Parliament – Deputy President Cyril Ramaphosa on Wednesday acknowledged that introducing a national minimum wage carried the risk of initial job losses but said government would seek to set it at a level where instead it would spur economic growth through greater demand for goods and services.
“There is ample research that proves that depending on the level where you set your minimum wage, once it has been set, it can actually lead to the improvement of the income of a number of people. For a while it is possible that there could be job shedding,” Ramaphosa said while answering questions from opposition MPs in the National Council of Provinces.
“But if you have set the minimum wage at a level where it can put more money into the pockets of the lowest earning workers, what that does is that they use that extra money to buy more goods and services, that then can lead to more demand and more people then getting employed and when that happens it then begins to fuel another spate of growth in your economy.”
He said this had been proven to be the case in other countries, notably fellow BRICS (Brazil, Russia, India, China and South Africa) member Brazil.
“That has been done and tested in other economies. So we are not sucking eggs, we are not sucking hot air.”
Ramaphosa said government was intent on pushing ahead with the measure, and had the full support of its social partners. The issue was therefore not whether to introduce it, but at what level to set the minimum wage.
“The issue is going to be the level, we are enjoying a high level of expert advice, from the International Labour Organisation, from countries such as Brazil, Germany and the United Kingdom, Malaysia, you name them… If we crossed it at a level, where we can promote job creation as well as to a large extent try and ameliorate massive job losses, we could see greater demand of goods and services in our economy.”
He responded to impatience voiced by the Economic Freedom Fighters that it was taking too long, with too many rounds of talks in Nedlac, the labour and business consultative forum, to introduce the national minimum wage.
The ANC in 2014 in its election manifesto undertook to investigate the introduction of a minimum wage as a way of easing inequality. In September that year, a team of ministers and representatives of labour and business was appointed to develop an agreement and report back by July 2015. At the time, Ramaphosa was resolute that the government would not look back, saying it was not a question of whether the step would be taken, but when.
Ramaphosa responded to the EFF by saying: “With the greatest respect, it is through social cohesion, it is through Nedlac that we will have a national minimum wage. The government is not going to legislate a national minimum wage on its own on a unilateral basis without moving along with its social partners. It is an agreement that will grow out of negotiations and deliberations that will yield this national minimum wage that you are so eager to have.
“It takes a number of social partners to go to a national minimum wage tango.”