Business Botswana is calling on Government to reconsider its plan for an immediate P4,000 minimum wage, warning that a “one-size-fits-all” increase could trigger job losses, push businesses into the informal economy and hurt the workers it is intended to help.
The private-sector body is instead proposing a four-year, sector-based rollout that would start at P2,500 and gradually increase the minimum wage to P4,000.
The proposal is contained in a new Position Paper released following a survey, interviews and a national symposium on the implementation of Government’s P4,000 minimum-wage pledge.
Business Botswana said the objective of achieving “decent wages for all” was valid, but argued that the proposed P4,000 monthly floor could have unintended consequences if introduced without sufficient flexibility.
The paper comes in response to the new government’s first phase of consultations on how to implement the minimum-wage pledge made after it came into office.
Government has argued that higher minimum wages are necessary to protect low-income earners, reduce inequality and help households recover from the economic effects of the COVID-19 pandemic.
Its position is that low wages contribute to in-work poverty and wage inequality, while a higher minimum wage could increase productivity, reduce staff turnover and support domestic demand as low-income earners have more disposable income.
Business Botswana does not reject the principle of higher wages, but disputes the pace and method of implementation.
“An increase in minimum wage would not provide better protection for low-wage earners,” the paper states.
Citing economic theory and the findings of its own survey, Business Botswana argues that setting wages above market-clearing levels can undermine job creation, economic growth and competitiveness.
Job loss concerns
The findings of its Business Botswana Survey 2024–2025 provide the strongest basis for its concern.
Some 64.4 percent of respondents said they were likely to lay off employees following implementation of a P4,000 minimum wage.
A further 66.7 percent said they lacked the financial resources to absorb the increase without operational disruptions.
Most businesses surveyed expected their wage bills to rise from between 21 percent and 30 percent of total costs to more than 51 percent.
Business Botswana said the impact would be particularly significant for labour-intensive sectors.
It cited an International Labour Organisation (ILO) feasibility study for Botswana which estimated that compliance with a higher minimum wage would increase the wage bill in agriculture by 5.4 percent and in the household sector by 8.6 percent.
Who bears the cost?
Business Botswana argues that the effects would be felt most heavily by small, micro and medium-sized enterprises (SMMEs), young people, people with disabilities, low-skilled workers and workers outside Gaborone.
“Unemployment is a likely outcome for the most vulnerable segments of society,” the paper warns.
The organisation also points to possible secondary effects, including higher prices as businesses attempt to recover increased labour costs.
It argues that some businesses could accelerate automation and replace workers with machinery where possible.
Others could resort to informal employment arrangements to avoid the statutory minimum.
“Some firms may move to ‘envelope wages’ and part-time contracts to avoid the legal minimum, deepening the shadow economy,” Business Botswana said.
It warned that SMMEs could consequently employ fewer workers or, in some cases, be forced to close, potentially shifting employment towards larger firms.
The paper also questions how the P4,000 figure was determined, arguing that it is not sufficiently aligned with existing policy provisions governing the setting of minimum wages through the relevant Advisory Board.
A four-year path to P4,000
Rather than rejecting the P4,000 target altogether, Business Botswana proposes a more gradual framework based on the capacity of different businesses and sectors to absorb higher labour costs.
It recommends a four-year phased rollout with businesses categorised according to their size and productivity.
The first category would comprise medium and large, high-productivity enterprises operating at economies of scale.
Business Botswana argues that these businesses are “better positioned to implement the P4000 minimum wage adjustments without significant disruption” and could therefore adopt the higher wage earlier.
The second category would comprise SMMEs and labour-intensive sectors, which would move towards the P4,000 target incrementally over four years.
Business Botswana also recommends that Government provide at least five months between announcing a minimum-wage increase and bringing it into effect, giving employers time to plan.
While the organisation does not prescribe a single “adequate” minimum wage, it refers to international benchmarks.
A joint report by the ILO, OECD, IMF and World Bank suggests a minimum wage of around 30 percent to 40 percent of the median wage. For Botswana, Business Botswana cites an ILO estimate of approximately P2,500.
Other measures of wage adequacy include 50 percent to 60 percent of median wages or 40 percent to 50 percent of average wages.
The four-year pathway previously proposed in Business Botswana’s survey would set the minimum wage at P2,500 in the first year, P3,000 in the second, P3,500 in the third and P4,000 in the fourth.
Beyond wages
Business Botswana argues that raising wages alone will not resolve poverty or improve household incomes.
It recommends that Government also reduce taxes on labour and raise tax-free thresholds so that workers take home more without imposing the full additional cost on employers.
The organisation also calls for a review of legislation governing overtime and working hours for domestic and agricultural workers, as well as the current 40 percent threshold for in-kind payments.
It wants sector definitions to be aligned with the International Standard Industrial Classification (ISIC).
Business Botswana further argues that higher wages need to be accompanied by productivity improvements through skills development, enabling workers to create more value for their employers.
It also calls for real-time labour-market data portals for employers and employees to inform future wage-setting decisions.
Non-wage benefits, including contributions towards health and education, should also be considered as part of a broader “decent work” package, it says.
The organisation proposes non-binding reference values for wage adequacy while allowing minimum wages to vary according to sector, business size and region rather than imposing a uniform national rate.
Economic pragmatism
Business Botswana says its approach seeks to balance worker welfare with the ability of businesses to remain viable.
“The recommended minimum wage implementation strategies represent a balanced, comprehensive approach that combines economic pragmatism with social responsibility,” the paper states.
“By emphasising gradual progression, sector-specific focus, and extensive stakeholder engagement, the framework sets the foundation for sustainable economic transformation and improved worker welfare.”
The organisation acknowledges that higher wages can deliver benefits, including reduced employee turnover, improved productivity and lower levels of in-work poverty.
Women, who Business Botswana estimates account for about 37 percent of minimum-wage earners, could also benefit from efforts to narrow the gender pay gap.
But it argues that these benefits must be weighed against the potential cost of job losses and business failures.
“The cost of losing a job has to be taken into account for every employed person,” the paper notes.
The Position Paper will form the basis of Business Botswana’s formal engagement with Government.
For now, the P4,000 minimum wage remains a policy commitment rather than law.
The debate is therefore shifting from whether wages should rise to how quickly and how fairly they can be increased without undermining employment.
As Business Botswana puts it: “A good business climate is the cornerstone of any successful decent work agenda.”
Its argument is that without such an environment, a well-intentioned minimum-wage policy could leave more Batswana without jobs rather than better paid.
