Inequalities: We Need a Salary Change


By Patrick Hilger The article about a GIPF manager earning above N$52 000 (published in a free weekly newspaper last week), but not doing even her official time, reminded me to write this article. News of these salaries and performances are not new. Only at the beginning of the year, we heard about the senior management of the Windhoek municipality complaining about their salaries which were about the same amount and above. We also know the CEO salaries and envelops from at least a dozen other employers, as well as the banking sector. They all have something in common, in that they have very high running costs, charge us high fees, while, at the same time their basis clientele is earning around N$1 000 only. How can you reconcile this? It looks like the majority of the fees serve only to pay extravagant lifestyles. Why is the government not putting a lid on these salaries? Why are we actually promoting these inequalities even through BEE (just to mention the Sasol deal)? We forget that this situation was only possible as a large part of the Namibian and South African economy was based on exploitation, making these salaries in a developing country possible. After independence, the first thing to do was to put in place a law to fix the higher salaries to a fixed maximum amount, to curb this trend. Increasing the low salaries is one option, which was partially done by the government and was a good thing to do, but has its limits. Lifting up these low salaries too much has the side effects of creating inflation and unemployment which we want to avoid. And an unskilled or even semi-skilled worker who is overpaid will not make Namibia a competitive economy. Increasing the salaries of all would make everything so expensive that at the end, we are back at square one, as salaries are increasing so will be the goods and services. However, there is an option in cutting down a salary of let’s say N$60 000 to N$40 000. This would fit better in the economic marketplace we are in on the continent. If you earned N$10 000 only five years ago in Namibia, you could live a very healthy and wealthy lifestyle. These days, if you are not already a house owner in Windhoek, this will not be possible anymore. It tells me that the price increases are artificial and based on some 1% of the population enjoying such high salaries that they put property prices to the sky. However, how do they feel in a country where people have to live on N$350 and cannot afford their electricity bill, water charges or daily food? A well known (and well paid) and respected consultant during a workshop in Rundu actually was of the opinion that the GINI coefficient of 0,7 making Namibia the most unequal society in the world is biased and untrue. I guess he is used to give workshops to the middle-class and government officials. But if you go to the villages, you find women who earn nothing and have their children sleep outside under a makeshift thatched roof, exposed to the rain, cold winter nights, scorching summer days, dustbowls and dogs roaming around. They go hungry to bed and if they are sick, they still lie on the same hard floor drinking unclean water. Inequalities can also be found in countries such as Congo, Angola, Nigeria, etc. but here the filthy rich are thieves nothing more. The late Mobutu ordered cake and wine from Paris by plane on the day of his younger daughter’s wedding. However, in general, the vast majority in these countries live in the same (admittedly deplorable) conditions, thus the statistics making Namibia the most unequal society in the world are correct, it’s about numbers and living conditions between the poor and the rich. It’s a fact that only 2% of Namibia has a household income of N$339 445 or a per capita income of N$158 013 per year (Namibia Household Income survey 2003/2004) – unfortunately these statistics do not give figures about the above-N$50 000. The filthy rich claim that this is their market value and if they don’t get that salary they go elsewhere. I might ask you where – certainly not to the EU, Canada or USA as the salaries in these countries for senior management are around 6000 to 7000 Euros or N$60 000 as well, but the cost of living is three times higher, meaning that the rent you will pay for your two-bedroom flat is also N$12 000 (rent for a house goes to N$ 25 000) and the lowest salary in a country like Luxembourg (which is having the most equal income distribution in the world and thus at the other end of the scale) is N$10 000 for a worker only. So they will quickly be disappointed, especially if they have to produce and present economic results, and at these positions of senior management, overtime is not paid, you just have to deliver results. South Africa might be an escape route as it has been built with the same exploitive system as Namibia and faces the same potential explosive problems, but then let’s be honest, South Africa now has its own qualified people and only a few will be lucky to still benefit from their unjust and unequalled society. So, let’s have the courage and find a way to fit our salaries into the Namibian environment without misusing funds which are so dearly needed elsewhere. And don’t worry, nobody will run away. If you can live in luxury with N$30 000 why on earth do you need N$60 000 plus subsistence and travel allowances or housing, car and cell phone allowances? There must be something seriously wrong with the system. How do you think people earning N$600 per month reading about CEO and management staff of N$60 000 feel? I am not a communist, and I was actually born in Luxembourg which has one of the highest incomes per capita in the world but I will give you an example where I see the injustices in Namibia. If a senior engineer or an MP earns N$60 000 in Luxembourg he “only” earns 5 times the lowest salary. But if the Namibian counterpart earns N$60 000, he earns 120 times more than the average Namibian (actually 75% of the population live on less than N$700 per month, 2003/2004 Household Survey page 37) and could even employ and nourish 120 workers and their families. That is what is wrong with the system. How can you expect a worker who earns N$500 per month to perform if he sees and reads that his brother and sister earning above N$52 000 per month does not perform either? So the low production of the Namibian economy is not just lack of skills but also the lack of motivation. The teachers are a good example here. They earn quite well for African standards (and I challenge everybody to compare their salaries with any African country. In some African countries they can even stay without a salary for months). So I can congratulate the government on this initiative, but given the responsibilities a teacher has, they still get frustrated when they hear the salaries