Regulating the private security industry in Tanzania: the effect of minimum wage order

Abstract

The principal objective of this paper is to explore the effect of minimum wage order as a form of regulatory mechanism for the private security industry in Tanzania. More precisely, it attempts to assess how minimum wage impact on the pricing of services to their consumers. It explores the background, comparative analysis of minimum wages, the current legal framework and interpretation of related legislation to support implementation and assesses compliance. The study that culminated in the paper was qualitative in nature, being based on the case study of the selected private security companies in Tanzania. For this end, this paper used observation, expert opinions, interviews and documentary review for getting both primary and secondary data. The findings of the study revealed that whereas the wage order is clear, there are extensive guidelines in the labour laws that require to be read together with it, leading to misinterpretation or deliberate omission due to their impact on the pricing. The set wage results in a selling price that is 4.3 times, even with a modest 10% profit mark-up. Compliance is very low, and enforcement is weak, leading to price undercutting and causes those willing to comply lax and follow non-compliers to survive in the market characterised with price wars. Consumer is conflicted in choosing cheap service providers and enforcing compliance with the minimum wage order for the welfare of guards. The study recommends improving regulatory oversight, more awareness training of PSC directors, simplifying the labour laws to avoid ambiguity, unifying minimum wages, regular audits and educating the consumers of the link between wage and pricing of service. It also recommends strengthening the capacity of trade associations to help in the regulation of their respective members.