Monday, 27 August 2012
AVERAGE, MINIMUM AND LIVING WAGES
The Zambian Government has recently raised the minimum wage. This is not before time, as the cost of living continues to rise, making Zambia one of the most expensive countries in Sub-Saharan Africa.
It is good, too, that this rise appears to be non-negotiable. There have been the predictable complaints about stifling investment and threats of redundancy from the usual suspects - agri-business, construction, the mines and the Employers’ Federation.
Annual inflation is around 10%. According to the Jesuit Centre for Theological Reflection, the JCTR’s Basic Needs Basket’s (BNB) for June 2012 total amounts to K3, 395,660 for an average family of five living in Lusaka. See www.jctr.org.zm
The new basic wage, although an improvement, is woefully inadequate. Another JCTR survey shows that low incomes and high living costs make it impossible for people to save any money. In fact, it is even worse, as families all over the country are reducing the number of meals they eat, to eke out family income, so that they can reach pay-day. By raising the tax threshold to K2m or $400, the Government has helped to take many low-wage earners out of the tax bracket.
The minimum monthly wage for domestic workers has increased from K256 000 ($50) to about $105 (K525 000). The wages of other workers - such as shop assistants, farmworkers, and construction workers, will increase from $50 to $220 (K1 100 000).
Almost two thirds of the Zambian population of 13 million people live on a dollar or less a day, and only around 500,000 people are employed by the formal sector, according to the country's Central Statistical Office.
However, with these recent measures, Zambia seems to be giving a nod in the direction of the post-war Beveridge ideal of full-employment, something that was the political consensus here in Britain until the 70s, when tackling inflation became more important than decent jobs for the working population. Now, casualisation, short-term contracts and minimum-waged jobs are the norm.
Since inflation reduces the value of money, neo-liberal governments and the financial sector wish to control it tightly. As a result, we are now beginning to see: greater poverty, a wider gulf between the rich and poor, and the smallest amount of disposable income for many since the 1930s, as people lose their jobs and have their pensions cut.
Here in Scotland, Members of the Scottish Parliament, MSPs, are trying to ensure that private companies who work for public organisations pay their staff a "living wage" to help those many families who suffer from “in-work poverty”. Child poverty campaigners reckon that 60% of Scottish children live in such households.
The lowest paid worker for the Scottish government now earns at least £7.20 an hour. MSPs want this to be the case for all workers from private firms on contract to the government. £9 billion is spent by Scottish authorities to pay for services provided by private companies, but between a quarter and third of these workers earn less than the living wage.
To make the living wage a condition of any government contract, may breach European Union law some complain. However, European Law is not the Law of the Medes and Persians yet, and should not be used as an excuse to stop doing what is right.
The Joseph Rowntree Foundation reports that a couple with two children now need to earn £36,800 a year to have a "socially acceptable" standard of living in Britain. This has increased by one third in 4 years, due to rising childcare costs, food prices, utility bills and transport costs, combined with cuts to benefits.
The minimum income standard (MIS) study was commissioned by the Foundation and undertaken by Loughborough University. Its main finding was that increasing numbers of people in Britain live below what is an acceptable standard of living. This MIS standard includes earning enough to eat a balanced diet, run a car and heat a house.
A couple with two children each need £18,400 a year.
Single people need £16,400 a year.
A single parent with a child needs £23,900 a year.
A pensioner couple need £12,000 each.
Like the JCTR basket, the breadline is not being considered, but instead a level of income that is required for an acceptable standard of living.
Childcare has risen by nearly a third since 2008.
Bus fares have doubled in 10 years.
Public transport has been cut, so for a family with children, a car has become essential.
The minimum weekly amounts for “socially acceptable” life essentials are listed below.
Beds and bedding: £3.29
Garden equipment: £0.66
Parent social activities: £30.00
UK holiday: £18.52
Birthday gifts: £8.42
Public transport: £12.38
(Based on a couple with two young children with a weekly income of £685).
All this talk about minimum wages, living wages, MIS or BNBs in Scotland, Britain and Zambia leads on to the question: "What is the world's average wage?". The United Nations' International Labour Organization (ILO) recently had a go at working it out.
First, they worked out the total wage bill for every country in the world. To do that, they took the average salary from each central statistics office, and multiplied that amount by the number of earners in each country. Unfortunately, the data covered only 72 countries and only formal wage earners were counted - not the self-employed or people on benefits, so in some countries the data is incomplete. Then they added the total wage bill for each country, and divided that by the total number of earners in the world. That gave an average salary of $1,480 (£928) a month, which is almost $18,000 (£11,291) a year.
The ILO then used a specially adjusted exchange rate called Purchasing Power Parity (PPP) dollars. One PPP dollar is equal to $1 spent in the US. This is because it is cheaper to live in some countries than others. In other words, it takes account of what dollars can buy in each particular country, compared with the United States.
Some Average Salaries in PPP$:
Luxembourg: $4,000 Monthly; $48,000 Yearly
US & UK: $3,000 Monthly; $37,000 Yearly
Bulgaria: $1,500 Monthly; $18,000 Yearly
Tajikistan: $225 Monthly; $2,700 Yearly
The world average comes to $75 a day for a 20-day working month - but a third of the world's population lives on less than $2 a day, and no account has been taken of child labour, pensioners, children and stay-at-home parents, and the self-employed. The number of self-employed is also huge. In developed countries, about 90% of working people are paid employees, but that figure is much lower in many developing countries.
In Zambia, most people are self-employed or work as independent farmers, and less than 20% of workers are salaried. In the same report, ILO Global Wage Report 2010/11, the PPP$ minimum wage for Zambia was given as $77 per month or $924 per annum, which is not the same as the average, but nonetheless it gives a good idea of the starting threshold. In 2011, Zambia was surprisingly awarded middle income status by the World Bank, with an annual Gross National Income per capita of $1160, even though the average national wage remains under $100 per month.