International Journal of Research and Innovation in Social Science (IJRISS) |Volume VI, Issue X, October 2022|ISSN 2454-6186
Impact of Minimum Wage non-compliances on Employment in Cameroon
Joachem Meh Bin, Aloysius Mom Njong & Moses Ofeh Abit
Faculty of Economics and Management, University of Bamenda-Cameroon
Abstract: This paper investigates the impact of minimum wage theft for employment in Cameroon using the 2005 and 2010 Cameroon labour force surveys. To achieve these objectives, use is made of the Difference-in-Differences estimator, hackman two step approach, instrumental variables approach. Empirical results revealed that minimum wage theft is more prevalent, deeper and severer among rural (female) workers than their urban (male) counterparts. Results also reveals a negative relationship between minimum wage theft and employment in 2005 and a deeper disincentive effect on employment between 2005 and 2010. These findings suggest that government should increase minimum wage theft control and impose penalty for violating firms.
Keywords: Minimum wage theft; employment; Heckman two-step approach; DID estimator; Cameroon
I. INTRODUCTION
According to the National Institutes of Statistic (NIS), minimum wage rate in the Cameroon labour market has witnessed an increase between 1992 – 2008; it was 23514 FRS, 28216 FRS in the period 2008 –2013 and 36270 FRS from the 30th of June 2013 till date. Despite the increase in the minimum wage rate, some firms do not respect the stipulated rate which lead to minimum wage theft in the labour market and it intend affect the wages of the workers and reduce their welfare. Other things being equal, workers are expected to be paid where their supplementary or additional productivity are equal to the respective price especially in the informal sector of the country (NIS, 2010).
This minimum wage violation is more evident with the private sector especially the informal sector. Minimum wage violation in Cameroon, is done knowingly and unintentionally by employer in a number of ways, where employees work off the clock, not paying commensurate overtime rate, misclassifying workers, not paying a worker’s final pay cheque after a job separation, paying by-the-day or by-the-job, and by not making unemployment insurance contribution or worker’s compensation (Bobo, 2009).
The most convening explanations for minimum wage theft have to do with the relative monopoly power of firms. With extensive unemployment, there are lots of people willing and able to take jobs, so employers do not feel pressure to improve wages and standards in Cameroon. Also, the existence of little or no trade union in the informal sector leads to weak bargaining power of workers and make employers to steal their wages and do not respect labour laws in the Cameroon