Monday, April 30, 2012


South African millionaire Herman Mashaba is leading a fight “against” labour in his country.

He says the country’s labour laws, which are intended to protect labour from apartheid-like exploitation are actually counterproductive – slowing business expansion and therefore costing the country jobs in the misguided attempt to save jobs.

The Labour Relations Act, Mashaba argued recently in Forbes magazine, “ Is really destroying jobs in our country …. No one goes into business to employ people. You go into business to make money,” the self made millionaire said.

 And Mashaba who lifted himself by his boots traps and built a fortune in cosmetics should know.

The perennial tension between labour and capital, while less antagonistic than it was while communism was a global counterweight to the free market, is still very alive, though the balance has shifted irreversibly towards capital with our new unipolar world.

Reflecting on Labour Day the Ugandan worker is not having an easy time. Woefully under represented, criticized for being unproductive and seemingly trampled on at the expense of “investors” they may have seen better times.

To turn this sorry situation around it goes without saying that labour needs better leadership.

The main challenge for Uganda’s labour is its relative level of unproductivity when gauged against regional and continental standards.

Last year a study showed that a Kenya at a comparable job level does the work of six Ugandans and a Tanzanian does the work of three Ugandans.

Casual onlookers quickly jumped on the subject to harangue our workers for being lazy, good for nothing space occupiers. But the reason for this I think has its source in an unlikely place – the lack of a minimum wage in Uganda.

Government argues that instituting a minimum wage would act as a disincentive to investors. In fact Uganda’s relatively lax labour policies are where the country scores highest in competitive measurements.

What no minimum wage does is allow for low quality investors, who are unwilling to invest in better technologies to set up shop here.

This is important because the low productivity of the Ugandan worker is less a function of laziness as it is a function of being undercapitalized. Basically because an employer can employ three workers where he could have employed only one supplemented by technology, our workers produce less per person than their more capital enabled cousins in Kenya and Tanzania.

A minimum wage would discourage the poor quality investor and allow in the better quality investor ready to inject capital into his enterprise and employ less workers per unit of output to make it viable.

Maybe Uganda could not afford the luxury of more expensive workers because in the absence of adequate power it is hard to justify increased mechanization. But now that our power deficit – we have been promised, will be sorted out once and for all come July, it is time to rethink the minimum wage.

And Uganda’s labour needs to position itself for this seemingly populist proposal, because inevitably low skilled labour will be ditched for higher skilled workers who can man the newly automated plants.

In addition government too needs to rethink its policies on taxation. To get the African to produce cash crops for her factories the colonialist introduced the poll and hut taxes. Africans then had to produce cash crops to get the money to pay the tax.

The politically motivated scrapping of the graduated tax a few years ago has affected productivity in the rural areas. It is true that there are some people in our society who are internally motivated and work without external compulsion, those are the barest minority. The vast majority of people need external stimuli to work and that is what taxes do.

What is popular is not always right and what is right is not always popular. But a reinstatement of graduated tax – while expensive to administer, would have the far reaching effect of getting our workers off their back sides.

A land tax to unlock all the thousands of square miles around our country would be similarly useful.

Back to labour. In order to retains it relevance labour needs to shed its antagonism towards capital by understanding it allowing itself to insert itself into their thinking. They have no choice because capital has more influence over governments than they do.

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