East African Business Week

KIGALI -Rwanda plans to have a new minimum wage before the end of the year to ease pay negotiations between employers and employees.
The Director of Labour Administration in the Ministry of Public Service and Labour (MIFOTRA), Mr. Alexander Twahirwa, says there is an ongoing study whose results are expected to recommend setting of a new Minimum Guarantee Wage (MGW).
"We commissioned a study and consultants are already on the ground. They are supposed to come up with a report which will help us to propose a minimum wage for Rwanda," Mr Twahirwa told East African Business Week in an interview last week.
He said the consultants would analyse the Rwandan economy to establish possibilities for setting different minimum wages for different sectors.
"We want to avoid exploitation of employees by their employers," Twahirwa said.
A Tanzanian firm Credit and Risk Solutions Bureau Ltd has been chosen to conduct the study. Tanzania is said to be having a minimum wage.
A minimum wage provides a base on which pay negotiations between employers and employees start.
Rwanda is currently using a minimum wage of Rf100(less than a US cent) that was set during 70s.
The current minimum wage, which is considered insignificant and outdated given the fact that the cost of survival has risen enormously since 1970s, is even based on to calculate pensions and insurance benefits.
Limited benefits discourage people to join the national social security system and private insurance schemes.
"The challenge we have is that there is no minimum wage. Employers and workers negotiate on their own will. There is no starting point for negotiations," Mr Twahirwa said.
Martin Kampayana, a trade unionist with CRISAT, a Kigali based confederation of independent trade unions for workers, said the new minimum wage might land on a hard rock since employees have a little say.
"They (ministry) will force people to accept the new minimum wage and no one will oppose it because the ministry is dictatorial," Mr. Kampayana said in an interview.
He said the ministry refuses to grant operating licenses to new independent trade unions, which limits their powers to advocate for workers especially in the courts.
The Ministry in charge of labour is also responsible for licensing trade unions in Rwanda.
Currently, there are 5.3 million Rwandans eligible for work but 8% of them are unemployed although the government promises to create 1.5 million jobs in seven years.
More than 78% these workers are in the agriculture sector, which is largely subsistence and although there is a call to commercialise the sector for the benefit of the majority.
By increasing the minimum wage, the government believes workers' life conditions will improve although employers are likely to react depending on the level at which the new minimum wage will be set.