Warning over minimum wage hike for South Africa

The National Minimum Wage Commission has called for recommendations on a new hourly minimum wage for South Africa as part of its annual review.

Under the National Minimum Wage (NMW) Act, the commission annually assesses and reviews the minimum wage. The minister of Employment and Labour, Thulas Nxesi, then determines an adjustment based on these recommendations.

While the government has argued that the national minimum wage can be used as a tool to lift more South Africans out of poverty, businesses have warned that further hikes would be untenable and lead to additional job losses.

This is according to the National Employers Association of South Africa, which conducted a survey among employers to determine what the effect of any possible adjustments to the NMW will be on their businesses, and the extent of their ability and capacity to absorb or withstand an increase.

Given the current economic climate in South Africa, the effects of the Covid-19 lockdown, and the recent losses due to violent lootings of mid-2021, an increase to the NMW will be catastrophic to South African businesses the economy in general, the group said.

“The effect of any adjustments to the NMW should not, and cannot be considered lightly. In a country such as South Africa, which is already struggling with unprecedented rates of unemployment, extreme poverty, over-burdened employers and business owners, and a veneer-thin trust in the government and its ability to care for its most vulnerable citizens, and unaffordable NMW will completely maim the already crippled economy, leaving employers, business owners, their employees and their dependents destitute.”

If employers cannot afford an increase, they will have no other choice but to reduce working hours or retrench their employees, it said.

“What government seems to fail to understand is that when one employee is retrenched, it is not only that employee who suffers. In South Africa, we live in a dispensation where one worker is generally the only income generator in a family of four or five people. This means that they would all suffer the consequences of that one employee’s retrenchment.”

The fact that an employer may not appoint a person at a rate below the minimum wage, even with the consent of such a person, robs a potential employee from earning at least some sort of living and condemns him to a life of abject poverty, Neasa said.

“It would behove the government to reconsider its future stance on increasing minimum wages and take heed of the employers’ objections to increases. Their focus should be the avoidance of catastrophic future economic implications for the country and the rise of unemployment.

“It is time for the government to take a critical view on all the legislative measures, of which the NMW is only one, and determine which deters employment.”

Current minimum wage 

Nxesi introduced the most recent minimum wage adjustment for South Africa in March, taking the current total to R21.69 for each ordinary hour worked.

As in previous years, the adjustment provides exceptions for several worker groups, including:

  • Farmworkers are entitled to a minimum wage of R21.69 per hour;
  • Domestic workers are entitled to a minimum wage of R19.09 per hour;
  • Workers employed on an expanded public works programme are entitled to a minimum wage of R11.93 per hour.

In its 2020 report, the national minimum wage commission said that ideally, a national minimum wage should apply to all employees across the country and irrespective of sector.

The commission recommended that the minimum wages of farmworkers be equalised with the national minimum wage with effect from the date of the overall adjustment in 2021. It added recommended that the minimum wage of domestic workers be increased to 88% of the national minimum wage in 2021 and 100% in 2022.

This adjustment of the minimum wage for domestic workers and farmworkers would increase about R450 per month for a domestic worker and about R350 per month for a farmworker.

Read: This is where South Africa is heading right now: IMF.

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Warning over minimum wage hike for South Africa