Higher South African minimum wages proposed for 2021

The National Minimum Wage Commission has published its annual review of the national minimum, including a proposed increase for domestic workers and other employees.

The National Minimum Wage Act, which was officially introduced in 2018, requires the commission review the minimum wage on an annual basis – soliciting comment from both experts and the public.

The three  key findings of the commission are as follows;

  • The majority of Commissioners recommend that the national minimum wage should be increased by 1.5% above inflation as measured by the consumer price index (CPI);
  • The majority also recommend that the minimum for farmworkers be aligned with the national minimum wage in 2021;
  • The minimum for domestic workers be gradually increased to equal the national minimum wage by 2022.

Annual adjustment 

The majority of commissioners proposed  that the national minimum wage be increased by the rate of inflation plus 1.5%.

The inflation rate, measured by CPI, as of September 2020 was 3% so the adjustment should be on the order of 4.5%, the commission said.

The national minimum wage was originally set at R20 an hour in 2018. In 2019, the Commission had only just been established and was therefore unable to undertake a full annual review.

At the time it recommended that the national minimum wage increase at the rate of inflation for the poorest decile of households the year to March 2020, or 3.8%.

The national minimum wage therefore increased from R20.00 to R20.76 an hour from March 2020. A 4.5% increase would effectively see the minimum wage rise by around a further 93 cents to R21.69.

In making this adjustment, the commission has to consider a range of factors including:

    • Inflation, the cost of living and the need to retain the value of the national minimum wage;
    • Wage levels and collective bargaining outcomes;
    • Gross domestic product (GDP);
    • Productivity;
  • Ability of employers to carry on their businesses successfully;
  • The operation of small, medium and micro enterprises and new enterprises;
  • The likely impact on employment or employment creation.

Equalisation 

The commission said that ideally, a national minimum wage should be applicable to all employees across the country and irrespective of sector.

To avoid excessive disruption, however, the Minimum Wage Act established lower minimums for farm and domestic workers, with a process of gradual equalisation to the national minimum wage over time.

Section 6 of the Act mandates the Commission to make recommendations to the Minister of Employment and Labour on this topic.

In 2018 farmworkers were entitled to a minimum wage of R18 per hour and domestic workers to a minimum wage of R15 per hour.  The minimum wages of farmworkers and domestic workers increased in March 2020 to R18.68 and R15.57 respectively.

Thee recommendation of the commission is that the minimum wages of farmworkers be equalized with the national minimum wage with effect from the date of the overall adjustment in 2021.

The commission recommended that the minimum wage of domestic workers be increased to 88% of the national minimum wage in 2021 and to 100% in 2022.

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


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Higher South African minimum wages proposed for 2021