How South Africa’s proposed R3,500 minimum wage compares to the rest of the world

Deputy president Cyril Ramaphosa has delivered the “magic number” for the national minimum wage in South Africa – R3,500 per month, or R20 per hour. This is how it compares to other national minimum wages across the world.

A comparison done in April by the World Economic Forum found that countries like Australia, Luxembourg and Belgium offered citizens the highest minimum wages (between US$8.50 and US$9.50 an hour) – while countries like Mexico and Latvia had some of the lowest (US$1.00 to US$1.50 an hour).

The minimum wages are in terms of purchasing power parity (PPP), which shows the income level relative to the cost of living in any given country. Using the World Bank’s PPP ratio for South Africa (R5.52/$) we are able to calculate how the country’s proposed minimum wage compares to the rest of the world.

A minimum wage of R3,500 translates to R20 per hour over a typical work month (160 hours, over 20 days/4 weeks), which in PPP terms is $3.62 per hour.

At this level, South Africa’s minimum wage would be on par with countries like Poland and Turkey. While this is on the lower end of the comparison countries, it is still far higher than those at the bottom.

The graph below details how the minimum wages compare on a PPP basis:

minimum-wage-proposal-vs-the-world

Notably, South Africa’s current average minimum wage (taken from all sectors’ collective bargaining) of R2,340, is US$2.65, while the highest recommended national minimum wage of R8,000 per month (as suggested by Pacsa) translates to over $9.00 per hour – which would have placed South Africa as third highest on the list.

minimum-wages-across-the-world-2

Not the end of the debate

According to Ramaphosa, the figure of R3,500 is not the official “final” number that will be implemented, but rather the starting point for the national minimum wage debate.

The deputy president has called on all South Africans, from businesses to workers to government, to debate the issue to help find the best way forward.

The national minimum Wage is set to be implemented by July 2019 – however the government has said that this is not a rigid timeline and is subject to change.

Read: Ramaphosa challenged to survive on R3,500 per month

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How South Africa’s proposed R3,500 minimum wage compares to the rest of the world