Labour, employer groups disagree on SA’s new minimum wage

Published Feb 5, 2024


THE new national minimum wage (NMW) of R27.58 with effect from March 1, 2024, up from R25.42, announced by Employment and Labour Minister Thulas Nxesi on Friday, has attracted a mixed reaction from labour and employer groupings.

The NMW will come into effect at the beginning of next month and now includes farm and domestic workers previously excluded since 2022. It comes against the backdrop of high youth unemployment and inequality that the World Economic Forum says is stunting South Africa’s gross domestic product per capita.

Onyi Nwaneri, a spokesperson for youth development organisation Tikka Africa, told Business Report yesterday that the NMW had brought “mixed feelings” across the South African economy.

“What we see in terms of unemployment is not good regarding youth unemployment with unintended consequences such as drugs, crime etc. South Africa is high on welfare, with close to 30 million people on welfare and dependent on the state,” she said.

While there was an urgent need for South African employees to “have dignity of labour” through decent remuneration, there was also a “large number of South Africans who have nothing” because the economy was not growing or yielding employment opportunities.

“My big concern is that the more we are sitting with an economy that is not growing and where companies say they can’t survive and where SMMEs are struggling, the more the unintended consequences of the increase in the NMW,” Nwaneri said.

So the new minimum wage will have “reverse consequences on job creation”, with the “the majority of SMMEs already and not able to afford last year’s minimum wage”.

The South African Congress of Trade Unions (Cosatu), however, said this was a “positive increase” of 8.5%, or inflation plus 3%.

“The federation tabled this proposal to the NMW Commission in 2023 and is very pleased this progressive proposal will now be implemented,” Cosatu said.

The NWG stipulations, however, do not apply to volunteers or persons who are not entitled to receive any remuneration for services rendered.

“The National Minimum Wage is the floor level below which no employee should be paid,” said Teboho Thejane, a spokesperson for the Labour Department.

The National Employers’ Association of South Africa (Neasa) said the NMW would keep millions of South Africans who currently did not have employment “out of work” for longer.

“It is absolutely meaningless except that it denies people the right to work. If a person has the right to work but we say you go to an employer and he says I cannot afford to pay what the state says I must pay you, so therefore I cannot help you, you can go home and sit and rely on the R350 grant,” said Neasa CEO Gerhard Papenfus.

In contast Cosatu said the new increase would protect “the value” of wages and “workers’ ability to take care of their families” against the ravages of inflation.

“It will inject badly needed stimulus into the economy, spurring growth and helping to sustain and create jobs. It will provide relief to more than six million workers earning within the NMW range,” said Cosatu.

It added that employees in the agricultural, domestic, construction, retail, hospitality, transport, security and cleaning sectors were set to benefit the most from the minimum wage increase.

However, Cosatu has called on the Department of Employment and Labour to crack down on employers who ignore the NMW Act, adding that it would continue to mobilise unions and workers to expose “such callous” employers.

“Organised business must play its part. It is unacceptable that an estimated 45% of employers fail to comply with the NMW. Such employers cannot be allowed to behave like they are above the country’s laws and treat their employees like glorified slaves.”