that are adequate, both for the worker to be able to buy the basics, and for the employer to have the comfort of giving this wage without risking substantial losses in terms of earnings, if we manage to increase worker productivity, which means equipping them, using more technology, increasing levels of training, skills and technical abilities so that the employer reaps greater returns from this productivity that allow them to compensate the employee with a higher wage, capable of covering the basic basket. But this can only be done in the medium term,’ explained Egas Daniel.
Workers’ march on 1 May
For economist and researcher at the Centre for Public Integrity (CIP), Estrela Charles, ‘Mozambique is a country that currently has very high costs for transport, food and also costs to support some services that, in principle, should be offered by the government. We’re talking about education and health services, which are public and, in principle, should be free. That’s why the increases don’t meet workers‘ basic needs.’
The researcher pointed to education and health as an example, explaining that they are free services, however, many schools and health centres, due to a lack of monitoring and material, end up charging some costs to the consumer themselves. ‘So, taking into account the precariousness of the public services we have here in Mozambique, this minimum wage we have is really quite low,’ she said.
For the economist, with this salary, citizens are not in a position to cover their expenses for 30 days.
‘The CIP did a study last year in which it calculated more or less the percentage of the minimum wage that is spent on transport, because we know that the commuting situation in our country is quite precarious and every citizen is forced to spend large sums to be able to travel to their place of work. With the minimum wage we have, around 60% or 70% of our monthly income goes on transport.’
Estrela Charles
And what would the ideal minimum wage be? Estrela Charles explained: ‘In general, it’s a bit difficult to define, because the wage is conceived on the basis of the productivity of the sector itself. We know that the agricultural sector, for example, has the lowest salaries compared to the others, but even so, we have to try to ensure that the salary increase is one that can at least compensate for what is monetary wear and tear, that can compensate for inflation. So, if we have inflation in 2022 of 10 per cent and in 2023 of 4 or 5 per cent, it means that the salary increase must be at least an average of the inflation of these two years. What I’m trying to say is that it’s inconceivable to have a pay rise of, for example, 3% in a country where inflation over the last two years has averaged 7%. So it means that the real salary of that employee is decreasing.’
‘A pay rise of 3.3 per cent is already below the average inflation of last year. This means that it reduces the purchasing power of the group that had this increase. Now we need to know what the level of productivity was in each sector so that it can really be compensated for this salary increase,’ began the economist and coordinator of the Mozambique programme at the International Growth Centre (IGC) of the London School of Economics (LSE), Egas Daniel, pointing out that “for those who had, for example, a 10.53% increase, we first need to remove the part that corresponds to inflation and compare the remainder with the increase in the sector’s performance to see if it was fair or not”.
‘That’s the fundamental question. We have the price level rising, which means that this employee now needs more money to cover his expenses. And on the other hand, we have a wage increase that is less than the increase in the price level. Where is this worker going to find the value, the differential, to at least be able to do the things he was doing in 2022 or 2023? It’s clearly not possible to have the same minimum wage in all sectors, but at least that wage, in each area of activity, can respect the issue of rising prices,’ emphasised Estrela Charles.
Basic products
Implications of low wages
For the economist, the insufficient increase in wages will have implications for several other factors. ‘There will be an increase in corruption and crime. When citizens have a salary that is below their needs, they always try, in one way or another, to compensate for these costs, whether through licit or illicit means. So, as long as we continue to have this salary that is below what is desirable, there will always be a greater likelihood of having all sorts of illicit corruption issues,’ he explained.
Damião Simango, representative of the secretary-general of the Workers’ Organisation of Mozambique – Central Trade Union (OTM-CS), said that the new minimum wages approved by the government still don’t meet the needs of Mozambicans, given the high cost of living in the country.
According to calculations by the OTM-Central Sindical, the basic food basket in Mozambique currently costs around 40,000 meticals and the minimum wage for workers only covers 11% of this amount, so there is a need for further increases.
Workers on the march during Labour Day celebrations
For the government, represented by the Deputy Minister of Labour and Social Security, Rolinho Farnela, the new salaries reflect ‘the economic and social moment the country is going through, the terrorist attacks in some districts of Cabo Delgado province and the Russia-Ukraine conflict’.
Nário Sixpene – Photo: D&R
