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Namibia's construction industry likely to see more retrenchments

Xinhua, February 7, 2017 Adjust font size:

The Namibia construction sector will remain under pressure this year and is set to see more retrenchments, as employers are caught between mandatory pay rises and cash flow crises, according to the Construction Industries Federation of Namibia (CIF).

Andre Oosthuizen, co-owner of Namibia's OJ Construction, told Xinhua Tuesday that the industry expects to see more retrenchments in the near future.

Barbel Kirchner, Consulting General Manager of the CIF, said recently the 2 years collective agreement which stipulates a 10 percent increase of minimum wages in the construction sector, will force businesses to cut costs and make retrenchments.

The Government Gazette No. 5917 stipulates the adjustment to the minimum wages, which have to be increased by 10 percent for the first year (ie. from Jan. 1 to Dec. 31, 2016) and by a further 10 percent for the subsequent year (ie. Jan. 1 to Dec. 31, 2017).

"We realize that during an economic slowdown, it would be difficult for employers to further increase the minimum wages in the construction sector. Unavailability of work in the sector and serious cash flow crisis already has forced businesses to cut costs and make retrenchments," he said.

According to him, in order to adhere to the legislated minimum wages and minimum employment conditions, with limited scope to reduce salaries, businesses cannot avoid but retrench more individuals.

"We will definitely abide by the government gazette, but like I said we are likely to retrench employees, due to the fact that we do not have the money," Oosthuizen said.

According to him the construction industry is becoming more and more difficult, since the suspension and budget cuts by the government of more that 50 capital projects in the country last year.

Currently the minimum wage for a labourer in the construction sector is 16.04 Namibian dollars (1.2 U.S. dollars). Endit