'Casuals hit most by financial crisis - ILO'
Dec 14, 2009
UGANDAN workers, particularly low-wage casual labourers, have been the hardest-hit by the impact of the global economic downturn, a new International Labour Organisation (ILO) study suggests.
By Sylvia Juuko
UGANDAN workers, particularly low-wage casual labourers, have been the hardest-hit by the impact of the global economic downturn, a new International Labour Organisation (ILO) study suggests.
“The assessment reveals that the most severe impact of the global economic crisis on Uganda has been a decline in real wages of the most vulnerable workers,†said Professor John Sender, a consultant from University of Cambridge, while presenting findings of the study.
The study, titled “A rapid impact assessment of the global economic crisis on Uganda,†was conducted in October 2009 on behalf of the Government.
It was launched by Eriya Kategaya, the First Deputy Prime Minister and East African Community Affairs minister, at Protea Hotel in Kampala last week.
The report notes that an ongoing steep decline in real wages was due to food price inflation and the stagnation in nominal wages.
Prof. Sender said the crisis contributed to this situation through the rapid outflows of portfolio investment, which led to a swift depreciation of Uganda’s shilling in the last quarter of 2008 and the first half of 2009.
“Food exports to neighbouring countries remained very profitable and continued to grow despite increasing domestic food prices.â€
The consultant noted that the vulnerability of the workforce was a cause for concern because it implied that future shocks could translate into large increases in Uganda’s poverty levels. “Very few workers received inflation adjustments to their salaries in 2009, or even in 2008. A number of employers have given the economic crisis as a reason to refuse wage increments.
“This was strong for low-wage casual workers, who spend a bigger share of their income on food and are less likely to receive wage inflation adjustments given their low bargaining power,†says the report.
The study points out that the global downturn led to a re-arrangement of Uganda’s export portfolio. While the country’s exports increased, the rise was driven by informal cross-border trade.
“Uganda’s traditional export crops, especially coffee, tobacco and cocoa, suffered a decline in export value caused by lower world market demand.
“In other cases like fish and flowers, the decline in exports seem to be attributable to supply constraints rather than world market conditions,†noted the study.
In addition, there were substantial declines in earnings in the tourism sector, which led to immediate lay-offs in the sector.
The study pointed to a large discrepancy between the supply and demand of unskilled labour that was caused by a rapidly growing workforce and low investment in key employment-intensive sectors.
It says the workers were equally affected by weak labour market institutions, labour organisations and a social protection system that only covers a small minority of the population.
The report suggests that the Government should focus its investment on crops and areas with the greatest potential of creating decent jobs.
“However, to minimise the short-run rate of growth of demand for vulnerable workers, this investment should use labour-based methods.â€
UGANDAN workers, particularly low-wage casual labourers, have been the hardest-hit by the impact of the global economic downturn, a new International Labour Organisation (ILO) study suggests.
“The assessment reveals that the most severe impact of the global economic crisis on Uganda has been a decline in real wages of the most vulnerable workers,†said Professor John Sender, a consultant from University of Cambridge, while presenting findings of the study.
The study, titled “A rapid impact assessment of the global economic crisis on Uganda,†was conducted in October 2009 on behalf of the Government.
It was launched by Eriya Kategaya, the First Deputy Prime Minister and East African Community Affairs minister, at Protea Hotel in Kampala last week.
The report notes that an ongoing steep decline in real wages was due to food price inflation and the stagnation in nominal wages.
Prof. Sender said the crisis contributed to this situation through the rapid outflows of portfolio investment, which led to a swift depreciation of Uganda’s shilling in the last quarter of 2008 and the first half of 2009.
“Food exports to neighbouring countries remained very profitable and continued to grow despite increasing domestic food prices.â€
The consultant noted that the vulnerability of the workforce was a cause for concern because it implied that future shocks could translate into large increases in Uganda’s poverty levels. “Very few workers received inflation adjustments to their salaries in 2009, or even in 2008. A number of employers have given the economic crisis as a reason to refuse wage increments.
“This was strong for low-wage casual workers, who spend a bigger share of their income on food and are less likely to receive wage inflation adjustments given their low bargaining power,†says the report.
The study points out that the global downturn led to a re-arrangement of Uganda’s export portfolio. While the country’s exports increased, the rise was driven by informal cross-border trade.
“Uganda’s traditional export crops, especially coffee, tobacco and cocoa, suffered a decline in export value caused by lower world market demand.
“In other cases like fish and flowers, the decline in exports seem to be attributable to supply constraints rather than world market conditions,†noted the study.
In addition, there were substantial declines in earnings in the tourism sector, which led to immediate lay-offs in the sector.
The study pointed to a large discrepancy between the supply and demand of unskilled labour that was caused by a rapidly growing workforce and low investment in key employment-intensive sectors.
It says the workers were equally affected by weak labour market institutions, labour organisations and a social protection system that only covers a small minority of the population.
The report suggests that the Government should focus its investment on crops and areas with the greatest potential of creating decent jobs.
“However, to minimise the short-run rate of growth of demand for vulnerable workers, this investment should use labour-based methods.â€