Unions say 5% wage offer will make workers poorer

File image: IOL

File image: IOL

Published Jan 29, 2020


CAPE TOWN - The country's union federations yesterday rejected the government's 5 percent increase in the national minimum wage (NMW) and instead called for it to be increased to 12.5 percent.

Cosatu, Fedusa and Nactu said the 5 percent increase would effectively make workers who earn these wages poorer.

“Considering that the NMW has not been increased for three years, the proposed increase is unjustifiable and insulting to the noble ideals of the legislation that was expected to eject millions of workers out of the poverty trap,” the unions said in a statement.

The NMW is R20 a day for workers in general, or R3 500 a month; R18 for farm workers, R15 for domestic workers and R11 for EPWP (public works workers). These amounts were agreed to in March 2017.

When South Africa formally introduced the NMW in January 2019, ostensibly to protect workers from “unreasonably low wages”, and promote collective bargaining, its modest level was criticised by some commentators, given its low value relative to GDP per capita.

Annual GDP per capita has been estimated at $7 600 in 2020, or about R111 500 a year. The annual NMW of a general worker comes to only R42 000.

Mervyn Abrahams, programme co-ordinator of the Pietermaritzburg Economic Justice & Dignity Group, which does research on the economic conditions of low-income people, said the increase was too low and amounted to “playing with people’s lives.”

Abrahams said the deficit between the NMW and the basic monthly cost of food, goods and services for a family of four was already 21.5 percent.

On top of that, inflation of lower income people was higher than average inflation – around 6 percent in January – and the outlook for these consumers was “severe” given the possibility of a 17 percent hike in electricity tariffs and an increase in VAT this year, he said.

The federations want the NMW to be increased by 12.5 percent to protect it from three years’ worth of inflation.

They demanded that farm, domestic and public works workers receive higher increases, to ensure the gap between them and the NMW narrowed and did not widen.

“It is shocking and callous” that the NMW Commission has “in a moment of lethargy and a failure to do due diligence” simply recommended an increase of 5 percent across the board, the unions said.

It meant the value of the NMW was being eroded by inflation.

“This is a blow to the 6.4 million workers who depend upon the NMW to survive.  It will have a dampening effect on an economy starved of stimulus,” the unions said.

Research by Picodi.com showed South Africa has among the lowest minimum wage levels out of the countries with a minimum wage, and that a basic nutritious diet for just one person would cost 34.8 percent of the monthly NMW for a general worker.


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