Minimum wage in Mozambique’s industrial sector higher than productivity of companies

24 January 2014

The national minimum wage paid by the industrial sector in Mozambique is higher than the productivity seen at Mozambican companies, according to a study carried out by the country’s Ministry for Planning and Development (MPD), published Thursday in Maputo.

According to the “Survey of Manufacturing Companies – 2012” (IIM-2012), which surveyed 761 micro, small and medium-sized Mozambican companies, the “minimum wage is higher than the level of productivity of the work for a large part of the workforce,” in the sector.

Reacting to this conclusion, the director in charge of Industry, Retail and Services of the Mozambican Confederation of Economic Associations (CTA), Mumbaraque Abdulrazac, told Macauhub in Maputo that “in a universe of 3,000 companies, perhaps 500 are able to pay,” the value of a national minimum wage.

“For many industries the minimum wage is being paid beyond the capacity of the companies, which could result in them closing and laying-off staff,” he said.

Danish economist Finn Tarp, of Copenhagen University, which co-authored the IIM-2012 survey, noted the discrepancy between salary levels and productivity, and said that the only way of correcting this was to increase the sector’s economic growth.

“The fundamental problem is that Mozambique is a poor country and, as such, the solution requires economic growth and understanding how that can be achieved,” Tarp told Macauhub.

IIM-2012 was put together by the Ministry for Planning and Development, Copenhagen University and the Business Climate Fund, following an identical survey carried out in 2006 (IIM-2006). (macauhub)