South Africa’s national minimum wage is due for its annual review by the National Minimum Wage Commission.
In a recent government gazette (9 September), interested parties were called upon to make recommendations to the commission, which it will consider before compiling a report that will play a significant role in determining the annual adjustment to the national minimum wage.
The government most recently updated South Africa’s minimum wage on 1 March 2022, with the amount set at R23.19 for each ordinary hour worked, representing an increase of 6.9% from the minimum wage set in 2021.
The next adjustment is set to be implemented in March 2023. The previous increase was above inflationary levels; however, since then, inflation has skyrocketed – vastly changing market conditions.
According to Cliffe Dekker Hofmeyr, the commission is likely to take into account the following factors when recommending its new minimum wage:
- Inflation, the cost of living and the need to retain the value of the minimum wage;
- Wage levels and collective bargaining outcomes;
- Gross domestic product;
- The ability of employers to carry on their businesses successfully;
- The operation of small, medium or micro-enterprises and new enterprises;
- The likely impact of the recommended adjustment on employment or the creation of employment; and
- Any other relevant factor.
This invitation is, among other things, a chance for South African businesses to provide input into a decision that has a far-reaching impact, said Cliffe Dekker Hofmeyr.
“It is widely known that the majority of South Africans are suffering from poor socio-economic conditions, a concern which shall certainly be prevalent in the commission’s recommendations.”
“An increase in the national minimum wage, that is above the rate of inflation will provide South Africans with more spending power which will be redirected into the economy.”
Given the fact that salaries are usually the largest expenses on a business’s books, a substantial increase will have a ripple effect that may create the need for restructuring and retrenchments, said Cliffe Dekker Hofmeyr.
This is particularly important at a time when businesses are still feeling the effects of Covid-19 and have yet to enter into a recovery phase.
Once the Commission’s report has been published with its recommendations visible to the public, interested parties shall receive another opportunity to make further written representations, which will be considered by the Minister of Employment and Labour together with the Commission’s report, said Cliffe Dekker Hofmeyr.