Minimum wage bad for Uganda- Economists
By Ritah Kemigisa
Economists have warned that setting a minimum wage will only make more Ugandans formally unemployed.
Recently the State Minister for Labour, Mwesigwa Rukutana, said earlier that the government was still studying the Minimum Wage Bill, 2015, which was passed by parliament in 2019.
He however dampened hopes for establishing a minimum wage in the country, describing the move as suicidal in the face of high levels of unemployment.
Renowned economist Ramathan Goobi shares the view that the minimum wage is only good for high income economies, adding that for poor economies, Uganda inclusive, such a wage will only make people poorer and instead of creating jobs it destroys them.
Goobi adds that with a minimum wage, there is increased supply of labor which reduces its demand which results into higher unemployment.
“Let us assume a minimum wage for maids is set at shs 200,000. With this amount, many families whose head does a job whose wage is not high enough from the minimum wage wouldn’t afford a maid and such will sack them leading to a reduced demand for maids. Meanwhile, a rise in the wage from the current about shs 70,000 to shs 200,000 would make more girls look for a maid job, leading to excess supply of maids,“ said Mr Goobi adding that is what economists call unemployment.
A minimum wage is the lowest amount a worker can be legally paid for his work.
The wage is intended to protect workers from exploitation by their employers.
