Department of Labour’s conduct in Parliament undermines meaningful national minimum wage package

On Wednesday 9 May 2018, the Parliamentary Labour Portfolio Committee reconvened to consider amendments to the National Minimum Wage (NMW) Bill and further amendments to the Basic Conditions of Employment Act (BCEA) and Labour Relations Act (LRA).

Unfortunately, the Department of Labour, which played a dominant role in the redrafting process, has, in a number of instances, either ignored the letter or spirit of decisions taken by the Portfolio Committee.

This follows their selective presentation of certain issues to the Portfolio Committee. For instance, certain points raised in various submissions were left out of the summary prepared by the departmentⁱ and others were inaccurately conveyed in the department’s verbal inputs to the committee.ⁱⁱ

This suggests a pursuit of particular outcomes that ignore critical concerns raised by the public and social partners, and thereby undermines the ability of the committee to conduct a balanced engagement on the bills before it.

This comes on top of the department’s sidelining of a number of aspects of the February 2017 national minimum wage Nedlac agreement between the social partners. Limited improvements made to the bills (such as increased fines for repeated offences) are outweighed by key instances were the protections that the national minimum wage seeks to provide workers have been undermined.

After enormous opposition from the department, the Portfolio Committee resolved that the NMW commission must be empowered to update existing sectoral determinations – mechanisms through which the Minister of Labour sets sector-by-sector conditions of employment and minimum wages (above the new national minimum wage) – and institute new ones. This appears in the amendments but in the weakest possible form.

The Bill, for example, does not stipulate that regular reviews of sectoral determinations must be undertaken, as is mandated for the national minimum wage. Further, Section 51(3) of the BCEA amendments stipulates that sectoral determination wages must increase proportionally to adjustment to the national minimum wage, indicating a desire to not manually review and alter sectoral determinations. This is a reversion to the original position of the department that sought to phase out the use of the sectoral determinations.

Regarding instituting new sectoral determinations, the Bill leaves it up to the minister to trigger the investigation needed to create a new sectoral determination rather than allowing the commission discretion to do this off its own bat, thus potentially limiting the institution of new sectoral determinations. This undermines the commission’s ability to co-ordinate a coherent wage policy using the national minimum wage and sectoral determinations in tandem.

Weakening the independence of the NMW commission unfortunately occurs in other instances, despite the department touting the importance of the independence of the commission in their parliamentary engagement.

The Portfolio Committee agreed that the commission secretariat will be housed within the department but the amendments made have further subordinated the commission to the department (instructions not made by the Portfolio Committee). The commission no longer has its own budget appropriated by Parliament but now must have funds defrayed from the department at their discretion.

The commission has limited operational authority over the secretariat despite the Parliamentary Law Adviser flagging this as concerning during the Portfolio Committee’s deliberations. This will potentially impact the commission’s autonomy to undertake research, implement complex aspects of its mandate, such as setting a medium-term target, and to independently manage its affairs, and is most concerning regarding its role in amending and adding sectoral determinations, as noted above.

This is despite all social partners and the Portfolio Committee stressing the value of independence and the international evidence overwhelmingly indicating that the most effective commissions have operational autonomy from government departments. An Achilles heel of the existing Employment Conditions Commission has been its lack of independent resources.

Both the Nedlac agreement and Portfolio Committee agree that the lower levels for domestic workers and farmworkers (R15 and R18 respectively) should fall away after two years unless research indicates otherwise. This agreement was supposed to be reflected in the amendments but does not.

As has been raised previously, the NMW Bill does not guarantee, or even promote, an annual increase. This was agreed to by the Portfolio Committee but the department’s failure to include this in the first place violates the Nedlac agreement which noted:

“It is specifically agreed that the adjustment should not lead to the erosion of the value of the NMW taking into account all of the above factors.”

The Bill only instructs the commission to “consider” as one among other factors “retaining the value of the minimum wage” rather than as a factor that should be specifically promoted subject to considering other factors.

Along with annual increases, the perceived low level of the national minimum wage was due to be offset by a strong medium-term target. This would have allowed government to argue that they were starting at R20 but have an ambitious framework to increase this. However, the medium-term target in the Bill is a damp squib.

In the Bill, the target must only be set within three years, with no mention of what benchmarks to use or when it must be implemented by – if the target is only reached three to five years after it is set, then, in the current formulation, it could take until 2026!

After engagements with unions on the sidelines of the Portfolio Committee a minimal improvement was accepted by the department – changing “within three years” to “within two years”. When the Portfolio Committee lacked appetite for this the department made little attempt to advance this improvement (in other instances the department stridently advanced its position).

On this matter, the Nedlac February agreement reads:

“The NMW Commission to be established will, as part of its mandate, establish a medium-term aspirational target for the NMW and take into account appropriate benchmarks and International Labour Organization (ILO) guidelines.”

The lack of guidance given to the commission on establishing the target may lead to the sort of paralysis that characterised the national minimum wage negotiations.

The accommodation of the Expanded Public Works Programme is another element that is weaker than the Nedlac agreement (in addition to the R11 per hour being extremely low). By not including any guaranteed increase in line with the national minimum wage, the Bill ignores that the agreement stipulates that the level should be 55% of the national minimum wage, thereby implying that it should at least increase in line with it.

In what can only be a deal struck with employer organisations, the Bill includes the ability of employer organisations to apply for exemptions on behalf of their members. This does not appear in the Nedlac agreement which notes that the department should be “fully equipped to provide the necessary assistance”.

A range of organisations have opposed this provision on the basis that it risks creating a sophisticated conveyer belt of applications.ⁱⁱⁱ It is worth noting that exemptions are rare internationally and already abused in South Africa.

Further, there is no framework for the exemption regulations (i.e. stipulating broadly what the minister should take into account when making regulations) as there is in Section 50 of the BCEA regarding current exemption mechanisms.

The amendments to the BCEA guarantee that workers must be paid for four hours of work even if they work less – this is an international innovation and a win for workers. However, it is marred by ignoring the Nedlac Committee of Principles agreement that the commission must investigate the feasibility of increasing the minimum number of hours from four to five, something which was captured in an earlier draft of the Bill. (Other ways in which the department has ignored either the Portfolio Committee’s deliberations or Nedlac agreement can be found here.^iv)

These examples highlight that not only has the department not (within sensible limits) maximised gains for workers, but has also actively weakened (or distorted) decisions taken by both the social partners and the Portfolio Committee that would have strengthened protections. This cannot go un-noted and the department officials should be asked to account.

The national minimum wage has been promoted since 2014 as the first step in a multi-pronged strategy to reduce wage inequality. This has not found expression in this round of the process. Hopefully the President will announce the next steps in this engagement and the Labour Portfolio Committee will hold the social partners at Nedlac to account.

Parliament still has a window of opportunity to amend the bills to ensure they offer maximum protection to workers and a strong, independent and well-resourced commission to oversee this critical policy intervention. DM