What you need to know about minimum wage in South Africa

 ·7 May 2016

The design and implementation of the national minimum wage legislation – and the level at which it set – will be crucial.

This is the word from Nicci Whitear-Nel, senior lecturer – School of Law, University of KwaZulu-Natal.

The South African government has committed to introducing a national minimum wage. At present minimum wages are set in various specific sectors but there is no minimum wage legislation which applies to all employees in South Africa.

The detail is yet to be thrashed out.

According to Whitear-Nel, there are some who are convinced that the introduction of the national minimum wage will have a devastating effect on employment.

“However, statistical modelling by Wits University’s National Minimum Wage Research initiative shows that setting the national minimum wage in the amount of between R3,500 and R6,000 per month will have a negligible detrimental effect on employment.”

This research is borne out by the extensive international research in this regard conducted in both the developed and the developing world, Whitear-Nel said.

In South Africa, when minimum wages were introduced in the domestic worker and security guard sector they did not have a negative impact of employment levels in those sectors.

“It is widely agreed that employees with the South African average of four dependants who earn less than R4,000 per month are not able to lift themselves and their families above the poverty line and are referred to as ‘the working poor’.

“Shockingly, over 40% of South African workers earn below this level. In the agricultural and domestic sectors it is estimated that a staggering 90 – 95% of employees earn below this level,” Whitear-Nel said.

Evidence showed that introducing national minimum wages contributes significantly to reducing inequality in society.

Whitear-Nel noted that South Africa is one of the most unequal countries in the world. “On average the top 10% of wage earners earn more than 24 times more than the bottom 10%, while the top five percent of the highest earners earn just about 50% more than the bottom five percent of earners. This gap is widening at an alarming rate. In 2010 the gap between the top and bottom 5% earners was 20 times less than it is today.”

“Interestingly, wage differentials rather than unemployment are regarded as driving inequality. The latest figures show that unemployment is rife – particularly among the youth (18 – 25 years old), where the official rate of unemployment almost doubles to approximately 52%,” Whitear-Nel said.

By Nicci Whitear-Nel (BA LLB), a senior lecturer at the University of KwaZulu-Natal’s School of Law.  She practiced as an attorney before joining the university.

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