National Minimum Wage Commission calling for comments on possible rate adjustments

A report is set to be compiled on adjusting the national minimum wage (NMW).

The NMW Commission extended an invitation for written submissions and recommendations to be considered for its upcoming annual report.

Submissions must be made by 30 September and following the publication of the report, another window will be opened for submissions by interested parties, before being sent to the Minister of Employment and Labour.

Consensus not yet reached

The national minimum wage was first instituted in South Africa in 2018 with the National Minimum Wage Act 9 of 2018.

When coming into effect, the rate in 2019 was R20 per hour and by 2024 the nation’s NMW had climbed to R27.58.

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Since 2018, the unemployment rate has steadily climbed from 27.1% to 33.5% in the most recent figures issued by StatsSA.

Many factors contribute to unemployment and a study conducted by the Development Policy Research Unit at the University of Cape Town (UCT) listed basic reasons why the impact of minimum wage is limited.

The 2020 report, cited by the Department of Employment and Labour, stated non-compliance, pre-existing sectorial minimums and broader structure issues as key concerns.

It added that the minimum wage in South Africa was relatively high, placing half of the workforce under the limit.

Effects on employers

The National Employer’s Association of South Africa (Neasa) released a statement in January responding to the Commission’s 2024 adjustment report.

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Citing affordability and a stagnant economy, Neasa reiterated they have always been against the idea of a national minimum wage.

“South Africa experiences a surplus of, especially, unskilled and low-skilled job seekers – caused by de-industrialisation and the failure of the education system,” stated Neasa.

“Any wage is better than nothing. There is a concern that the national minimum wage takes away the employers’ and employees’ liberty to negotiate their wages.

“Instead [NMW] increases the chances of unemployment,” Neasa explained.