Mozambique: Employers want continued wage freeze – AIM report

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Mozambique: Employers want continued wage freeze – AIM report

4:38 CAT | 17 Jun 2021

File photo: Lusa

The Confederation of Mozambican Business Associations (CTA) on Wednesday said there should be no rise in the minimum wages, because of the negative consequences of the restrictive measures imposed to halt the spread of the Covid-19 respiratory disease.

Speaking at a Maputo press conference, the CTA deputy chairperson, Vasco Manhica, said anything that could increase company costs, such as raising the minimum wage, “could interrupt the recovery effort and compromise the survival of companies”.

The current moment “remains challenging”, he said, which makes it “imperative to ensure that companies can survive, since many have already suspended their activities, or closed down altogether”.

The top priority, he argued, was to keep workers in employment, rather than to increase their wages, given the absence or reduction of the cash flow required to bear wage costs.

“I would like to stress that, despite the impacts of Covid-19, the companies have made an effort to keep most of their workers employed, even with a significant reduction in income”, said Manhica.

In September and October 2020, he added, the business class noted an economic recovery, but was then hit by the second wave of Covid-19, “and now a third, and much more dangerous, wave is imminent”.

Despite the relaxation of some of the restrictive measures recently announced by the government, companies were still facing a hostile economic context, and the first quarter of 2021 was “absolutely bleak”, said Manhica.

The restrictive measures had particularly affected hotels, restaurants and the sale of alcoholic drinks, eliminating completely “the trajectory of recovery that had been built in the last quarter of 2020”.

He said the hotel occupation rate had fallen to four per cent, and tourist centres such as the beach resorts of Bilene and Ponta de Ouro had experienced a 95 per cent fall in turnover.

Minimum wages are usually negotiated annually, sector by sector, in the Labour Consultative Commission (CCT), which is a tripartite negotiating forum between the government, the trade unions and the employers.

The 2020 negotiations began on 18 March that year, but the Covid-19 pandemic was used as an excuse to stop the talks – which means that there will be no rise in the minimum wage until further notice. In previous years, an increase in the minimum wage was usually announced in late April and was always backdated to 1 April.

The main trade union confederation, the OTM (Mozambican Workers’ Organisation) calculated in 2019 that, to provide a basic basket of goods and services for an average family, a minimum monthly wage of 19,600 meticais (297 US dollars, at the exchange rate of the time), would have been needed. In 2020, the cost for the same basket, according to the OTM, would be 22,700 meticais.

The monthly minimum wages agreed when the CCT met in 2019 came nowhere near 19,600 meticais. They ranged from 4,266 meticais for fishery workers on Lake Cahora Bassa in Tete province, to 12,760 meticais for workers in banking, insurance and other financial services. The minimum wage for public sector workers was just 4,467 meticais a month.

Wages have effectively been frozen since April 2019, and the employers are now demanding that the wage freeze be extended indefinitely.