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Minimum wage widely ignored

Nov 01 2010 07:00 Dewald van Rensburg

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Johannesburg - South Africa’s numerous prescribed minimum wages are ignored 45% of the time, an investigation has found.

Workers in unorganised sectors in which prescribed wages apply are also paid 36% less than the prescribed wages for those sectors.

Minimum wages are especially disregarded in regions with higher unemployment rates than the country’s average.

These were the principal findings in research commissioned by the department of labour and presented at a conference held by the University of Cape Town’s development policy research division on Friday.

The researchers, Professor Haroon Bhorat, Professor Ravi Kanbur en Natasha Mayet, analysed the September 2009 labour-force survey and compared it with nine of South Africa’s 11 sectoral determinations. Because of differences within sectors, the application of a total 36 different minimum wages was tested.

These minimum wages are all largely disregarded, but security guards, farm workers, domestic helpers and certain retail workers, in particular, lose out because the regulations are not enforced.

In the case of private security guards, especially, employers do not apply the government’s minimum wage policy, the investigation shows. A total of 67% of the country’s security guards are paid less than the minimum. In 2007 they were paid 42% less than the minimum. At that stage the minimum was under R3 000 a month.

In 55% of cases farm workers are underpaid and these workers receive on average 31% less than they are entitled to according to law.

About 47% of the workers in the taxi industry are also underpaid. They receive on average 38% less. In contrast, minimum wages in civil engineering and in the sector for retail managers are generally complied with.

The efficacy of prescribed minimum wages is influenced by a multiplicity of factors, the research reports.

Application of the regulations on minimum wages is particularly strongly related to the presence of large-scale unemployment in an area.

Competition for scare jobs appears to be the overriding factor. In these areas, especially, labour inspectors have had an influence on payment of the prescribed wage.

There’s a clear dynamic related to local surplus labour markets, said Bhorat on Friday.

The presence of the 800 or so inspectors in various areas has a measurably positive effect – but the effect is slight.

It’s possible that more inspectors would force employers to stick to the regulations.

Workers belonging to unions or those working for government institutions or larger companies more often receive the prescribed wage.

An interesting finding is that workers’ chances of receiving the prescribed wage is much the same whether they work for a formal or an informal enterprise.

The absence of written contracts and illiteracy in English contributes to far fewer workers receiving the minimum wage.

- Sake24

For business news in Afrikaans, go to Sake24.com.

minimum wage  |  labour
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