Why South Africa needs a national minimum wage

Research from the School of Economic and Business Sciences at the University of Witwatersrand has highlighted why the country needs to establish a national minimum wage.

South Africa’s current minimum wage legislation covers employees in three main ways:

  • Through sectoral determination, where government has placed a minimum wage in sectors where workers are particularly vulnerable – such as domestic workers, or farm workers.
  • Through collective bargaining, where trade unions and employers set the standard, which is then established across an entire sector.
  • And through company-level collective bargaining between unions and employers – though this often sets the actual, not minimum wage for workers.

According to the researchers, while these established forms of minimum wage has served workers well – especially in promoting collective bargaining – historically it has been difficult to enforce.

Previous research showed that as many as 45% of workers are paid below the established minimum wage.

Further, sectoral determination excludes about 1 million workers who are not represented by collective bargaining – and often set lower wages for sectors that primarily employ women, younger workers, migrant workers, and people with disabilities.

Thus, the researchers argue that a national minimum wage would simplify the complexities of the country’s current system – which has 124 wage schedules – and would promote an ‘equal pay for work of equal value’ standard among workers.

The big problem

According to research done by the CSID, across all employees in the country, the average wage is R8,669. However, 50% of workers earn below R3,640.

In the formal sector (excluding agricultural and domestic work), the average is higher at R10,275 – but still, 50% of workers earn below R4,680.

Highlighting the problem, the researchers point out that the estimated cost of essential food and non-food items needed to survive is R1,319 for one person – and R5,276 for a household of four.

Compare these figures to the average minimum wage in the country – which is between R2,360 and R2,730 in sectoral determinations and private sector bargaining councils, respectively – and you will see how dire the situation is for some.

Data from Economists.co.za shows that the lowest minimum wage set by government for domestic workers is at R1,813, and private security guards can expect even less at R1,805.

Lowest minimum wage set by government
Lowest minimum wage set by government

At these lowest levels, a primary breadwinner for a family of four would not be able to care for their family.

Even the highest-paid workers on minimum wage – civil engineers – would only take home R4,460, well below the R5,276 household cost.

It should be noted that the proposed national minimum wage would be to establish the lowest level which people could get paid, and would still allow industry sectors to determine fair levels through collective bargaining.

Globally, 155 countries have determined minimum wages on a national or sector basis. At least 52% of these countries have not adjusted their minimum wages for at least two years, Economists.co.za said.

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Why South Africa needs a national minimum wage