JOHANNESBURG - Today the National Assembly will pass the National Minimum Wage (NMW) Bill. This law alone marks the boldest attempt by the ANC-led government to tackle the apartheid wage system and bring a better life to millions of workers and their families.
It will help millions of farm, domestic, retail, hospitality, restaurant, petrol station, cleaning, security, parking, hairdressing, furniture and other vulnerable, exploited and impoverished workers. The majority of whom are black women.
The NMW of R20 an hour will see wages rise for 6.4million workers. This is 47percent of our work force. It is expected to inject an additional R5.5billion in wages into the economy each month. It will be a significant boost to efforts to address our massive levels of poverty and wage inequality.
This boost to the most impoverished workers’ wages will see them spend more on food, electricity, transport, health and education. This will help stimulate the local economy. This is exactly what it has done so successfully in the US, Germany, and Brazil, among others. It may be a valuable jolt to our badly needed economic growth.
Workers will now be entitled to a minimum wage of at least R20 an hour and at least four hours of work per shift. Farm workers will see their wages rise to R18 and domestic workers to R15. They will be fast-tracked to 100percent of the NMW within two years.
An NMW commission consisting of government, business, labour, community representatives and experts will be established to oversee the implementation of the NMW, identity any problems to its effectiveness and conduct annual reviews and increases.
The annual reviews of the NMW must take into account the impact of inflation, cost of living, wage inequality, poverty and the need to protect the value of the NMW.
The NMW commission must also conduct further research to set a medium target for the NMW to move it significantly above R20.
It is important to make the distinction between a minimum wage as opposed to a living wage or even a decent wage. They are very different, but necessary concepts. A minimum wage is the level below which no one should be paid by law. A living wage is what trade unions should push business and government to give to workers. This will require hard work on the part of unions and economic growth to sustain it. There is not a single country in the world that has legislated a living wage.
Critics of the NMW have said it is too high and will cost job losses. However, those critics have omitted to mention that businesses that legitimately cannot afford to pay R20 can apply for an exemption.
Other critics have said the NMW will be too low, that it is tantamount to a slave wage, etc, and should be R12500 a month. This in fact would be double the commonly known level for a living wage.
While we would all love an NMW of R12500, it would be tantamount to economic suicide in an economy of 1percent jobless growth, thousands of retrenchments, 36percent long-term unemployment and the overwhelmingly majority of workers earning nowhere near R12500. In fact, research has shown that an NMW of R12500 would lead to millions of workers being retrenched. Perhaps the most disingenuous part of those calling for an NMW of R12500 is that those unions themselves have not achieved such an NMW in the sectors they organise and all too often even accept wages below R20.
While the R20 figure is not the original R26 that Cosatu called for, it is far above the R11 business proposed.
This deal was crafted over three years of intense negotiations at Nedlac and Parliament between unions, government, business and community organisations with the assistance of academic experts. It shows the value of social dialogue.
A great deal of thought has gone into the NMW to ensure its effectiveness and to prevent any loopholes. It provides for escalating fines for employers who repeatedly fail to pay the NMW and who have not applied for exemptions.
These fines will go to the workers who were denied their due. The government will disclose the names of employers who apply for exemptions or fail to pay the NMW. Companies who apply for state tenders will be required to be in line with the NMW law. Employers will be prohibited from lowering the wages of workers who already earn above the NMW.
The call for an NMW has been one that unions have fought for the past 100 years. It is a key demand of the Freedom Charter. It is to Cosatu’s credit that it has been achieved. Cosatu and other unions must now act to ensure workers are aware of their right to an NMW and expose employers who fail to.
The government must be bold in enforcing the law. Business must show its commitment to this new dawn and not pay just a minimum wage, but in fact work to pay a living wage.
This is an historic day. This is a proud moment for all South Africans. Well done to Cosatu and its labour allies Fedusa and Nactu for delivering this victory to workers. Well done to labour, business and government for working tirelessly to negotiate this deal. Well done President Ramaphosa for being a tireless champion of the workers.
Matthew Parks is Cosatu’s Parliamentary Co-ordinator.
The views expressed here are not necessarily those of Independent Media.
-BUSINESS REPORT