Briefing Parliament’s labour committee during a workshop on a national minimum wage, National Employers Association of SA (Neasa) chief executive officer Gerhard Papenfus said this could be seen as interference.
“If anybody interferes with this [free] market arrangement and prescribes a wage to the market which the market (or employers) cannot afford, it will respond in a particular way…” he said.
Employers could be forced to cut staff, mechanise, or close shop altogether.
If government did go ahead with the establishment of a minimum wage across sectors, a compromise would need to be reached.
“A national minimum wage, if that is indeed the route that government wants to take, needs to be fixed at a level where new entrants to the labour market can be absorbed at an affordable and sustainable cost and that a healthy trade-off between a minimum wage and employment be maintained at all times,” Papenfus said.
Papenfus said arguments by organised labour and others that a high minimum wage will have a knock-on effect in stimulating demand in the economy could not be proven.
“This, however, if it will happen at all, would take time to reflect,” he said.
“Therefore, in the short term, although it will increase an employer’s wage bill, it will not be met by the same increase in demand.”
There was also no evidence to suggest an increase in wages would automatically be met by an increase in worker productivity, Papenfus added.
He cited examples in the metals and engineering sector, where he said 700,000 jobs were lost in the past 30 years.
“Over the last three decades the metal and engineering industries’ bargaining council has established wages for that industry which were completely unrealistic.”
Congress of SA Trade Unions strategist Neil Coleman took Papenfus to task for making sweeping statements and not providing MPs with a clear indication of what he thought an acceptable wage was.
“He says if productivity and demand increases then maybe employers can afford it, but there’s no attempt to grapple with the fact that improving the conditions of workers and having a better approach to productivity, not of workers, but the economy and the enterprises as a whole, is assisted by minimum wages and this is the experience of many, many countries around the world,” Coleman said.