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The real minimum wage in South Africa

The real minimum wage in South Africa

Economist Mike Schüssler says that South Africa’s formal sector is already paying well above the minimum wage as the department of labour debates the level at which it should be set.

The government is set to implement a national minimum wage in the country in 2016; however, it is looking for guidance on what that amount should be.

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.

Union Cosatu has called 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 Economic Freedom Fighters (EFF) to establish a national minimum wage of R4,500 in 2016.

The DA meanwhile, says that while it is not against minimum wages, it needs to be sector specific to avoid job losses.

In an opinion article on MoneyWeb, Schüssler, who is an economist at Economist.co.za, pointed to research indicating a median wage in the formal sector of approximately R5,100 per month.

This, he noted, is above a median figure of R4,800 per month cited by Statistics South Africa (Stats SA) in its Labour Force Survey (LFS). This figure has been at the centre of debate over the implementation of a minimum wage.

For all workers in SA, the median wage is approximately R3,200 a month, according to the LFS.

“The fact is that the formal sector is already paying well above the minimum wages, although there are a few sectors such as agriculture, retail and security industries that pay less,” Schüssler said.

He pointed out that domestic workers and informal sector employees also receive wages below R3,000 a month. However, in the formal sector, monthly wages are significantly higher than the proposed minimum wage.

Read: What the national minimum wage will cost SA

According to Schüssler, at least three sets of data appear to ‘debunk the low wage myth’ in SA when it comes to the formal sector.

He said that data from the National Credit Regulator indicates that the national median personal income is R8,134. The data is gathered from approximately 20 million applications every year for loans from a variety of credit providers.

Schüssler also alerted to ‘useful data’ compiled by debt councillors showing  that in the year ending in March last year, the typical individual with a debt repayment problem earned between R7,500 and R10,000 per month.

“The sample is also significant as about 90,000 individuals were placed into debt counselling in the year to March 2015,” Schüssler said.

Recent tax statistics showed that over 7.1 million people paid personal income tax, “which means that they earned more than R6,000 a month. This is the majority of the 10.8 million people working in the formal sector,” Schüssler said.

More on minimum wages in SA

Why South Africa needs a national minimum wage

How much is minimum wage in South Africa?

Minimum wage in South Africa vs the world


BusinessTech's Staff Writer is directly plugged into the South African Internet backbone, and spits out press releases and other news as they receive it. They are believed to be cl...
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  • third class citizen

    I know that I could triple my workforce if allowed to trade freely without racist restrictions, and that’s just with my current company. Remove those restrictions and watch SA turn itself around within 24 Months!

    • chunk

      is it really a restriction?

      • Dreigorian

        is that a real question?

        • chunk

          Yes its a real question.

      • third class citizen

        Yes.

        • chunk

          How and why?

          • third class citizen

            It affects the entire supply chain. Besides the fact that SA isn’t getting the best bang for its buck, and I as a citizen am excluded by virtue of not being born black.

          • maxc

            Nope, BEE is not a restriction. The best way to start is evaluate your place of work, business, and ask your friends, family…etc. Check how many whites occupy top management all the way through to lower management, and compare it to blacks, coloureds, Indians etc. That’s when you start seeing a vastly different picture to what the propaganda Is all about. BEE only really affects ownership, and the use of suppliers which are BEE registered, social contributions, etc….and that only with really big companies. Most SME’s (small business, contractors, service co’s…etc) do not comply at all with BEE, and they account for the bigger portion of the workforce than the large corporates which are BEE compliant. Scout the jobsites, and look at how many of the ads actually state AA or EE..etc…very few…There is enough work in SA, and as a white dude I have worked hard, and never looked for excuses, we have always had everything go our way and want to look for excuses when it doesn’t. I change jobs every 2 years, and have worked for over 20 years, I have never found any trouble finding work, or getting any of our white contractors work….Stop blaming things like BEE and look in the mirror for the real problem.

          • third class citizen

            I’m not an employee Guest. I am restricted from accessing tenders due to my skin, not ability. Yes it’s because I refuse to take on a partner, or give my company to my employees, but that’s a moral choice I’ve made, which should not exclude my companies product.
            So let’s agree to disagree?

          • maxc

            Its obvious your laziness overpowers common sense, even when facts stare you straight in the face. You can remain in your shell blaming a system which still gives ample opportunities to white people, and retire miserable and unhappy forever blaming something, when you should have been blaming someone, yourself. If you read my comments, I gave you a general view of how BEE works, even for non-employees (business owners(, fact is a big corporate might not sign a contract with you if you are not BEE registered, or registered at a certain level, BUT for every 1 big corporate that turns you down, there are about 20 more companies at any given time with which you can do business I. e they do not need to use BEE suppliers (majority of companies do not employ BEE). So if you are complaining about BEE stunting your growth, the FACTS clearly show that you are a lazy bum waiting for a hand-out, when there are ample opportunities to make your business boom.

          • third class citizen

            Listen max, because it would seem you only hear what you want to hear.
            You can’t tell me anything about bbbee, not unless you are a business owner that’s been there!
            There’s a ceiling, that if you want to exceed you need a black partner. This is a monetary ceiling that matters not if you wish to supply govt or not!
            Now, why would I want to exceed that ceiling and give away my possession if it’s for a few hundred grand? No, if I’ve got to sell out it must be worth it!
            So keep your ill informed nonsense to yourself and try reach that threshold, because until you do, you have no idea of what bbbee actually means or is!

    • slvn

      oh great more imagined restrictions. you only need BEE compliance if you deal with gov. the fact is your current company is not producing good work. finish and kla.

      • NosySnoopy

        You have no idea how B-BBEE is implemented, do you? It is everywhere in the private sector, although it mostly effect the companies with big turnover or a big workforce.

        • slvn

          ” mostly effect the companies with big turnover or a big workforce” my point exactly. truth is if your product is something people want you will grow. their is no secret formula, to blame a lack of growth on BEE is ridiculous.

          • maxc

            Very true slvn. So many idiots blame BEE for their poor performance, not finding jobs, when the fact is BEE only affects large companies, and only the very senior levels and ownership levels (Even large companies which are BEE certified, count how many white vs black managers there are and tell me BEE is taking work from white people) – Bull Freaking sh&&&&…..whites still occupy 70% of top positions and BEE hasn’t done jack to change that….gotta love the Indians & Jews, never complaining and blaming nonsense like this and only expanding their wealth…

      • third class citizen

        I said triple my workforce didn’t I?
        That would imply I have a product capable of being sold in big enough quantity to employ people no?
        So don’t worry about my business, cause you don’t seem to understand what’s being discussed. BBBEE affects the entire supply chain, so either educate yourself or keep quiet.

  • slvn

    SA is becoming like the US. the workers are getting squeezed more and more. while companies make even bigger profits. 2nd job anyone.

  • Nasdaq7

    Expect millions to lose their jobs. As entrepreneurs and economists we are 100% against this new minimum wage. 100%.

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