May 1st was yet another day for the world to commemorate Labour Day. Workers from all over the world are faced with different opportunities and challenges. When I was reflecting on the past Labour Day celebrations in Uganda, I noticed with concern that the debate on minimum wage did not take a centre stage as has always been the case. 

Workers in Kenya were all smiles after their President announced a 5% increment on their minimum wage. Proponents against the minimum wage legislation reform in Uganda have always argued that setting a minimum wage would scare away investors. 

This argument is flawed for two main reasons; first the country has public funded mechanisms at the department of labour capable of engaging stakeholders, particularly workers, employers and other responsible government ministries with a view of coming up with a wage that is not excessively prohibitive. 

Secondly, there is no evidence to suggest that the absence of the minimum wage reform has in any way attracted investors. To the contrary, we see many cases where investors prefer to invest in countries that in the first place have stringent minimum wage legislations because of many other reasons such as low cost of power, capital, limited structural bottlenecks and absence of red tape bureaucracy in relevant state departments. 

There are also a number of studies that have shown that a reasonable minimum wage has positive impact on economic growth arising out of increased purchasing power, access to capital for startups and many other benefits of an empowered labor market.

Our inability to have a frank and conclusive discussion on the minimum wage and pension sector reform poses a significant threat to social protection in years to come whose consequences will be unprecedented aware of the fact we have a very young working population.

According to the Uganda Bureau of Statics 2014 census report, the dependence burden has already hit catastrophic levels. In 2014, the population was reported to be young with 55% of the people in Uganda aged below 18 years with the overall age dependency ratio of 103.2 per 100 persons aged 15-64 years.

However, there are many young people who are employed as maids/domestic workers (Other forms of jobs in informal sector) who continue to sell their labour for almost zero pay. These are the majority of Uganda’s working population. These workers are neither captured under the National Social Security Fund (NSSF) nor do they have any formal pension or saving mechanisms to cushion them against future risks and vulnerabilities, especially in old age.

There are two noteworthy questions that arise; what will happen to these people without pension or meaningful savings in old age? Remember these workers will have worked for their entire productive life. The other question is whether the state will be in position to provide pension for these people in old age? This points to a desolate future aware of the fact that the Government is failing to meet basic counterpart funding for the senior citizens grant under Expanding Social Protection Programme.

It is my strong opinion that minimum wage reform linked with pension sector reform is the only viable and sustainable intervention for dealing with the future dependence problem. The perceived investors we are desperately trying to attract may not be there in 30 to 40 years to come, but the State will be there with a huge and insurmountable social protection crisis.

While we have been living in a society with strong family and communal ties, research available suggests that it is no longer tenable to hedge one’s hopes on family or community for social economic support. We are increasingly seeing older persons and children being abandoned by their close relatives and community members which points to a bleak future. 

Survival of any one shall depend either on savings or pension made in his or her productive life. Where will a maid (without savings/pension) who would have worked at someone’s home for about 40 years go when reality of old age finally comes in?

It is time to give a second look at the Arineitwe Rwakajara (Worker’s MP) Bill on Minimum wage and to urgently discuss pension reform that looks at the informal sector in order to address the future social protection challenges. The Government is also urged to provide the necessary counterpart funds in FY 2018/19 budget to support the Senior Citizen Grants under expanding social protection programmes to address the current risks and vulnerabilities for older persons in the country.