The Evolution of Labour Market Trends in Lesotho’s Manufacturing Sector: Lessons and Policy Implications

THIS ARTICLE sheds light on the key dynamics of the manufacturing sector in Lesotho during a 20-year period from 1997 to 2016, with a view of informing economic policy. The results show that factors such as inflation, labour productivity and industry average wage can be used as the basis upon which labour market polices such as minimum wages can be set.

The current nominal minimum wage has been found to be highly correlated with the past inflation rate, while it is positively and significantly related with the current labour productivity. When setting up the minimum wage based on the industry average, it has been found that the optimal level should be sought so that it is not relatively too high or too low. Keywords: Wages, inflation, labour productivity, manufacuting, employment JEL classification: E24, E31, J24, L60, O14