Open up your books, Phori tell factory owners

Open up your books, Phori tell factory owners

MASERU – SMALL Businesses Minister Chalane Phori says the government is not hostile to renegotiating the M2 000 minimum wage but wants the textile companies to be honest about their financial situation. Phori was a member of the sub-committee of ministers appointed by Prime Minister Thomas Thabane to advise cabinet on the minimum wage.
Other members of the sub-committee were Minister of Trade Tefo Mapesela and Minister of Gender Mahali Phamotse.

The sub-committee recommended the M2 000 minimum wage that has triggered an outcry from textile companies that it is unstable and is likely to force some of them out of business.
Textile factories have since challenged the decision, arguing that it is illegal because it was not made by the government at the Wages Advisory Board’s recommendation as required by the labour law.
But Phori told thepost he believes the fears of wholesale company closures and looming mass retrenchments are overdone.
His committee, he said, has not seen any evidence to suggest that the companies cannot afford the new wages and are facing imminent financial ruin.
“Instead what we have is evidence that the companies are not complying with the tax and financial regulations of the country,” Phori said.
He said before its recommendations to the cabinet the sub-committee had meetings with the Lesotho Revenue Authority (LRA) and the Central Bank of Lesotho (CBL).
The idea, he said, was to check if the textile companies are complying with the financial and tax laws.

“The answer from both institutions was negative. We know that they are not complying with the laws of the country. They are not paying their taxes consistently.”
The minister said the only way the textile companies can convince the government that they cannot afford the new minimum wage is to open their financial books to scrutiny.
We want to know how much profits or losses they are making, he said.

“They cannot just say they can’t afford something without producing credible financials that show that they are struggling.”
“Only when there is an agreement that the companies are trading fairly can we have an honest dialogue about what is feasible and what is not.”
Phori said the committee also looked at the minimum wages in other African countries that have textile companies before making the recommendation to cabinet.

“It’s clear that Basotho factory workers are the lowest paid in the region. What is sad is that the same companies that are refusing to pay M2 000 here will happily pay R3 500 in South Africa.”
“What is really the difference here? The market is still the United States which pays in dollars and the salary is still paid in the rand which is equivalent to our loti.”
South Africa subsidises wages and helps companies pay for new machinery.

When this was pointed out to Phori during the interview he said Lesotho too has advantages that help textile companies.
“Our water and electricity are cheaper. The corporate tax in other countries is around 30 percent while our factories here pay a mere 10 percent. The textile companies pay less rent as well.
“The truth is that they are enjoying a lot of benefits here and the government is not getting anything in return apart from the fact that its people are exploited.”
The Lesotho Textile Exporters Association (LTEA) said the subcommittee’s allegations about tax evasion are unfounded.

“The ministers don’t understand how the tax system works. We have asked them to fully understand how the system works so that they can make an informed decision,” said a senior LTEA official who refused to be named for fear of retribution because he says he is a foreigner.
“The factory companies have been complying with the financial regulations of this country.”

The official said the companies are still hoping the government would reconsider the decision.
“We know there will be a disaster if they insist on M2 000. We know some companies are going to close. Some buyers have already called to ask about the prices. Trouble has already started.”
Meanwhile, the Lesotho National Development Corporation (LNDC) has to pick up the bill for repairing the factories damaged in Maseru and Maputsoe during the violent protests last week.
The factories belong to the corporation.

Staff Reporter

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