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Patel: State won't regulate salaries

Dec 03 2010 11:28 I-Net Bridge

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Johannesburg - Economic Development Minister Ebrahim Patel on Friday defended proposals in the government's new growth path document, saying that the state would not regulate salaries or set maximum limits.

Patel was writing in Business Day newspaper.

The new growth path calls for "moderation" in wage increases, he wrote.

"It puts forward proposals for commitments by stakeholders to accept moderation in wage increases as part of a deal on price restraint, concrete jobs commitments and measures to address income inequality."

He said the proposals did not entail pay cuts, set maximum salaries, or rely on state regulation.

Rather, they sought a consensus with business and labour on remuneration increases in the future.

"They cover employees earning more than R3 000 a month and they propose a modest but above-inflation wage increase at the lower end (R3 000 to R20 000 a month) ranging to a freeze or below-inflation increase (the so-called salary caps) for the highest paid, who earn more than R45 000 a month."

Patel acknowledged that "no one ordinarily volunteered for this kind of sacrifice".

"But we cannot hope to sustain a common purpose in a society marked by extreme inequality without promoting wider cohesion.

"To secure commitments on partnership and productivity improvements in a divided workplace is difficult, unless senior staff also show solidarity."

Patel said the official Incomes and Expenditure Survey for 2005 to 2006 had found that the richest 10% of the population received 51% of all household income, while the poorest 50% got just 10%.

"If we do not start to deal with this problem now, when will we?".

Discussions on wages had in the past polarised society, he said.

"Some have argued for more wage flexibility and moderation at the bottom end, while others have called for restraint on high- end salaries and bonuses. We need to take the debate beyond strident comments and move both parties to new ground."

Patel said the new growth path made proposals to provoke a discussion that could build a new consensus on wages and earnings.

"We made them specific, because anything less is unlikely to get South Africans talking."

He also said that the growth path provided a fair balance between what the state must do and what businesses are best equipped to do.

"This is where social partnership is critical," he said.

"The engagement with some of SA's largest companies and business associations will help to spell out the roles each can play."



ebrahim patel  |  new growth path



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