Trade unions and economists have welcomed the National Minimum Wage Commission’s proposed wage increase of consumer price index (CPI) plus 3%.
The CPI was 5.5% in November. The employment and labour minister will announce in February 2024 the new rate of adjustment, which will come into operation from March 1.
Matthew Parks, acting national spokesperson for Cosatu, said that they welcomed the announcement by the National Minimum Wage (NMW) Commission of the proposed 2024 increase.
“The federation has tabled this proposal to the NMW Commission and is pleased this progressive proposal has received its support. This increase will help protect the value of the NMW and workers’ ability to take care of their families from inflationary erosion.”
Parks added that it will inject badly needed stimulus into the local economy, spurring growth and helping to sustain and create jobs.
“It will provide significant relief to more than six million workers earning within the range of the NMW. Workers in the farm, domestic, construction, retail, hospitality, transport, security, and cleaning services sectors will benefit the most.”
Parks said that Cosatu was pleased with the progress that has been made with the NMW since it came into effect in 2019 at R20 an hour.
“Today it is R25.42 and will soon pass R27.50. It has seen domestic workers rise from R15 and farmworkers R18 in 2019 to being equalised with the NMW today. This is a far cry from the poverty wages farm and domestic workers were paid a few years ago, at times as little as R6 an hour.”
Parks added that it was critical the Department of Employment and Labour cracked down on employers who ignore the NMW Act.
“Equally, we expect unions across the board to work together to expose such employers. Organised business, too, must play its part. It is unacceptable that an estimated 45% of employers fail to comply with the NMW.”
South African Federation of Trade Unions (Saftu) spokesperson Trevor Shaku said that the trade union federation agreed with the increase.
“This proposal will at least elevate workers’ income above the consumer price index by 3%, enabling them to increase the basket of household goods they are able to buy.”
However, Shaku added that it must be noted that the current minimum wage was low and the proposed increase will make little difference.
“Currently, the national minimum wage is R1 000 less than the average cost of a household food grocery basket. The long-standing demand by Saftu is a living wage, which shall be calculated based on the necessities that a worker requires in order to survive per month.”
Professor Irrshad Kaseeram, from the University of Zululand’s Economics Department, said that he also agreed with the proposed increase as food and fuel prices have increased by more than 20% over 2023.
“A wage increase of 8.9% doesn’t really offset the rise in food and fuel prices. These items constitute the largest proportion of spending in minimum wage earners’ budget. Simply put, despite the suggested wage rate rise, it will not mitigate high living costs.”
Kaseeram added that households and businesses throughout South Africa are struggling to keep costs down.
“Such wage increases will be a burden on them hence in some instances they will most likely cut back on employment. Moreover, they will attempt to pass on costs to consumers.”
Dick Forslund, a senior economist at the Alternative Information and Development Centre (AIDC), said that it was positive that the wage was increased by more than official CPI inflation.
“I don’t think it will benefit workers who have informal employment.
In formal employment, the minimum wage is at risk to be a ceiling and not a floor. Generally, the economy needs redistribution from profits to wages.”
The Department of Employment and Labour said that the public had until January 8 to make their written representations on the proposed increase.