The big problem with the National Minimum Wage – one year later

As South Africa approaches the one year anniversary of implementing a National Minimum Wage (NMW), critics and supporters alike are seeing some problems with the implementation.

While the minimum wage, set at R20 per hour for most workers in the country, has undoubtedly benefited a large portion of the country’s workforce by elevating their take-home pay at the end of each week or month, researchers note that it has done little to stamp out poverty, or give those workers a dignified life.

Unions meanwhile have called for the wage to be reviewed and lifted for 2020 – and for those workers not yet covered by the full amount (such as domestic workers who earn only R15 per hour) to be brought in-line with the base level.

The National Minimum Wage Act empowers the National Minimum Wage Commission to assess and review the wage each year – but it, too, is facing some problems.

According to a document presented to unions by the commission, it is taking a multi-prong approach to its review of the NMW – but it relies on data from Stats SA to do so. Unfortunately, that data has a lag of almost a year (ie, to see the impact of the NMW in 2019, the data will only be available in late 2020).

The problematic theme overall is that everyone with a vested interest in the minimum wage wants it reviewed, but the body established to do that does not have enough data at its disposal to make it happen just yet.

“The quantitative analysis is heavily dependent on the Quarterly Labour Force Survey (QLFS) administered by Statistics South Africa (StatsSA). There is an inevitable time lag in the release of the quarterly surveys, but this amounts to only two months or so,” the commission said.

“The wage data from the QLFS is however only released annually as the Labour Market Dynamics Survey (LMDS) and the time lag is close to a year. This would mean that wage data for the first year of implementation of the NMW (2019) would only be available in late 2020, never mind allowing time for analysis of the data.”

However, a representative of Stats SA has assured the commission that the release of the current LMDS (2018) is in process and that the commission can request the early release of unedited data for the 2019 period.

“This would allow the commission to produce analysis of the impact of the NMW sooner than the end of the 2020 calendar year,” it said.

“We need a higher minimum wage”

The table below outlines how different workforces are paid (in area A – mainly metropolitan areas):

However, the latest data from the Pietermaritzburg Economic Justice & Dignity Group shows that this is simply not enough.

“In most Black South African households, only one family member works. This one wage must support, a reductive average of 3.9 persons in November 2019. The baseline wages remunerated to most Black South African workers are very low. Divided by 4 persons, the wage becomes a poverty wage,” it said.

By its calculations, even in the best case minimum wage scenario (R20/hour) the average worker will only take home R3,360 a month – and when factoring in the cost of food, transport and electricity, the household is already left with a R780 deficit.

This is before any other household expenses such as education, hygiene or insurance.

As the NMW levels go down – for farm workers and domestic workers – the situation is just as bleak, if not worse.

According to unions such as Cosatu and Saftu, it is imperative that the NMW be reviewed sooner rather than later.

They argue that the level of R20 per hour was settled at back in 2017, when the NMW was first tabled, and it has not changed since then – even while the cost of living in the country continued to rise and the economy deteriorated.

To protect workers as the Act intended, the wage should be adjusted with inflation at the very least.


Read: This is the average salary in South Africa right now

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The big problem with the National Minimum Wage – one year later