Prime
Pay interest on delayed salaries
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What you need to know:
- It is very hard to understand how employees, many of whom live hand-to-mouth, can be expected to go for weeks and months without being paid their wages. It is a form of abuse to employees. How are they expected to afford to pay for basic necessities, let alone to buy school uniforms for their children. Yet they are expected to show up at work, perform their duties with smiling faces, and be thankful that they have jobs!
In its issue of August 2-8, 2023, the Kiswahili weekly Raia Mwema published an article titled, “Madaktari Selian walia njaa” (Doctors at Selian are crying of hunger). The author of the article reported that doctors, nurses, and other employees – over 500 altogether – at the Arusha Lutheran Medical Centre in the city of Arusha had not been paid their salaries for more than four months! While this is shocking, it seems, this problem is widespread.
As I was trying to find out if that was actually true or just an exaggeration by the newspaper, I learned that it was indeed true and, sadly, not an isolated case. In fact, I found out that my relative who works for a registered daycare in Moshi had not been paid for several months.
The report by the Controller and Auditor General for fiscal year 2021/22 shows that 113 local governments had accrued late payments to their employees worth Sh120 billion (about $52 million at the time).
At the same time, six local governments had accrued late payments worth Sh310 billion ($134 million) to 233 retirees. No matter what the reasons for late pay might be, employers, both private and public, should at the very least pay interest on salaries and supplemental payments that are paid weeks or months late.
It is very hard to understand how employees, many of whom live hand-to-mouth, can be expected to go for weeks and months without being paid their wages. It is a form of abuse to employees. How are they expected to afford to pay for basic necessities, let alone to buy school uniforms for their children. Yet they are expected to show up at work, perform their duties with smiling faces, and be thankful that they have jobs!
But how can they perform their duties adequately, let alone cheerfully, when they are hungry and troubled, psychologically, wondering if they are going to be evicted by their landlords for failing to pay rent on time or whether they can afford the fare for a ride to get home.
The negative multiplier effect of not paying workers their salaries and supplemental compensation on time is hard to estimate, but it must be huge. African culture is such that each worker has immediate and extended family members that depend on them. When wages and other payments are delayed, it could literally mean that some relative’s education has to be delayed or ended altogether. Moreover, in conjunction with late payment of salaries, often times contributions by the employer for health insurance are also delayed, thus putting employers and their dependants in jeopardy should they need medical attention.
Needless to say, employees who find themselves in this predicament must find ways to survive. Some, regrettably, may compromise their values to be able to get basic necessities. They may, for example, be compelled to beg from the people to whom they are providing services. Some may succumb to even worse behaviour.
Undoubtedly, some will try to find side jobs and engage in activities like selling food and vegetables. Needless to say, they will be exhausted all the time. Some may have to sell their furniture and other belongings. Many are forced to borrow from loan sharks commonly known as “mikopo umiza” or “kausha damu” (loans that are painful/loans that dry one’s blood). These seemingly callous loan sharks charge exorbitant interest rates of up to 40 percent and demand that they hold the borrower’s bank card.
Note that when employers delay paying salaries and other employee compensation for weeks, they are, in effect, borrowing from their employees, without their consent. Therefore, it is only fair that employees should be paid interest. It is the least employers should do. The interest on salaries and other compensation paid late should start to accrue from the date an employee was due his or her salary/compensation.
The interest rate should be set by the Minister of State, Prime Minister’s Office (Labour Youth Employment and Persons with Disability) and revised annually to reflect the inflation rate and market conditions. Without requiring interest payments on late salaries and other compensation, some employers can create a pattern of always being a month or two behind, and continue to “borrow” from their employees indefinitely.
