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Business worried about salary cap

Johannesburg - The South African Chamber of Commerce and Industry (Sacci) cautioned on Wednesday against the government's proposal to cap wage and salary increases.

It said such measures could discourage the improvement of productivity and deflect foreign direct investment elsewhere.

The comments were a response to the government's New Economic Growth Path Framework released on Tuesday.

The framework set out the government's ambitions for the local economy and job creation.

Objectives included creating five million jobs over the next 10 years by placing more emphasis on labour-intensive sectors such as manufacturing and infrastructure.

Sacci suggested that creating the five million jobs would be difficult.
 
It raised concern over some of the government's objectives in the framework, in particular the possibility that wage and salary increases will be capped by legislation.

On Tuesday Patel said there was a proposal for discussion with business and labour, for moderate wage settlements linked to clear commitments by business to save jobs, create new jobs and address inequality.

The document proposed "moderate wage settlements" for those earning between R3 000 and R20 000 a month, "possibly to inflation plus a modest real increase", with "inflation-level increases for those earning over R20 000 a month".

Further, it suggests that pay and bonuses for senior managers and executives earning over R550 000 a year be capped.

"Sacci would only support voluntary implementation of such restraints," the business group's president Chose Choeu said.

When making the framework public, Economic Development Minister Ebrahim Patel said that the key challenge would be implementation.

In Sacci's view, the success of the framework will depend to a large extent on the implementation of policies and incentives to grow the small, medium and macro enterprise sector and the cutting down of red tape.

"It will also be very important that the commitments and milestones identified in the growth path are adhered to," Choeu said.

The business body supported the focus on engineering and artisan skills.

The framework aims to produce 30 000 more engineers by 2014 and 50 000 more artisans by 2015.

Sacci is preparing comments on the paper and is also developing a strategy on the role it can play in the implementation of the new economic growth path.
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