Minimum Wage Act: Fine line between lifting wages and job security
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by Michael Bagraim
The Department of Employment and Labour printed a Government Gazette on the investigation into the National Minimum Wage, on November 20 this year. It invited the public to make written representations on the suggestions.
In particular, interested persons were invited to make written representations on the National Minimum Wage Commission within 30 days. In other words, by the end of December.
It is my understanding that trade unions and big business have been approached to put in their recommendations.
These written representations should go by email to [email protected] or to Private Bag X117, Pretoria, 0001. It is vital to submit your comments as invariably increases in statutory minimum wages create further unemployment or could result in further impoverishment.
Most of the commissioners recommend that the national minimum wage be increased by 1.5% above inflation. They also recommended that the minimum for farm workers be aligned with the national minimum wage next year and that the minimum for domestic workers be gradually increased to equal the national minimum wage by 2022.
The idea of the National Minimum Wage Act was to propose a structure that ensured working people did not live in poverty.
In must be borne in mind that the National Minimum Wage is R20.76 an hour. The commission has to take into account the current and potential economic impact from the adjustments. It needs to look at inflation, the cost of living and the need to retain the value of the National Minimum Wage. Importantly, the ability of employers to carry on their businesses successfully is a real issue.
All the commissioners have had a look at the likely impact on employment or employment creation. Like I had said initially, the statutory minimum wages impact employment and certainly do not enhance employment creation. It is realistic to say that almost 50% of our possible workers are not working. Above this, the food poverty line is about R585 a person for a month. Wage differentials remain the highest in the world and, unfortunately, there is an increase in the cost of living. The lockdown under Covid-19 has exacerbated our problems and has been a greater negative than the virus. An issue that needs to be mentioned is that there has been a great increase in food prices which affects poorer households enormously.
The National Minimum Wage Commission has taken careful look at the collective bargaining outcomes with all the various bargaining councils. It appears the increases from last year to this year were between 5% and 9%. Despite the increases, we’ve had incredibly low labour productivity and, again, the lockdown has made it worse. We all know that the lockdown has had a terrible effect on most employers and, in particular, small business.
The commission has urged employers to look at the possibility of applying for exemption from the National Minimum Wage but the exemption procedures are difficult and the paperwork is onerous. Above this, the exemption is only a minimal exemption. It is sad to say that the true National Minimum Wage is naught rand per hour as more than 50% of the possible workforce is unemployed.
The commissioners have a very fine line to tread, in that they have to ensure unemployment is kept at bay while they try to move towards a livable wage.
Interestingly, the report talks about three million employees ( a third of the formal private sector workers) benefited from TERS at least during levels 5 and 4 of the lockdown.
In the process of gradual equalisation for farm and domestic workers, we must do everything in our power to avoid excessive disruption and/or retrenchments. In order to try to alleviate the problem, the commission has suggested gradual equalisation over a few years. It is common knowledge that domestic workers were severely impacted by the lockdown. They were entitled to return to work in June. The commission has recommended that the minimum wage of domestic workers be increased to 88% of the National Minimum Wage next year and to 100% in 2022.
There are minority recommendations from the three business representatives who have given input from Agri SA and have asked for the phase-in for farm workers and domestic workers to be over four years. It appears that the recommendation from the business representatives is sensible. We all know how debilitating it is to be unemployed and we don’t want any factors to add further stress to employability of people. At this stage during Covid-19, many businesses struggle to remain viable and sustain employment.
* Michael Bagraim is a labour lawyer. He can be contacted at [email protected]
** The views expressed here are not necessarily those of Independent Media.
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