Minimum wage should go up 4.5%, says commission

First published in GroundUp.

A majority of members of the National Minimum Wage Commission has recommended that the minimum wage be lifted from R20.76 an hour to R21.68 an hour.

This is an increase of 4.5%, which is 1.5 percentage points above the inflation rate of 3% a year in September.

The commissioners said because of the impact of food prices, inflation was higher for low-income households. The effective rate of inflation for low-income households was 3.3% a year, they said.

They said the current minimum wage is below the lower poverty line of R3 360 a month for a household of four people. This poverty line measures what is needed to cover food and some essential items like shelter. Two in five households in South Africa earn this or less, they said. At R21.76 an hour, the current monthly minimum is about R3 320 a month.

The majority opinion of the commission defended the rise in the minimum wage in the midst of the Covid-19 economic downturn. “A modest real increase seems unlikely to aggravate the downturn and could assist by working in tandem with other measures to stimulate the economy,” they said.

According to the majority opinion, “Initial research … has found that the policy did not place an undue burden on employers.”

South Africa’s minimum wage legislation currently discriminates against farm workers and domestic workers as these workers can be paid at a rate lower than the minimum wage. The minimum wage of domestic workers is presently 75% of the minimum wage, while the minimum wage of farm workers is presently 90% of the minimum wage.

The majority of commissioners argued that the minimum wage for farm workers should be brought to parity with the national minimum wage in the 2021 adjustment (an effective increase of R350 per month). They said wages of domestic workers should be increased to 88% of the national minimum by 2021 (approximately R19 per hour), and to parity by 2022.

They found that farm workers were not subject to the pressures that caused mass unemployment in other sectors, as their work was declared essential from the beginning of the Covid-19 crisis.

The majority opinion was supported by nine members of the commission. These were community representatives Tumelo Zwane, Conti Matlakala and Isobel Frye, labour representatives Trenton Elsley, Edward Thobejane, Solly Phetoe, and independent experts Dr Sarah Mosoetsa, Professor Imraan Valodia, and Dr Neva Makgetla. The chairperson of the NMWC is Professor Adriaan van der Walt.

The minority opinion, from Jahni de Villiers, Jonathan Goldberg, and Kaizer Moyane, representing business, did not recommend an increase above the inflation rate. They wrote that, “any increase, in our opinion, will have an effect on job retention and creation.”

They did not support the proposals on domestic and farm workers either, arguing that “no sector can absorb such increases.” Instead they argued for a four-year phase-in period for both farm and domestic workers. “This is the only reasonable proposal to avoid the negative impacts of massive wage increases,” they said.

Under the National Minimum Wage Act, the National Minimum Wage Commission annually assesses and reviews the minimum wage. The Minister of Employment and Labour then determines an adjustment based on these recommendations.

Written representations to the commission on the 2021 adjustment can be submitted to the Department of Employment and Labour by 30 days after 20 November. DM