New research by economist Mike Schussler shows that there are large sectors in South Africa which already pay salaries far higher than the proposed national minimum wage levels – but will still be negatively impacted should it be implemented.
According to Schussler, average monthly salary data from South Africa’s major sectors (excluding directors), shows that industries such as the vehicle manufacturing industry and others in the formal sector pay well above current levels of minimum wage.
Depending on which metric you look at, at present the national minimum wage range seems to be anywhere between an estimated R2,000 a month and R5,500 a month.
However, looking at a median wage (the middle point of the scale), it is likely to be below R3,000 a month, the economist said.
Currently there are three main groups that cover some form of minimum wage in the country:
- Sectoral determinations, which cover approximately 5.1 million employees, have minimum wages that range from R1,813 per month to a high of R9,991 per month for qualified artisans in the civil engineering business sector.
- Next, bargaining council wage agreements, which cover about 2.6 million employees, range between R1,200 for hairdressers, to R12,974 a month for highly skilled new artisans in the tyre industry.
- Thirdly, trade unions represent another 1.1 million members and influence an estimated 1.7 million employees, and carry the highest minimum wages – from about R7,081 a month for certain workers in the coal sector to a high – without benefits – of R22,978 a month for artisans in the motor vehicle manufacturing industry.
According to Schussler’s findings, some minimum wages in these covered sectors, put workers in the top 20% or higher of wage earners in the country.
“Many minimum wages in South Africa – in both the public and private sectors – are already many times that of the typical wage earner who receives an estimated R3,200 a month,” Schussler said.
“It indicates that many sectors have minimum wages that are many times that of the proposed minimum wage – whatever that is likely to be.”
The economist highlighted the top 20 non-financial sector industries which have the highest average salaries (using quarterly labour survey data) in 2016.
|#||Sub-sector (formal, non-financial)||Average monthly salary||% above formal sector average|
|1||Petroleum refineries and processing of nuclear fuel||R44 120||136%|
|2||Air transport||R42 042||125%|
|3||Electricity and utilities||R39 984||114%|
|4||Computer and related services||R37 216||99%|
|5||Architectural, engineering and other technical activities||R34 772||86%|
|6||Research and development||R31 265||67%|
|7||Legal, accounting, bookkeeping and auditing activities||R30 735||65%|
|8||Post and Telecommunications||R28 487||53%|
|9||Motor vehicle manufacture||R28 067||50%|
|10||Medical instrument manufacture||R27 577||48%|
|11||Basic precious and non-ferrous metals manufacture||R26 275||41%|
|12||Other educational institutions||R24 634||32%|
|13||Extra Budgetary institutions e.g. SETAs UIF etc||R24 466||31%|
|14||Collection, purification and distribution of water||R24 253||30%|
|15||Basic chemical manufacturing||R24 203||30%|
|16||National government departments||R24 159||29%|
|17||Advertising industry||R24 123||29%|
|18||Freight forwarding; broking and Travel agencies||R24 056||29%|
|19||Special purpose machinery manufacture||R23 447||26%|
|20||Real estate agents and brokers||R23 301||25%|
Research done by the School of Economic and Business Sciences (SEBS) at the University of the Witwatersrand, however, shows that there are as many as 2.35 million low-wage workers are excluded from minimum wage coverage.
The implementation of a National Minimum wage would thus protect these vulnerable workers – and a level of R4,000 was determined to be the best level, which would have minimal economic repercussions.
Economists have rebutted the findings, however, saying that implementing a wage at that level will lead to job losses in the short-term, with other effects – such as inflationary pressures – following soon after.
This means that companies that already pay well above already-established minimum wage levels will ultimately end up worse-off, doing more harm than good.
“It is clear that all of the industries listed above will not be affected by a minimum wage law, although they may not be aware of that,” Schussler said.
“Unfortunately, these sectors represent the industries who will pay for the minimum wage if it triggers an inflation increase.”
Economist Dawie Roodt has previously said that simply increasing wages would do nothing to counter the root effects of poverty – namely critically low employment, low productivity and and poor education.
Roodt said that a national minimum wage of R4,000 would kill jobs, and put South Africa in an even worse position than before.
“Unless you improve education, you are simply not going to get higher productivity and higher wages,” he said.