The National Minimum Wage (NMW) Commission has stuck to its recommendation in November that the national minimum wage should increase by 1.5% over and above inflation, and decided that the national minimum wage will be R21,69 for each ordinary hour worked.
Minister of Labour and Employment, Thulas Nxesi, on Monday published the new minimum wage in the Government Gazette. The inflation rate stood on 3% in September last year and the commissioners said that the adjustment of 1.5% above inflation was compatible with previous collective bargaining outcomes.
Farmworkers now to get minimum wage
The majority of commissioners recommended that the minimum wage for farmworkers should be aligned with the national minimum wage this year and farmworkers would now also earn a minimum wage of R21,69 per hour, while they earned 90% of the minimum wage until now, at R18,68 per hour.
Farmers’ union, TLU SA, is not happy with the decision and says it foresees an increase in unemployment and food prices. TLU SA said it was shocked and disappointed after arguing against it in December. TLU SA suggested government should completely set aside the minimum wage until the economy and employment rates picked up.
“It seems that the National Minimum Wage Commission paid no heed to any of the comments from the agricultural sector,” said Henry Geldenhuys, president of TLU SA. “Farmers are unable to absorb these levels of remuneration. We shudder when thinking of the consequences of unemployment in South Africa when the government implements the increased hourly rate.”
TLU SA said it “did not buy” the argument that an increased minimum wage would put workers in a better position. “When comparing the salaries of the Expanded Public Works Programme and the private sector, the government’s hypocrisy is blatant. The state pays half of what other sectors pay.”
Geldenhuys said if government cared about workers and unemployment, it would have adjusted its approach to labour. “If people choose to work for R100 per day for an income, rather than receiving a grant of R40 per day, it should be their choice. More than ever before, what the country needs now is increased employment, resulting in counter-poverty outcomes.”
He said the agricultural sector and all other private industries should rather be supported by the government to create sustainable employment opportunities.
Free State Agriculture (FSA) said the adjustment came at a time when it was economically challenging to produce food and it seemed as if the government was out of touch with realities.
“Despite Free State Agriculture and other institutions’ objections to the proposed increase, substantial adjustments continued, regardless of the economic challenges the country is currently experiencing,” says Francois Wilken, president of FSA.
“Time will tell, but this ill-considered decision will force farmers to put alternatives in place to survive economically.”
Domestic workers and gardeners
The minimum wage for domestic workers and gardeners increases by 22,6%% to a minimum wage of R19,09 per hour from the current R15,57. They will now earn 88% of the minimum wage, while they were only entitled to 75% until now.
National Minimum Wage Act
These increases were announced in terms of the National Minimum Wage Act, which is aimed at prioritising a more equitable pay structure that ensures working people do not live in poverty. The Act also makes provision for exemptions when employers cannot afford the adjustment.
President Cyril Ramaphosa proclaimed the Act in 2018 to protect low-earning, vulnerable workers in South Africa and provide a platform for reducing inequality and huge disparities in income in the national labour market. It was then expected to benefit 6.6 million workers.
How it is calculated
The commission considered inflation, the cost of living and the need to retain the value of the minimum wage, gross domestic product (GDP), wage levels and collective bargaining outcomes, productivity, ability of employers to carry on their businesses successfully, the operation of small, medium or micro enterprises and new enterprises, and the likely impact of the recommendation adjustment on employment or the creation of employment.
Considering this increase, the commissioners felt that the Covid-19 downturn was a unique circumstance, and the implication for the national minimum wage remained difficult to anticipate. A modest real increase seems unlikely to aggravate the downturn, and could assist by working in tandem with other measures to stimulate the economy.
If you pay less than the minimum wage
It is an unfair labour practice to unilaterally alter hours of work or other conditions of employment when you implement the national minimum wage. It does not include:
- payment of allowances, such as transport, tools, food or accommodation
- payments in kind, such as board or lodging
- bonuses and
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