‘Low’ minimum wage not enough to help workers’ families beat poverty – Pacsa

The newly announced National Minimum Wage of R20 per hour for workers will in no way meet a low income family’s needs and enable them to live a dignified lifestyle, instead it will entrench wage inequality and poverty in the affected families.

The Pietermaritzburg-based consumer research organisation, Pacsa said setting the minimum wage at this low level would make it impossible for a worker’s family to meet the essential goods and services required to live at a basic level of dignity, nor will it allow workers to save towards their retirement.

“It may decrease the depth of extreme poverty in some households, but it is not enough to enable low-income households a way out of poverty,” Pacsa director, Mervyn Abrahams said.

According to Abrahams, while the panel suggested that the wages of 6.7 million workers will improve as a result of the proposed minimum wage, a large number of the most vulnerable workers will be excluded and therefore may not see that wage improvement.

“We expect that the minimum wage will institutionalize and legalize the low wage regime. It will constrain any substantial economic transformation in our economy and labour market and allow massive racial wage inequalities and scandalous levels of wealth to continue,” Abrahams said.

ALSO READ: Peters moves to axe Acsa board members, ‘shield CEO’

Pacsa, for the past two years, has been tracking the affordability and cost of a limited basket of essential basic goods and services for low-income households in Pietermaritzburg.

Its research found in January 2017 that the cost of these goods and services for a household of five came to R6 822.87. But for households relying on the income of R3 500, it would mean having to endure a shortfall of up to R3 322.87.

Abrahams said a family on the minimum wage would therefore have to cut back or forgo essential goods and services required for dignity, household functioning, health and well-being

He said the new framework squeezed the majority of workers, while South African CEO’s on JSE-listed companies earned R45 560, or more according to the 2016 Bloomberg survey.

“What we require is real transformation. We have not really explored the possibility of how a NMW could be set at the level of a living wage…Much more thinking is required around what a living wage could mean and how [and] together as South Africans we could secure it for everyone.

“Given that the NMW has now been set at R20 an hour, the task of thinking around a living wage is perhaps now more urgent,” Abrahams said.

The national minimum wage was signed by Deputy President Cyril Ramaphosa and would come into effect on May 1 next year.

For more news your way, follow The Citizen on Facebook and Twitter.