Businesses in South Africa need to pay their workers at least R20,000 per month
South Africans are facing extreme cost pressures, and Professor Ines Meyer of the Living Wage South Africa Network says that companies should pay their workers R20,000 per month.
The network’s latest study of 2,000 participants in South Africa revealed that R20,000 was the amount needed to live a decent life.
Although the average respondent had net pay below R14,000, South Africans with net pay above R25,000 could live a decent life.
The R20,000 figure was selected as the midpoint, as it allows South Africans to adequately satisfy the following criteria:
- To realise the lives they value;
- Save something for the future;
- Be prepared for occasional emergencies, like unforeseen medical costs, and
- Enjoy a decent standard of living and human dignity
Meyer states that companies seeking to preserve their market share will eventually have to pay their employees at least a living wage amid calls for broader social reform.
“Unfortunately, many companies are still resistant because of legacy thinking that goes against what modern consumers expect from their vendors and employers,” said Meyer.
South Africans who are employed can still live in poverty as they are underpaid in relation to the cost of living.
Employers who pay living wages do so voluntarily, and it differs from the legislated minimum wage, which compels companies to pay workers a rate not lower than the prescribed amount.
She noted that the concept of a living wage considers the income a human being needs to live with a measure of dignity, in accordance with the Constitution.
The arguments against don’t work
South African companies typically have three main arguments against paying a living wage. The first is that they cannot afford it.
The second states that the cost would mean letting go of employees or hiring fewer workers, which impedes job creation and increases unemployment.
Finally, they state that the difference between the income of the lowest- and next-highest-paid workers would be unfair to higher-skilled employees.
However, data from the World Economic Forum (WEF) suggest that this is often a knee-jerk reaction, leading to flawed thinking and a lack of supporting data.
Research showed that the national minimum wage in South Africa did not result in corporate financial distress, higher unemployment or employee dissatisfaction.
“A better approach than to ask ‘can we afford it’ would be ‘how to make it happen’ as paying less means we ensure we keep employees living in poverty,” said Meyer.
Although companies may see the figures as an unwanted loss to their business, the WEF has identified many overriding benefits to the living wage.
It allows for the retention of consumers who favour ethical companies that share their value of an equitable world.
On top of the goodwill, lifting consumers out of poverty has been shown to grow consumer markets. Companies also often see less absenteeism, greater employee engagement and improved productivity.
“Worker poverty can adversely affect the entire organisation, including profits, so early adopters of a living wage initiative stand to benefit sooner and win a greater share of the market,” said Meyer.
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