Business executive, Bärbel Kirchner, spoke to Observer Money on behalf of the Namibian Employers Federation (NEF) on the implications of the recently announced minimum wage of N$18 per hour.
Observer Money (OM): The government has increased the national minimum wage for all Namibian workers to N$18 per hour, what impact will this have on members of the NEF?
Bärbel Kirchner (BK): The Namibian Employers Federation (NEF) foresees significant challenges for employers due to the N$18 per hour minimum wage. Many businesses, particularly in sectors where profit margins are low, will struggle to accommodate this sudden increase. This may force employers to make difficult choices, such as reducing operations or, in some cases, retrenching staff to manage the added costs. There is also a concern that businesses might need to pass on these cost increases to consumers, potentially fueling inflation and undermining the intended welfare benefits for employees.
OM: Has the NEF done any research on how much the new minimum wage will cost employers?
BK: The NEF has expressed concerns that the Ministry of Labour, Industrial Relations and Employment Creation (MLIREC) did not adequately address the NEF’s material concerns about the potential economic implications of this wage adjustment. While specific cost projections may vary across industries, the NEF’s position is based on broad input from its members, who anticipate significant financial pressures. This feedback highlights a need for comprehensive, sector-specific impact assessments to guide any wage policies effectively.
OM: What is the NEF opinion on the N$18 minimum wage, how much would be ideal?
BK: The NEF believes the N$18 wage is not universally sustainable and may not be appropriate across all sectors due to Namibia’s economic diversity. The organisation had advocated for a more measured approach, which would consider sector-specific circumstances and allow for exemptions where necessary. The NEF’s ideal scenario involves sector-sensitive wage determinations, alongside enhanced consultations and tripartite deliberations, to ensure sustainable implementation without adverse impacts on employment.
OM: The new wage will be implemented on 1 January, which appears short notice, what is your opinion?
BK: The NEF finds the 1 January 2025 implementation deadline to be short notice, especially given that comprehensive discussions have not concluded. A deferment of six months is being requested to allow businesses adequate time for operational adjustments, thereby avoiding potential disruptions in December that could harm both business continuity and social stability. Such a deferment would help ensure a smoother transition and give employers time to make necessary financial and staffing arrangements.
OM: What is your member’s opinion on the minimum wage and how it will affect their operations?
BK: NEF members are concerned that the rapid implementation of a nationwide minimum wage, without sufficient consultation, may lead to operational strain. This includes the risk of further retrenchments and a shift toward informal employment or technological replacements. Members also fear that increased wage costs may inadvertently result in inflationary pressures, eroding purchasing power and ultimately impacting employees.
OM: Anything else that you may wish to add?
BK: The NEF strongly advocates for a parliamentary review of the wage decision to ensure that all stakeholders, including Parliament, are actively involved in determining a wage policy that supports both economic stability and worker’s welfare. The organisation remains committed to government efforts to improve worker welfare but emphasizes that this must be achieved in a manner that aligns with economic realities and the needs of businesses.
