ZATI deliberations on raised minimum wage submitted to the Zanzibar government


(Posted 14th July 2017)

Following a meeting of Zanzibar’s tourism investors following the sharp rise in minimum wage proposals made by the island’s government, has the following position been presented to the Government of Zanzibar:

In reference to the Stakeholder’s meeting that was held at Zanzibar Ocean View on 6th July 2017, below are the deliberations and position that ZATI has presented to the Government:

  1. We support the Government´s promise of wage increase and where economically possible will comply.
  2. However we strongly have to object to over 100% increase to the minimum wage, for the following reasons:

A jump from TZS 145,000 to TZS 300,000, is too sudden and the amount is too high.

  • If the lowest salary increases to TZS 300,000 we will have to make increments to all other higher salary levels and in our industry that can be up to 6 tiers of skills levels.
  • The payroll for all institutions will as much as double, and this cannot be afforded. Some of our members employs upward of 500 people.

B.It comes at the same time as ZSSF increases from 15% to 20% on gross contracted salaries and not as before based on basic wage of TZS 145,000. This was also imposed without discussion with the tourism stakeholders.
C. Even though PAYE was reduced slightly last month it does not compensate for the combined effect of A and B.
D. The proposed rate will result in increased inflation rates further increasing the cost of operation. Inflation rates have been declining to single figures but this proposed wage increase will without a doubt reverse that process.

E. The effect will be to force businesses to shed labour causing job losses which will impact badly on the crime rates
F. It will cause the removal of casual labour which will hit the lowest skills and poor people in rural populations who make up the majority of this group.

  • Outsourced services and contractors will also be putting up their charges so the burden will be further increased.
  • This increase will turn away future investment with the result of less economic growth for Zanzibar

In conclusion, the Tourism industry, be it hotels, restaurants or tour operators is a labour intensive industry with a range of skills and unskilled employees. If the starting base is TZS 300,000 the domino effect of that starting point will be an un-sustainable payroll.

Zanzibar tourism is an internationally competitive industry. It is not possible to raise room rates, as we are already an expensive destination. It will be impossible to mitigate the increase in payroll this way

We believe a priority for all concerned, for the Government, the industry and the public should be to increase employment. If the higher tier of TZS 300,000 was to apply to the tourism industry the result will be for our industry to shed labour at a significant level.

Considering the above points, the proposed minimum wage for the Tourism industry should be TZS 180,000.

The rate increase proposed for casual labour is also unattainable. This will discourage employment of seasonal unskilled workers such as additional gardeners etc, this will result in loss of income at the grass root level as stated in E above. The rate for unskilled daily labour in the Tourism industry should be TZS 10,000.00 per day and skilled labour TZS 15,000.00.

We shall keep you updated on the negotiation progress with the government.

Best Regards,