What the national minimum wage will cost SA

Cosatu has joined the EFF in supporting the implementation of a national minimum wage – but research shows that sacrifices will have to be made.

According to a report by the City Press, research into a potential national minimum wage shows that – no matter how low the wage is set, it will cost South Africa jobs, in a market where over 8.4 million people are unemployed.

Cosatu are calling for a national minimum wage of between R4,500 and R6,000 to be set for workers in South Africa. This echoes the call from the EFF to establish a national minimum wage of R4,500 in 2016.

Currently, Wage regulation in South Africa takes place through collective bargaining and direct regulation of pay for vulnerable workers via the sectoral determinations.

The average minimum wage is a monthly wage of R2,731.74 across all the private-sector bargaining councils; and in the region of R2,362.36 across all the sectoral determinations.

Despite this, however, many workers in the country are still paid below minimum wage – and as many as 60% of South Africa’s workforce earn below R3,000.

The bare minimum cost of living (survival line) for a family of four exceeds R5,500 a month.

After finding that South Africa’s poor live on R7 a day, the Pietermaritzburg Agency for Community Social Action (Pacsa) said that the minimum wage should be R8,000 “if we are talk of the possibility of accessing a basic life of dignity”.

Research has shown that setting the minimum wage at R6,000 in the country, would result in around 65,000 job losses, and push South Africa’s unemployment rate to 25.9% by 2020.

However, this may be a narrow-minded way to look at it, as the same research also showed that even a low minimum wage could boost the South African economy by 0.2%, the City Press reported.

The impact of a minimum wage would be most felt in the manufacturing and hospitality industry, the report said with the services sector most likely to see jobs go.

DA shadow Minister of Labour, Ian Ollis, has previously said that the debate on a national minimum wage is currently irrelevant as the country has over 8.4 million unemployed people who couldn’t benefit from it anyway.

“Giving R300 or R400 extra to someone via a minimum wage might provide a little help for those who already have a job, while ignoring those 8.4 million South Africans who sit on the side of the road in Alexandra, Ekhuruleni or Mamelodi every day looking for work,” he said.

“The national minimum wage debate does exactly the wrong thing. It attempts to ease our consciences appearing to do something for the poor, when actually we are just making it more difficult for those 8.4 million unemployed people to get jobs, or just plain ignoring them completely.”

Ollis stressed that the DA is not against minimum wages, but it must be sector specific to curb job losses in marginal industries such as textiles and, more recently, steel, as well as those where rapid increases will lead to job losses such as agriculture, security services and domestic work.

You can read the full story in the City Press for 29 November 2015

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What the national minimum wage will cost SA