The political hot potato of a national minimum wage has again made headlines in the run-up to next week’s local government elections; although this time the topic has been raised by outsiders.
A contentious issue no matter where you stand, the topic has garnered political attention from both ends of the spectrum, and could well have been a serious electioneering topic. Instead, the run-up to this year’s vote has been characterised by the usual mud-slinging and violence.
So much so, that ratings agency Fitch warned a few months ago against SA implementing populist measures such as introducing a minimum wage in the run-up to local elections in August.
Earlier this week, City University of New York's Stephanie Luce was on Radio 702 suggesting that the naysayers were wrong: minimum wage didn’t lead to job losses in the long-term. In fact, after a short-term hiccup, it actually resulted in more jobs, and more money going into the economy.
Read also: National minimum wage will hurt workers
This she had based on a study of several states in the US and, while conceding America is hardly a developing country, she said there were many structural economic similarities between us and them.
My alma mater has also released a study. The University of the Witwatersrand notes a minimum wage of between R4 500 and R5 000 a month would push up buying power, and help grow the economy.
Let’s face it, any boost to the economy - which stalled when it was only just out of the station - will be more than welcome.
The Department of Labour has also weighed in, noting that, if it were to be introduced, a national minimum wage would be a tough balancing act.
For and against
Currently, SA looks set to introduce a national minimum wage, with Cosatu threatening all sorts of protests if the country doesn’t implement this labour protection.
About a month ago, SA took a big step forward in the implementation when government, labour, community and business constituencies at the National Economic Development and Labour Council (Nedlac) decided to deploy a team of experts to determine the modalities of the system, including a feasible level.
Read also: Minimum-wage panel appointed
Setting a level won’t be easy. Do you look at a liveable wage? A minimum wage? Which is right? How do you work that out?
Martin Hopkins, an executive committee member at the South African Reward Association and a partner at PWC in the People and Organisation practice, says we should look at a living wage, and how to implement it. He argues CEOs’ salaries - too high or not - are fuelling antagonism between labour and employers because the lowest-paid workers are often unable to live decent lives.
That certainly makes sense to me.
Hopkins points out that, currently, minimum wages are set by sector. He notes some have suggested the wage be set at between R3 500 and R3 700 a month. He adds a minimum wage will create a category of working poor, which is why it must be a living wage - but both sides need to be balanced as top execs are needed to run a company well (especially in tight economic times), while treating workers fairly is important.
Hopkins cites an independent UK study, which he says shows a living wage improves the quality of work, reduces absenteeism, and enhances recruitment and retention, to support his argument.
The DA’s mayoral candidate for Johannesburg would certainly disagree. Herman Mashaba argues in his book, Capitalist Crusader: Fighting Poverty Through Economic Growth, that the concept of a minimum wage, and the legal requirement to impose a wage agreement between a majority union and all staff - regardless of their union membership status - is counterproductive.
Mashaba - who is himself a wealthy businessman after starting Black Like Me during apartheid - says workers should be able to sell their labour for whatever they want; simplifying employment to economic supply-and-demand terms.
Cosatu, however, argues that a minimum wage will avoid strikes and improve labour relations as well as making a significant contribution to stimulating equitable economic growth and development.
Read also: Cosatu to hit the streets over minimum wage
Others have argued it will hurt small businesses the most, and will lead to job losses because companies - in this economic climate - can’t afford it. That also makes a level of sense to me; if a mini company is getting away with paying a receptionist R2 000 a month, and then has to double that salary, they’ll likely elect to answer the phones themselves.
Not so, says Luce. She says this situation did not pan out in the US in alarming numbers and small companies were happy to pay a minimum wage because they wanted to keep key skills.
Read also: ‘Minimum wage doesn’t have to mean job losses’
Not the same
Yet, whatever Luce believes, SA is fundamentally different to the States. Our economic growth is predicted to be, erm, zero this year, and I wouldn’t be surprised if we are in a technical recession. The US is growing, even if only at 1.1 percent.
Our jobless rate is - officially at least - painfully high. Unofficially, the situation is even worse. In the second quarter, the jobless rate inched lower to 26.6 percent quarter-on-quarter , although it rose sharply year-on-year with more than 400 000 more people unemployed.
In America, only 5.5 percent of its working-age population is unemployed.
Those are rather sharp differences.
Our unemployment rate is especially acute among our younger people - a category of people who are vital for our future growth.
Statistics SA’s latest figures show that, out of the 20 million people between the ages of 15 (the legal age at which you can start working) and 34 (cut off for being considered young), only 6 million are employed. That’s less than a third of our youth in gainful employment.
That’s far from good.
Luce says a minimum wage actually helps the youth become gainfully employed. I didn’t hear how, because some [insert rude word here] without indicators decided to ignore Pauli’s exclusion principle .
Even so, that would be good news for all concerned, and our economy, which is currently in the ICU.
There are also other ways to get our youth into a situation where they have job security. Asher Bohbot, EOH’s CEO, is passionate about this topic, and has developed a toolkit that companies can piggyback off to offer internships.
Essentially, his idea - which sees EOH take in a few hundred interns a a year - means that companies up-skill young people on the government’s ticket, and help them get the skills they need to get a job. He notes the chances of a young person with work experience getting a job versus one without is substantially higher.
Are either of these solutions? Which one is best?
I don’t know; maybe it’s a combination of both.
What I do know is that the issue of a living wage, or a minium wage depending on your ideology, and employment, should not be a political one.
It can’t be a promise made to win votes: these are people's lives, and our economy we're talking about. Votes are not at stake, futures are.
* Nicola Mawson is the online editor of Business Report. Follow her on Twitter @NicolaMawson or Business Report @busrep.
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