Alarm bells over minimum wage in South Africa
Having a minimum wage in South Africa is a careful balancing act that could lead to an increase in the unemployment queue if not managed properly, says Michael Bagraim from Bagraim Attorneys.
Speaking to CapeTalk, Bagraim said that there still are thousands of workers earning below the minimum wage, and even some trade unions are avoiding approaching employers to ask for the regulated increase out of fear of being retrenched.
Bagraim said there is no exception to the minimum wage, and as a result, some businesses are not looking to employ more people.
“It’s a double-edged sword. Do we have a minimum wage and have people get paid at least something that is decent, or nothing? A minimum wage has added to that unemployment queue,” said the labour lawyer.
“Unlike the rest of the world, we have a duty to create as much employment as possible and not so much the duty to push up the wages in the sense that it is going to backfire and create more unemployment.”
The Department of Employment and Labour recently published the new national minimum wage at an increase of roughly 9.6%, bringing it up to R25.42 per hour. The new wage came into effect on 1 March this year.
Bagraim said that when legislating the minimum wage or considering adjustments, market forces should be considered, and a risk-orientated approach should be used.
We need to relook at the situation of labour law and, as a Department of Employment and Labour, instead of having a blanket minimum wage, have an inspector to take into account individual businesses’ financial standings and provide exemptions for a period of time.
Wage issues add to the already contentious employment environment where labour laws can often oppose businesses from encouraging employment due to the whole “rigmarole” of firing a person or having to approach the CCMA.
Bagraim added that the real minimum wage in South Africa is R0 because the country is close to 50% unemployment. On top of that, the minimum wage is not close to a ‘living wage’.
In April, the minister of labour, Thembelani Thulas Nxesi, said that the new minimum wage had not impacted employment numbers in several sectors, including mining, agriculture, manufacturing, trade and construction.
He said that there was no observed shift in employment following the steady increases to the minim wage over the past few years – going against economist and analyst findings that argue that increases to the wage amid the current economic climate would cripple businesses and lead to job losses.
Bagraim’s statements echo those of Daniel van der Merwe, an attorney and the National Collective Bargaining Co-ordinator for the Consolidated Employers’ Organisation, who raised concern over the sustainability of SMEs in South Africa following the announcement of the increase.
As SMEs are the largest employer in the country, Van der Merwe said that the size of the increase had left many feeling like inputs from the sector in finding a fair level for the hike was ignored.
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