of parastatals are at a runaway. The same applies to the private sector, here salaries of N$5 000 and N$10 000 are seen as very high and senior positions reach their maximum around N$30 000. They simply cannot pay more if they want to deliver an affordable service to people who earn N$1 000, their main customers and clients. Some might argue that the salaries of the filthy rich are spent again in the economy which is a good thing. Wrong, all this money cannot be spent here but rather goes to traveling expenditures and investments outside the country and the part which is spent in Namibia is spent in Windhoek where it has recently attracted the likes of ‘Maerua malls’ which provide imported goods they are willing to pay the price for. The most damaging effects can be seen on property prices which have gone up by 300 % in only 5 years. Windhoek has become the most expensive town in Africa because even a tiny 1% of the population (18 000 people which are mostly having a residence in Windhoek) is enough for a small city with a small population (around 80 000 living in the Windhoek formal residential areas, excluding Katutura and informal settlements which increases the total population to around 240 000) to be able to auction plots for unreasonable prices and to find actually people paying for them. As other towns are following the example of the capital, inequalities are only increasing and the so-called Vision 2030 will remain a far-fetched dream. So what system should we use, the Cuban one where everybody regardless of their work, colour or qualification earns the same? This system had many merits, especially the colour blindness they created in people’s minds, already in the 1960’s when the USA still had segregating laws, and it lifted the lifestyles of many black Cubans but they did not need BEE or affirmative action schemes, as after the revolution all people were regarded as equal. However, it also generated the same faults, which is lack of motivation in people to achieve results for low payment (which is also the case in Namibia but for obviously different reasons). If you have studied hard and have responsibilities and do not earn more than a worker this can be painful as well. Private enterprises are also not encouraged, so the individual does not see the fruits of his labour. Besides, even in socialist or former communist countries, the model has unfortunately failed as human nature is not ready for this sharing of wealth. Somehow the human mind is also less creative in an environment where private ownership is not permitted and monopolistic state-owned enterprises do not make services cheaper or more efficient as history has taught us. In most countries, the socialistic ideas were betrayed, and even in these countries there was a filthy rich minority called the “Nomenclatura”. So we need to find a social way which can produce wealth, motivate and give everybody what he deserves; adapted to the socio-economic realities of the part of the world we are living in. One option would be the one found in Scandinavian countries in the northern part of Europe who charge 54% income tax on high salaries (above the N$40 000 mark) and very little on low ones. But the system incurs costs to manage the revenue collection and it takes time for the money to be ploughed back, and it still does not make the services provided by the parastatals and banks cheaper, as the company first has to pay out the high salaries. So this system only applies to countries which already have a high living standard. The only way to stop the ever increasing prices and high fees is to reduce the top salaries before deductions. And maybe some of the CEOs and senior staff should remember where they are coming from – when you climb up the ladder and have more than you need, give some of your money to charity organizations, vocational training programmes, etc. It’s not enough to give some handouts to extended families. You have to help to build up the nation as a whole not just your family. As one of the richest men in the USA, the late Conrad Hilton, creator of the Hilton International Hotel chain, stated: “It’s not what you have that makes you rich, but what you give away to others.” He gave away millions to the needy. Through this statement I ask, are our filthy rich really rich or poor? It’s up to you to decide. Given the high turnover of CEOs or directors at parastatals such as the NDC, Air Namibia, GIPF and the very high fees of others – Telecom, Nored – I wonder if our parliamentarians could not come up with a law to put up a maximum salary scheme, so that the people employed become workers who are working again and not liabilities to the company and the nation. I do not want to generalize and I am sure that there are also some very hardworking highly paid senior staff, but if your salary is around N$60 000 and above per month and you look yourselves in the mirror when you get up each morning, ask yourself with the hand on your heart, do I really need this, should I not lobby that all high wages should come down to a more reasonable level. I know that you will not want to give up your lifestyle especially if others don’t either, that’s why we need a law bringing down all the salaries to the ground at the same time. And honestly if you go home with N$35 000 or even N$40 000, in our economy it’s still more than you need and you can still travel for which you still pocket S&T, right? If a medium enterprise makes a turnover of N$50 000 with a net profit of N$10 000 per month it’s regarded in this part of the world as a healthy enterprise. Now why do we come up with salaries above N$50 000 which is above the total turnover and income of a small to medium enterprise in Namibia. What I like in the initial Cuban philosophy is that they considered themselves as workers working for a common cause. Let’s see ourselves as such, you are still a worker, even if you are a CEO of this or that parastatal and you have to be accountable to the nation. To end and leave you something to reflect on, what is the salary of a salesman/woman or worker in any Chinese shop (guess before you look further?) – N$300 per month (prior to deductions and of course no paid leave days)? And how much is the S&T per day of any senior manager in the public service, above N$500 per day on top of his salary. And where is crime coming from? Unfortunately the thieves don’t differentiate whether this is hard earned money or give-aways from which he wants a part of the cake. So at the end of the day if we cannot fix the problem from both ends, pay decent salaries and cut at the same time the exorbitant ones, Namibia will not just be in the club of the highest inequalities but also the one with the highest crime rate. * The writer is an agro-socio economist.

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