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Gratuity System Favours Expatriates, Says Researcher
The gratuity system, which is reserved for expatriates, continues to ensure that expatriates and a certain stratum of citizen aristocracy are more economically privileged than the rest of the working class in Botswana.
In addition, the fact that average earnings of foreign workers are three times higher than those of citizens, contributes to the unjustified aristocracy.
According to an research article authored by University of Botswana lecturer Dr Monageng Mogalakwe, titled, “The Making Of A Foreign Labour Aristocracy In Botswana”, foreign workers are paid gratuities ostensibly in order to compensate them for lack of job security, while citizens are locked in pension schemes “for their own good”, and have to wait for their retirement so that they will have something to live on.
Mogalakwe acknowledges that there is a citizen fraction of this labour aristocracy comprising mainly of chief executive officers of state owned enterprises or joint venture companies between the state and international capital. “This fraction is however small and insignificant,” he says.
“It is common practice in both the public and private sectors to give expatriates or non-citizen employees an end of contract gratuity at the rate of at least 25% of total basic salary earned during the period of contract.
For example, an expatriate who earns P20 000 a month on a three year contract will earn a gratuity of about P180 000 at the end of the contract. If such an expatriate was to have his contract reviewed five times, he would have earned about P900 000 in 15 years, over their basic salaries.
Mogalakwe argues that “it is this gratuity system that has enabled expatriates to lead better lives than citizens. He says expatriates are able to exercise control and decide on the most beneficial way to invest these gratuities and benefit from their investment. “Simply put, the gratuity system has opened to expatriates investment possibilities that are not available to Botswana citizens in comparable positions.”
Mogalakwe says the position of government is that if all citizens were employed on short term contracts, with regular terminal benefits at the end of the contract, this would increase costs, and it is economically and financially unsustainable.
“The position of government has influenced wage policy in the private sector, which has traditionally followed government, to also come to the same conclusion.”
The scholar says this explains why citizen workers are not only paid less than expatriates workers for equal work, but also why Botswana’s economic miracle has not really worked for most Batswana and Botswana remains a wealthy country with poor people.
He says local wages and salaries are based on the assumption that lower wages for the vast majority of workers would create more employment opportunities for the greatest number.
The observation is that there is no explanation for the very range of differentials, and that it is doubtful that these very large differentials which vary across economic sectors can be explained in terms of skill and experience. The purpose of the research was to investigate whether expatriate workers in Botswana are a labour aristocracy.
According to Mogalakwe, borrowing from the Tsabadiri Report, the place of recruitment should have a significant impact in determining remuneration. “For example, one would expect that foreign workers recruited from Europe or North America, who are accustomed to higher standards of living and strong currencies, would earn more if they have to be compensated for differences in hard currency earnings. But in Botswana this is not the case. It is the same for every “expatriate.”
The explanation for the higher differentials in remuneration of locals and expatriates is that “during the colonial days, the citizens of Botswana were deliberately paid low wages on the basis that equal pay for equal work would create an expensive local elite cut off from the vast majority of peasants, increase government costs and would be economically unsustainable in the long term.
“In the post colonial period, the citizens of Botswana were again deliberately paid lower wages on the assumption that a policy of equal pay (with expatriates) for equal work would mean less employment opportunities for other citizens. As a result expatriates are still notched above citizen employees of similar qualifications, skill or experience.”
“Labour aristocracy” is a term used traditionally to describe a small and relatively economically privileged section of the working class. “The concept was developed to designate a section of the working class that was in receipt of higher wages and therefore liable to compromise its class interests,” Mogalakwe states.
As for practical implications, the current set up has contributed to difficulties faced by citizen employees in Botswana in seeking to improve their material conditions.
BY AUBREY LUTE
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