Botswana's Businesses Alarmed by Proposed Minimum Wage Increase
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Synopsis
On January 31, businesses in Botswana raised alarm over the government's proposal to significantly increase minimum wages, warning of potential inflation and unemployment. The plan to raise wages from 1,500 pula to 4,000 pula could strain local companies, prompting calls for a phased approach.
Key Takeaways
- Proposed minimum wage increase could lead to inflation.
- 28.5% of companies may raise prices.
- 66% lack financial resources for wage hike.
- 35.1% consider layoffs to manage costs.
- Phased implementation preferred by majority.
Gaborone, Jan 31 (NationPress) Enterprises in Botswana have expressed concerns that the substantial rise suggested by the new administration in minimum wages might result in increased inflation and job losses.
The government aims to more than double the current monthly minimum wage from approximately 1,500 pula (around 108.30 USD) to 4,000 pula (approximately 288.80 USD).
Mpaphi Tsholofelo, who leads policy and research at Business Botswana, mentioned that a recent survey conducted by the non-profit organization involving around 2,000 firms indicated that 28.5 percent of respondents would likely raise prices to offset higher expenses, while 66 percent reported insufficient financial resources.
During a symposium on minimum wages in Gaborone, Tsholofelo stated, "35.1 percent of participants identified the need to consider potential layoffs to manage expenses, while 64.4 percent foresee a decrease in workforce due to financial limitations; 5.5 percent mentioned the possibility of reducing employee benefits, and 4.4 percent are contemplating shortened working hours."
The majority of the survey participants regarding local businesses' understanding, acceptance, and preparedness for the proposed wage increase favored a phased implementation instead of an immediate one.
Pius Mokgware, the Minister of Labour and Home Affairs, highlighted that low wages contribute to the country's elevated crime rates, including commercial theft.
He called on larger corporations capable of offering higher compensation to cease using smaller businesses as an excuse, asserting that most companies across various sectors can manage to pay the proposed minimum wages.
Mokgware acknowledged that a universal approach would not be suitable for smaller enterprises and emphasized the importance of finding a balance between maintaining business profitability and ensuring fair employee wages.
