‘National minimum wage may cut jobs’

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Jobless1 . File photo: Simphiwe Mbokazi.

The ANC has pledged to investigate the introduction of a national minimum wage “as one of the key mechanisms to reduce income inequality”, but the proposal has been greeted with caution in business and political circles.

Commentators argue that there is a distinct possibility that setting such a minimum wage will cut jobs, rather than create “decent jobs”.

While President Jacob Zuma gave the first indication that the ANC was toying with such an idea in his January 8 statement, which took the form of an election manifesto at the weekend, Adcorp labour analyst Loane Sharp said once the idea was flighted in a manifesto, it was “most likely” that it would be implemented.

Sharp noted that previous proposals in ANC manifestos, such as pledges about labour broking and affirmative action, had been implemented. “There is a high degree of confidence that the provision will therefore be implemented… but its effects on employment will be disastrous.”

In two economic sectors where wages had escalated “most dramatically”, agriculture and mining, employment had fallen sharply.

In agriculture jobs had dropped from 2.1 million to 770 000 since 2001. A minimum wage regime on farms was implemented in the late 1990s.

While there was no legislated minimum monthly wage in the mining sector, there was an effective minimum wage as negotiated by the trade unions, Sharp said.

The lowest wage paid in mining was about R4 000 a month. In agriculture, the minimum wage rose to R2 870 late last year, after a 100 percent rise was implemented by the Department of Labour.

Anton Alberts, the Freedom Front Plus spokesman, said while the idea of a minimum wage was noble, the economy could not sustain it.

He believed it would be better to stick to targeted minimum wages in sectors where they already applied, such as in agriculture.

Alberts suggested that the government, labour and business negotiating chamber, Nedlac, should carry out a study, which would include an audit of the various economic sectors to see where it could be effectively applied.

He was worried, however, that the ANC was creating expectations about a national minimum wage, which could not be implemented.

DA finance spokesman Tim Harris said South Africa had one of the highest rates of unemployment in the world because of structural rigidities in the labour market, including an extremely low level of flexibility of wage determination, “a metric where we are ranked 144th out of 148 countries in the World Economic Forum’s latest global competitiveness index”.

To create jobs South Africa needed, he said, to overhaul wage setting mechanisms and prevent the extension of centrally bargained wages to small firms that were not represented on bargaining councils.

“The ANC’s proposal to investigate a national minimum wage would take us in completely the opposite direction by reducing flexibility in wage determination and would probably see us drop from 144th to stone last on the global competitiveness index,” Harris said.

Radio news reported Neren Rau of the SA Chamber of Commerce and Industry as saying that the ANC should tread carefully. “The key issue remains the relationship between productivity and remuneration and a national minimum wage may send the wrong signal,” Rau told Eyewitness News.



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