We don’t need a single minimum wage in South Africa: Mboweni

 ·6 May 2016
Money Rand

Tito Mboweni, a former governor of the South African Reserve Bank, says that no worker in South Africa should earn less than R3,000 per month.

In a debate on social media, Mboweni called for sectoral minimum wages to be enforced as apposed to a single minimum wage as is being proposed by the government.

“Let’s debate: we don’t need a minimum wage in South Africa. We need a set of minimum wages. No worker should earn less than R3,000.00 pm,” the former governor said.

Deputy president Cyril Ramaphosa said this week: “We are confident that we will soon be able to agree on a level at which the minimum wage should be set that will both improve the lives of the lowest paid workers in South Africa and support our job creation efforts.”

“Introducing a national minimum wage is a step towards restoring the dignity of workers of this country,” he said.

Read: Why a minimum wage debate is irrelevant in SA right now

Mboweni said that mine workers should be paid differently to domestic workers, who in turn should be put in a different bracket to steel and engineering worker, or shop and office workers, or construction workers etc.

He stressed the call for ‘sectoral minimum wages’ and called on the Department of Labour to enforce the Legal Requirement about narrowing the gap. “It is there in the law…enforce.”

“At least nobody is opposed to sectoral minimum wages. Agreed? In that case why are politicians talking about a national one minimum wage,” Mboweni said.

At present minimum wages are set in various specific sectors but there is no minimum wage legislation that applies to all employees in South Africa.

Economist Mike Schüssler says that South Africa’s formal sector is already paying well above the minimum wage as the department of labour debates the level at which it should be set.

The government is set to implement a national minimum wage in the country in 2016; however, it is looking for guidance on what that amount should be.

Currently, wage regulation in South Africa takes place through collective bargaining and direct regulation of pay for vulnerable workers via the sectoral determinations.

The average minimum wage is a monthly wage of R2,731.74 across all the private-sector bargaining councils; and in the region of R2,362.36 across all the sectoral determinations.

Union Cosatu has called for a national minimum wage of between R4,500 and R6,000 to be set for workers in South Africa. This echoes the call from the Economic Freedom Fighters (EFF) to establish a national minimum wage of R4,500 in 2016.

The DA meanwhile, says that while it is not against minimum wages, it needs to be sector specific to avoid job losses.

In an opinion article on MoneyWeb, Schüssler, who is an economist at Economist.co.za, pointed to research indicating a median wage in the formal sector of approximately R5,100 per month.

This, he noted, is above a median figure of R4,800 per month cited by Statistics South Africa (Stats SA) in its Labour Force Survey (LFS). This figure has been at the centre of debate over the implementation of a minimum wage.

For all workers in SA, the median wage is approximately R3,200 a month, according to the LFS.

“The fact is that the formal sector is already paying well above the minimum wages, although there are a few sectors such as agriculture, retail and security industries that pay less,” Schüssler said.

He pointed out that domestic workers and informal sector employees also receive wages below R3,000 a month. However, in the formal sector, monthly wages are significantly higher than the proposed minimum wage.

More on minimum wage

The real minimum wage in South Africa

SA farm workers get minimum wage increase

National minimum wage in SA a done deal: ANC

What the national minimum wage will cost SA

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