Minimum wages in Mozambique have increased by 8% for workers in the state sector, the country's largest employer, following the conclusion of annual negotiations between the labour federation, the employers' union and the government on April 26th. Wages, which are negotiated annually, are set differently for 11 different economic sectors, including the government, agriculture, fishing, mining and the financial sector. The minimum wage increase for employees in public administration was among the lowest, establishing a minimum of MT2,380 (US$76) a month. By contrast, the minimum wage for agriculture and livestock workers rose by a brisk 19.3% to MT2,005, while the lowest monthly earnings in the financial sector, the best-paid group, rose by a galloping 52% to MT5,320.

Apart from the generous settlement for financial sector workers, the rises in minimum wages are modest in real terms. Indeed, the 8% rise in the minimum wage for government workers lags considerably behind the 13% average rise in consumer prices in 2010. The Economist Intelligence Unit forecasts slower inflation in 2011, averaging 7.5%, which would mean that the settlement for state employees barely represents an increase in their purchasing power this year. Moreover, the wage levels in most sectors remain very low: the minimum for government and agricultural workers amounts to little more than US$2 a day at market rates, or about US$4.50 a day in 2009 purchasing power parity terms.

The importance of minimum wage rates should not be overstated, however. Although precise data are lacking, the majority of Mozambicans are thought either to work in the informal sector or to be unemployed. Therefore, most do not benefit from even the scant income support offered by minimum wage levels.