Higher wages for farmworkers – short term pain for long term gain

Short term pain for producers and long term gains for the economy are in store if farmworkers get the proposed increases to their national minimum wage, an economist says.

But farmers, divided by interests on opposite sides of the economy, want government to deal with the land question as well as inequality first.

Over the weekend, the Southern African Clothing & Textile Workers’ Union (SACTWU) called for the rapid implementation of increases in the National Minimum Wage for farmworkers and others in South Africa. In November last year, the Commission had proposed that the National Minimum Wage floor be adjusted upwards by the September 2020 inflation rate (3%) plus 1.5%, during 2021.

This meant a proposed 4.5% increase during 2021.

The commission had also proposed that an adjustment be made to lift the National Minimum Wage for farmworkers this year, to equal that applicable to other workers, and the same to be phased in for domestic workers next year.

Lower demand hurting producers

According to economics professor at the University of Johannesburg, Dr Peter Baur, lower demand and sales in restaurants and other food traders could impact pricing in the entire value chain, which could already be impacting farmers. Fruit and grain producers were also hard hit by the drop in demand for certain products.

But these problems are less impactful than the overarching policy issues affecting agriculture, not least of all the existential threat of indiscriminate land grabs created by the parliamentary process to allow the expropriation of land without compensation.

“At one stage, what we are worried about is when it does go through, what does it mean for farmers,” said Baur.

The country is facing higher levels of poverty, following millions of jobs shed in the carnage of Covid-19, added Baur, making the case for increased wages a strong one regardless of the probable short term impact, and could further pinch the pockets of producers.

Households and economy to reap the long-term rewards

“It will have an impact on cost of production, thus producers will be affected. However, its a social question, and benefits of raising the minimum wage will benefit households, and due to the high unemployment levels and pressure on household income, the need to raise min wages is quite important,” he argued.

Rising costs of energy are also compounding the problem. Due to the lockdowns, lower demand for primary products upon the closure of restaurants and gastronomy industry, coupled with lower demand due to lower global production, would possibly impact on prices of food.

“This too will put farmers under pressure. Overall, the real effect of minimum wages has had varied results across the world. Impact on farmers is not just due to wages, its many global and national factors too. Future concern rest on investor confidence and outcome of Covid-19. Also, an increase in minimum wage may also induce more spending, which may provide much needed stimulus for the economy,” he concluded.

Afriforum says do away with talk of EWC before discussing wages

Civil rights group Afriforum CEO Ernst Roets said the group was not opposed to higher wages for farmworkers, but expressed concern that farmers already faced policy uncertainty and likely could not afford higher wages as things currently stood. If wages must be hiked, expropriation of land without compensation would have to go.

“The minimum wage is not the only way to help people get higher wages and there isn’t one single solution to this. One way that government can help farmworkers earn higher wages is to step away from expropriation without compensation and to give farmers policy certainty on that,” Roets said.

“This will increase the business confidence because now people don’t want to invest in farms because they don’t know if their property is going to be protected.”

Farm murders have been linked to wage disputes, but he doesn’t believe that this could necessarily be seen as a major cause for the phenomenon.

“It is a factor but not as much in comparison to other issues. Government did a study on farm attacks in 2003 and labour issues as a motive only accounted for 1 out of 6 of the incidents. It is still a factor but greed and stealing was found to be a much more frequent motivator.”

Black farmers voices not being heard

Black farmers, according to the National African Farmers Union (NAFU) president Motsele Motlala, are largely left out of national conversations about the minimum wage and economic policy.

He lamented the fact that farming organisations representing this community, including NAFU were left out of the National Minimum Wage Commission and so the issues which affect them were not carefully considered by government. This puts black farmers, the majority of whom did not have access to major agricultural markets, at a worse position to pay higher wages.

“The black farmers of South Africa are definitely in a difficult position because of their lack of access to funding, credit, research and representation. This puts us in a difficult position, especially those smaller farmers who are on the ground working hands on,” Matlala said.

“They do not have access to the mainstream markets and so they do not determine the prices of the products they are selling. That puts them in a catch-22 when it comes to having to pay higher wages, because at the same time they do have to pay the workers who contribute to food production.”

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