Benchmarking salaries on PDL makes sense
THE most positive point to emerge from the inaugural meeting of the new Tripartite Negotiating Forum (TNF) on Wednesday was the concession by employers in the formal sector to start benchmarking minimum wages against the poverty datum line (PDL).
This is a major concession, and one that has been sought unsuccessfully for decades. Just as importantly, it represents a serious attempt to convert a general consensus into something practical that can be implemented with the degree of implementation measured precisely.
The Zimbabwe Congress of Trade Unions (ZCTU), caught a bit flatfooted we suspect by this sudden offer by the Employers Confederation of Zimbabwe (Emcoz), were not that keen and it has been referred to a technical committee, along with instructions that a final report must be made by a tight deadline, not left to become bogged down in waffle and delay.
Emcoz did dilute the effect of their offer by suggesting that a minimum wage could be half the PDL, but that should be treated as an opening offer.
The principle of benchmarking can be accepted, but the actual percentages must obviously be negotiated and we believe there can be a significant improvement on the 50 percent.
The PDL does provide an independent and rational basis for benchmarking a minimum wage. It is the average sum needed by a family of five to survive, that is to provide basic accommodation, buy essential food, pay for transport to work and school, buy essential basic clothing, pay the school fees and pay shortfalls at clinics. Anyone who has studied the list of things covered by the costing will immediately note that it excludes every luxury and semi-luxury.
It is a surviving figure, but a family on that income can live decently if not very comfortably.
It also automatically takes into account inflation, subsidies or their lack, and just about every other factor that affects costs. And this is important considering the high inflation that Zimbabwe has experienced in the last 15 months and the 50 percent inflation the authorities are expecting this year.
There must be some mechanism that automatically adjusts incomes in the environment we have to cope with for a while. There is a strong, but not really thought-out, feeling that wages should be set in US dollars and converted at the rate of exchange prevailing on pay day. But that does not address actual costs that families face.
Over the last few months, we have faced a falling but still significant monthly rate of inflation yet the exchange rate has remained stable. This means if wages had been indexed to the exchange rate people would have been getting poorer in real terms.
So exchange rate indexing is counter-productive while the poverty datum line itself represents something real, how much do you need to actually live and raise a family.
The switch to benchmarking against the poverty datum line will need a lot more thought and negotiating. For a start, there is the percentage that should be the initial minimum wage. There are grounds to accept under the PDL as a minimum for school-leavers starting unskilled employment, although something better than 50 percent must be on the table.
But obviously, a skilled worker with modest experience must be earning more than the PDL if those skills and that experience are to mean anything. So whatever is agreed as a minimum must be accompanied by guidelines to national employment councils, who fix the actual minimum wages for all non-supervisory workers in the formal sector, on how to negotiate the jumps between grades.
A second point about poverty datum lines is that the criteria can change. The United States, for example, where poverty is defined for various state and federal initiatives like access to cheaper food, assumes the poor need a lot more than the list used to calculate the Zimbabwean PDL. As we move towards Vision 2030, we will need to upgrade our definition of poverty, and the unions in any case need to make sure that any deal makes it clear that the PDL can only be upgraded, not have items slashed and that the PDL is calculated by a reputable independent agency.