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Workers demand VAT cushion

Mohalenyane Phakela

A FACTORY workers association, the Independent Democratic Unions of Lesotho (IDUL), has pleaded with the government to gazette a salary increment that will cushion workers against the erosion of their disposable income by the recent increases in value added tax (VAT) and planned hikes by transport operators.

In a recent interview with the Sunday Express, IDUL board member, Rathakane Rathakane, said that while they were looking forward to a salary increment in the new financial year which begins on 1 April, they were however, concerned that the recent increases in VAT.

Finance Minister, Moeketsi Majoro, announced the VAT increase to 15 percent from 14 percent during his budget speech in parliament.

Dr Majoro also proposed to gradually increase VAT on telecommunications and electricity, which presently stand at 5 percent to align to the unitary rate of 15 percent. This coming financial year the VAT will be increased by 4 percent for telecommunications and 3 percent for electricity.

According to Mr Rathakane, “The VAT increase is very disturbing to factory workers who are already earning meagre salaries”.

“Workers have to pay rent, school fees and buy groceries from the little they earn. It is very difficult to understand how the workers survive.

“Apart from the other prices which are subject to change, transport operators have already revealed that they are demand an increase in the taxi fare from M6 to M15.

“This is a huge blow to the factory workers who already forced to walk long distances to and from work because they cannot afford even that M6 or the discounted fare of M5. If they cannot afford M6 or M5, what more if the price increases by 150 percent?”

A general factory worker and a trainee machine operator who have been working for less than a year in Lesotho, each earn M1 238 per month while a sewing machine operator earns M1 331. The general worker who has worked for more than a year earns M1 372 while a machine operator earns M1 456.

Lesotho has 55 textile factories and six of these are locally-owned, 17 South African-owned, eight are Chinese-owned and 24 are owned by the Taiwanese.

80 percent of the factories export their goods to America and the rest are exported to South Africa.

While welcoming foreign investment, Mr Rathakane however, bemoaned the low salaries which are way below those offered in China, South Africa and Taiwan.

Research has shown that the minimum wage in China is RMB2 300 (M4 300), NT$22,000 (M8 600) in Taiwan and R6240 (M6240) in South Africa.

“Whenever we demand salary increments, we are told that the ‘ridiculous’ amounts that will chase away investors. We understand that but in these investors’ home countries the basic salaries are way higher than those of our country.

“We have therefore asked the government to ensure that workers are paid at least half of those paid in the investors’ home countries,” Mr Rathakane said.

In the 2017/2018 financial year, the factory unions were at logger heads with the government demanding a 9 percent increment while the government offered 7 percent.

Mr Rathakane said that they were still awaiting judgement over the issue as they had taken the matter to court. He said they were also in talks with the government regarding the increment which will be effected on 1 April this year.

“We asked that when they review the basic salary, the government should consider the inflation rate as well as the conditions at the factories,” he said.

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