Trouble for domestic workers in South Africa in 2024

 ·23 Jan 2024

Domestic workers in South Africa can look forward to higher mandatory pay this year – but overall job security is at severe risk as the financial pressures on the households that hire them are not letting up.

Indebted South Africans will be waiting to hear if they will be given any relief this week when the South African Reserve Bank (SARB) announces its first interest rate move of the year.

Analysts and economists widely expect the central bank to hold rates at current levels – which means households will face higher, restrictive rates for longer, keeping the financial pressure on.

The latest Credit Stress report from Eighty20 revealed that middle-class South Africans were seeing an increased rate of new defaults on loans over the last quarter, while wealthier households were increasingly turning to credit to make it through the month.

The pressure on households has been felt across the economy, with the final quarter of 2023 showing weak consumer spending and retail sales, putting the country at risk of entering a technical recession.

According to Eighty20’s data, middle-class households have a credit-instalments-to-monthly-income ratio of 73%, while heavy-hitters (the wealthiest 5% of the population) carry a ratio of 61%.

The data shows that the households in South Africa most likely to hire domestic workers have little room to take on more costs in 2024 – and there appears to be no relief on the horizon.

Interest rates are only forecast for cuts in the latter half of the year, while the Treasury is expected to find new ways to wring tax revenues from the tax base in February.

Domestic worker jobs are inextricably tied to the economic prospects for private households and the performance of the broader economy in South Africa.

When exceptionally tough economic times hit – as has been the case for the last three or four years – households clamp down and tighten their belts, and luxuries like domestic help are often some of the first expenses to go.

These households now face not only the prospect of possible tax hikes or a squeeze from Treaury and continued pressure from high interest rates and a stagnating economy – but also the cost of mandatory increases from an above-inflation increase to the national minimum wage.

The National Minimum Wage (NMW) Commission has recommended a CPI+3% increase to the NMW in 2024, which would increase the hourly rate by around 9% to R27.71 per hour in 2024. This would increase the monthly salary for a domestic worker to about R4,300 a month.

Domestic worker jobs in peril

Research in 2023 from domestic services platform SweepSouth showed that, alarmingly, the average domestic worker earns under R3,000 a month – despite the minimum wage requirements.

In addition to this, the group found that thousands of domestic worker jobs were lost in 2023. The reasons for this ranged from economic troubles to increased levels of emigration.

This loss of jobs has been reflected in quarterly employment data from Stats SA since 2020.

South Africa has historically had around 1 million domestic workers employed in the country, but this took a massive hit in 2020 following the Covid-19 pandemic and subsequent lockdowns.

Around 250,000 domestic workers lost their jobs in the quarter following the lockdown before recovering in subsequent quarters – but never going back to the numbers seen before.

The sector is now entering its fourth year of struggling to get these jobs back, with the latest data pointing to around 150,000 domestic workers still lost to the market.

Read: Big pay hike for domestic workers coming in 2024 – here’s how much you could be paying

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