Farm minimum wage a double-edged sword

Feb 04 2013 22:40
Cape Town - Labour Minister Mildred Oliphant's announcement on Monday that a new minimum wage for farmworkers would be set at R105 per day was met with consternation by farm unions, who warned of job losses in the agricultural industry as farmers make "adjustments" to the increase.

The new rate, which is R36 more than the current minimum wage of R69 a day, would take effect from March 1.

But farm unions argue that the new rate may inevitably force farmers to cut their workforce to survive.

The Transvaal Agricultural Union (TAU SA) said the increase was the result of undue pressure and intimidation by seasonal workers, and said this created a precedent for future actions in other sectors that would jeopardise labour relations.

"Secondly, small and emerging farmers in particular certainly cannot afford these wages. Even concerns in certain industries will not be able to pay these wages... They will have no other choice but to reduce their workforce for the sake of financial survival," the union said in a statement.

With its announcement, government was aiding the creation of a climate for inflation "by approving several increases which will ultimately have a negative effect on consumers".

Higher minimum wages, higher electricity prices, and higher fuel prices were just some examples.

AgriSA said the increase to R105 a day would have "drastic implications" in the sector.

"This is especially true for labour-intensive sub-sectors where individual farmers will now have to make tough decisions on adjustments to ensure their sustainability," said AgriSA president Johannes Möller.

"Such adjustments are inevitable, taking into account recent hikes in fuel prices and water tariffs, and a likely sharp escalation in electricity tariffs."

He said the wage adjustment was not conducive to confidence, investment and the maintenance of the industry's contribution to food security.

Deputy Agriculture Minister and Freedom Front Plus leader Pieter Mulder echoed these sentiments, and said it would be seasonal workers who would suffer the most.

Mulder said the choice in South Africa was often between minimum wages or no work at all.

"It should be expected that South Africa's agriculture will in the next couple of years undergo a total restructuring, where farmers will be changing to less labour-intensive products, or will mechanise in an effort to balance their books."

The new minimum wage would also lead to the dismissal of seasonal workers.

"Where permanent workers will not be affected so much by the new wage determination, it will lead to the dismissal of tens of thousands of seasonal and temporary workers," Mulder said.

But the labour minister said an exemption from the new minimum wage would be available to farmers who could provide proof that their financial situation was so poor they would be forced to shut down operations if their wage bill rose accordingly.

Oliphant said an economic analysis by the Bureau for Food and Agricultural Policy had found that if the average wage of farmworkers increased to more than R104.98 per day, "many farms will be unable to cover their operating expenses, and hence not be able to pay back borrowings or to afford entrepreneurs remuneration".

"Agriculture is an important sector in our economy and it is imperative that it is stable at all times," she said.

Not over yet

Oliphant had earlier made the wage announcement at a briefing in Pretoria.

"The new minimum wage... is R105 per day for employees who work nine hours a day, or R11.66 per hour, R525 weekly, or R2 274.82 per month," she told reporters.

This new sectoral determination would be promulgated for a three-year period. During years two and three, wages would be increased by CPI plus 1.5%.

The labour minister's announcement followed countrywide public hearings on a new minimum wage for the agriculture sector, which were prompted by violent protests in parts of the Western Cape.

Farmworkers in the region were demanding a R150 a day minimum wage. The department said organised business had argued for a figure lower than R105.

Oliphant said all parties on the Employment Conditions Commission had agreed to the new minimum wage except the business representatives.

Meanwhile, the Congress of SA Tade Unions welcomed the wage agreement, but said it would not signal the end of efforts to improve the plight of farmworkers.

"Cosatu welcomes this agreement, but it is not enough," said Cosatu Western Cape secretary Tony Ehrenreich.

He said the agriculture sector as a whole should be transformed to improve relations on farms, and between farmers and the state.

"There is an attitude of hostility between farmers and their workers, and to some extent between government and farmers."

Ehrenreich accused the farmers of not coming to the table sooner, and criticised them for offering R94 a day when they did.

"Workers have realised that they are not going to get anything for nothing," he said of the strikes that brought farming activity to a standstill in fruit-growing regions of the province in recent months.
cosatu  |  agrisa  |  tau sa  |  ff plus  |  mildred oliphant  |  tony ehrenreich  |  labour



Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

We're talking about: STEINHOFF

Steinhoff International, once the darling of fund managers, risks falling out of the JSE top 100.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

If SARB keeps interest rates the same this afternoon, how will this affect your personal finances?

Previous results · Suggest a vote