National 20.8.2016 10:28 am

Nafcoc calls for differentiated multi-minimum wage arrangement

Picture: Thinkstock

Picture: Thinkstock

The National African Federated Chamber of Commerce and Industry (Nafcoc) has called for a differentiated multi-minimum wage arrangement appropriate to South African conditions. 

Nafcoc welcomes the appointment of an expert panel on a minimum wage recently appointed by Deputy President Cyril Ramaphosa “with some reservation”, it said in a statement.

“Nafcoc believes that the credibility of the panel would have been greatly enhanced if the interests SMMEs [small, medium, and micro enterprises], particularly black SMMEs, were directly represented in the panel. Notwithstanding, our view is that such a step will advance and move the process forward towards finality.”

Nafcoc had been monitoring the debate on a minimum wage for some time and submitted that a policy on a minimum wage could not be concluded in isolation without taking into account the unique circumstance in South Africa. The small and medium enterprise (SME) sector, from which Nafcoc drew its members, was estimated to account for 90 percent of all formalised businesses, provided employment for about 60 percent of the labour force, and contributed close to 34 percent of GDP.

SMMEs currently faced constraints and problems, ranging from “restrictive laws, unreasonable health regulations, punitive tax and license fees, including the current ‘sugar tax’, to limited financial support and banking access”. Yet big business was supported by government in terms of subsidies and other incentives, Nafcoc said.

“A national minimum wage is an extremely important policy tool in redressing current poverty, inequalities, and dependency. Nafcoc is of the view that while [a] minimum wage is [a] necessary policy tool, it is by no means sufficient. It has to be complemented by other key policy measures to minimise the unintended negatives economic effects which may result in its implementation.

“In this regard, Nafcoc is of the view that a differentiated multi-minimum wage arrangement will be appropriate to South Africa. This minimum wage regime should be carefully sequenced in a way that it does not undermine other important transformative economic initiatives. We are of the view that the lowest minimum must be above the poverty line and the highest should be consistent with the living wage. Currently there are minimum wages that are in place in terms of various bargaining council wage determinations. We believe our proposal will blend perfectly well with the current arrangements.

“Our view is that to those that are fortunate to be working, [a] minimum wage will contribute towards better protection, reduce inequality, and alleviate poverty. To those that are out of work – some 9 million persons – this debate is meaningless and academic. To the self-employed and SMME, a much more nuanced approach is needed,” Nafcoc said.

African News Agency (ANA)


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