RULING All Basotho Convention (ABC) legislator Sam Rapapa has warned of unrest and possible factory closures and retrenchments in the aftermath of the government’s decision to increase the factory workers’ wages by 62 percent.
Last week the cabinet resolved to gazette a minimum wage of M2000 for factory workers which would be backdated to 1 April this year.
The government’s decision followed a series of protracted negotiations which failed to yield an agreement between factory workers’ unions and their employers.
This week, Mr Rapapa who is also a member of the Public Accounts Committee (PAC), said the government decision put the country in serious “trouble” as it was “made on emotions and not on facts” which show that the increment is not economically sustainable.
The factory owners, who have coalesced under the banner of the Association of Lesotho Employers (ALE) and the Lesotho Textile Exporters Association (LTEA), also say the wage increments are not sustainable. They have since obtained an interim court interdict barring the government from gazetting the M2000 minimum wage.
Speaking during the PAC session with the Ministry of Labour and Employment on Monday, Mr Rapapa appeared to concur with the employers. He said while it was good to increase the workers’ salaries, there was no way the factory owners could afford to pay wage increments in a short space of time and remain viable.
He warned the government to brace for the worst as the unsustainable wage increments could force some factory owners to close shop as was the case some years ago in neighbouring South Africa.
“I can only imagine the costs of running business which include workers’ salaries, cost of the materials, electricity and many others.
“Then there is the 62 percent increment that is going to be paid in arrears. That comes up to almost M25 million. To expect the investors to raise that amount and arrears in five months is not feasible,” Mr Rapapa said.
“This country is faced with a very dynamic situation where we are going to witness real problems. We can all attest to the fact that there were many factories in QwaQwa which were closed down. The problem was the minimum wage. The same happened in Botshabelo.
“While we are happy that factory workers have gotten the increment, the fact is that this places a huge burden on the employers by increasing the wage bill by 62 percent plus the arrears. This country is in trouble. We are at the crossroads.”
Mr Rapapa suggested that the government decided on the wage increment on the basis of emotions and not on facts.
“Such decisions must not be made on emotions but with numbers and facts.
“What surprised me again is that the labour unions had asked the M2000 increment in two tranches, the first tranche this year and the second next year. And a political decision is then made that the M2000 must be paid now just because there is an ILO (International Labour Organisation) study that was done five years ago. This matter should be dealt with using calculators and clear heads.”
A 2012 ILO study indicated that the living wage in Lesotho is around M2850 and since the then the trade unions have been calling for the restructuring of the minimum wage for textile workers from M 1238 to M2020 per month.
Mr Rapapa warned the government to brace for petitions from retrenched workers once the investors leave due to the unsustainable wage increments.
“The Ministry of Labour should prepare for unrest when the investors leave,” Mr Rapapa added.
Fellow PAC member, Palo Leteetee, concurred with Mr Rapapa, saying a government bailout to enable the factories to pay their workers was the only solution to what he said was the impending unrest.
“I was hoping that the Labour Commissioner (‘Mamohale Matsoso) tell us that there is a bailout plan from government. How is this going to work out? Even China Garments Manufacturers (CGM) was given a bailout to sustain its operations. The only solution is for the government to bailout all the factories so that they are able to pay their workers or we will be in trouble. They (investors) will go,” Mr Leteetee said.
In 2008, CGM received a M30 million bailout from government to enable it to remain viable.
PAC chairperson, Selibe Mochoboroane however, differed with his colleagues, saying the 2012 ILO study showed that the factory owners could afford the salary increments but they were just not willing to award them.
Another legislator, Thabo Sofoneea, concurred with Mr Mochoboroane, saying it was disheartening that five years after the ILO’s recommendations, the minimum wage had still not been increased.