How minimum wage salary slip will be from July

Dar es Salaam. Civil servants receiving the minimum wage will see their take-home pay rise by between Sh42,000 and Sh45,000 from July.

It was announced on Saturday that President Samia Suluhu Hassan had approved a 23.3 percent increase in the minimum wage effective July 1.

With the minimum wage currently in the region of Sh300,000, a 23.3 percent rise translates into an additional Sh69,900 in the gross pay.

Considering that public servants pay five percent of their gross salaries as social security savings, it means that at least Sh18,500 will be deducted from the gross pay.

If the remaining sum is subjected to the Tanzania Revenue Authority’s pay-as-you-earn calculator, Sh6,512 will be further deducted, leaving minimum wage employees with Sh344,893 in take-home pay.

Stakeholders say the increment will increase workers’ purchasing power and stimulate the economy.

Trade Union Congress of Tanzania (Tucta) president Tumaini Nyamhokya said the 23.3 percent increment was a “boom”, bearing in mind that it had been a long time since the government last increased salaries.

The government last raised civil servants’ salaries seven years ago, and calls for further increases had in the past fallen on deaf ears despite the spiralling cost of living.

“This (increment) will increase purchasing power, and eventually enable workers to purchase what they previously could not afford,” Mr Nyamhokya told The Citizen.

His sentiments were echoed by economist from the University of Dar es Salaam, Dr Abel Kinyondo, who said inflation had eroded workers’ purchasing power over the years.

“Something is better than nothing. Although the increment doesn’t reflect the current cost of living, it will nevertheless bring some relief,” he said.

Dr Kinyondo added that an increase in disposable income would further stimulate the economy due to the expected redistribution of income.

“This (salary increment) is a perfect way of stimulating the economy. Consumption is one of the most effective ways of building the economy, and for one to consume, they must have purchasing power,” he said.

Prof Haji Semboja of the State University of Zanzibar said the salary increment was likely to increase workers’ morale.

“The government has played its part, and it’s time workers reciprocated by increasing productivity,” he stressed.

The increment will increase the government’s wage bill in the 2022/2023 financial year by Sh1.59 trillion, equivalent to 19.51 percent, compared to 2021/22 .

Prof Semboja cautioned that failure to adjust to the wage bill could lead to job cuts, or a freeze on hiring of new workers.

“The government should not cut jobs, but rather motivate workers to increase productivity,” he recommended.