Challenges of a liberalized economy; It’s The Market Forces Which Will Determine Whether Sanyu Fm Management Was Wrong To Sack Its Employees

This week has been dominated by the news of the impromptu sacking of Sanyu fm radio workers by the management. It is believed that the Sanyu management had imposed a 25% salaries cut of the workers, who in turn, flatly rejected the idea leading to an exodus from the radio station.

Many have expressed shock that an employer can wake up one day and sack the entire work force especially during this unforgiving tough economic covid-19 period.

You can as well say that all those complaints are premised on ignorance of the workings of the current economic structure of the country.

You need to know the rules of the game to complain about the decisions of the referee.  It’s clearly obvious that most Ugandans don’t understand the working philosophy of the Ugandan economy-which is really absurd.

The Cold War Phenomenon

The reason why there was very protracted cold war between the capitalist west and the socialist / communist west was exactly because of those arguments like job security, wages control, price controls and others.

They were about who controls economic decisions and how they should be imposed on the populace.

While the capitalists adored and actually employed the capitalist system which was premised on dictates of a free market economy where demand and supply determined the flow of economic activities, the socialists/communists believed in a centrally planned economy which was dictated by the state.

In a capitalist setting there is belief in a liberalized economic environment, where the private sector is controlled by market forces of demand and supply.

In such a structure the employers and indeed the employees decide where to get/take their labor and at what rate. They make individual decisions with the sole intention of catching up with the dictates of a free market atmosphere.

That is the major reason why the minimum wage couldn’t and cannot work in a liberalized economic environment because that is determined by the labor market forces.

If the worker is talented or highly qualified, he attracts the attention of high paying organizations and vice-varsa. This gives the indispensable worker the right to make a case for how much he will be paid.

If the worker is not skilled enough or not productive enough or doesn’t contribute to the profitability of the company, then he s/he should expect anything ranging from low pay or even getting sacked.

Capitalisms is very harsh to lazy, unskilled and unproductive workforce.

In a socialist setting, however, the state determines the price of the goods on the market, determines the wages through a very strict minimum wage policy.

Socialism therefore protects laziness, un-productivity, and unprofitability.

Socialism in Africa

In Uganda of the pre-1986 era, government used to set the prices of sugar paraffin and other goods. That’s why the Ugandans had every justification to listen to the budget speech at all costs. This was mainly because the country was operating a socialist policy which is largely centrally planned.

The objective of the socialists/communists is to get rid or deter exploitation. They therefore envisage an egalitarian society where all citizens are equal irrespective of the effort they invest in their work.

The problem is that it also condoned laziness, mediocrity and paid no attention to profitability.

On the other hand the capitalist approach rewards innovation and hard work because it’s premised on the pursuit of profit.

The difference between the two philosophies was the one that led to the cold war between America and the western world at large that espoused capitalism and Russia and the eastern bloc which espoused communism and socialism in varying degrees. Russia led the eastern bloc of communists and socialists while America led the capitalist bloc.

Both powers went on to share the world basing on the two principals of capitalism versus communism.

A defeated Germany after the Second World War was divided by the Berlin wall between capitalistic western Germany and communist eastern Germany.

Korea was divided into capitalistic South Korea and North Korea (communist). America had to fight a very costly war to avert the emergence of communism in Vietnam.

The eventual outcome

The outcome of both polices is well reflected at how the countries fared in terms of economic development. The results showed that the countries that espoused capitalistic systems developed more than the communists.

In the end the communism was defeated and the Berlin wall was broken down in 1990.  From that moment on, the debate of whether a country was pro-west or pro-east never made sense because the cold war had come to an end.

During the cold war era most African leaders had adopted a socialist leaning approach. Leaders like Mwalimu Julius Nyerere , Milton Obote , kwame Nkrumah all espoused socialistic tendencies.

Patrick Lumumba was assassinated because his socialist beliefs.

It must however be honestly be emphasized that socialism was the best option for African countries because they had not developed the character to handle the exploitative challenges associated with capitalism.\

So you can as well say that the post independence African leaders were right to adopt a socialist option.

Africans had not developed the innovative character to deal with the challenges of capitalism because they were not productive enough to satisfy the supply side for goods.

For instance at the time of independence sixty years ago, most businesses were run by Indians while Africans only had to till the land.

You find that an Indian only had to hoard a given good to create scarcity which would then lead to a rise in demand and in turn a rise in price of a product.

This exposed them to exploitation from the Indians. One can also say that this was the major reason why President Idi Amin was compelled to expel the Indians from Uganda in 1972.

That scenario couldn’t happen in a socialist setting because the prices were set by central authority.

Uganda today

Today Uganda runs a mixed economy but which is largely liberalized private sector led. This approach makes it very difficult for government to provide employment to Ugandans or to even protect the citizens from exploitation.

The principal of fairness is therefore left for market forces to iron out.

The god thing is that unlike in the past, today the Ugandans have increased their level of productivity which can sustain the supply aspect of the equation.

On the labor aspect, most Ugandans have achieved some level of skill to attract a good wage.

If a given worker is skilled and productive enough, he will dictate how much he gets paid. If the workers are in big supply then their wages will go down.

Now the situation at Sanyu fm is not unique to Sanyu fm alone. It is the order of the day in all organizations around the country because of the reasons (market dictates) advanced above.

Since we have no minimum wage , like I reasoned at the beginning of this article , the employer is at free will to determine how much to pay.

But since , like I said earlier,  the employer is motivated by profit , then there is no way he will decide to either sack or cut the wages of workers who are contributing to the profitability of the organization.

Principally speaking, it’s imagined the Sanyu fm management made that decision because the revenues and profit books were not balancing.

Am not saying that employers are always right or motivated by profit all the time. Of course they make irrational decisions which are normally punished by the market forces.

What am saying is that if the employees feel that they were contributing to the profitability of Sanyu fm, then they should simply quit and take their skills elsewhere.

Personal experience

I was working at one media house, but when it made a mess of my wages, I quit. And you know what happened?

When I quit that print media house, its copy sales fell drastically to the extent that you hardly see its circulation on the streets or in the super markets any more.

But when I was still there, that paper was the talk in town, and its circulation and copy sales were felt all over the country.

The point here is that when an employer doesn’t recognize the efforts of the good worker, he pays the price. So let’s see if the market forces will punish Sanyu fm for its decisions. That is the beauty of the free market economy.

The author Fred Daka Kamwada is political journalist and a blogger

kamwadafred@gmail.com