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Raise national minimum wage

Dec 18 2016 06:03
Dewald van Rensburg

Johannesburg - Trade unions are pushing for a number of changes to the proposed national minimum wage that would make it a far more meaningful intervention – but still not a living wage.

The unions’ main way to get a higher minimum wage is by demanding the scrapping of a key feature of the expert panel’s report and its R20-per-hour proposal.

This is the so-called wage freeze, whereby the R20 only really becomes enforceable in 2019, making the national minimum wage in effect R20 in 2019 terms.

That is more like R17 an hour currently.

The point of this is to make the national minimum wage segue painlessly with most of the existing sectoral determinations.

The panel’s proposal leads to few actual wage increases across the most important low-waged sectors such as domestic work, contract cleaning, farm work, private security and hospitality.

The unions’ proposal changes that dramatically.

They call for R20 an hour to become effective next year, and for it to increase by inflation plus 1 or 2 percentage points a year from the start.

That means something in the region of R23 an hour by 2019.

Using a fairly commonplace 45-hour work week, the unions’ proposal comes to R4 450 a month by 2019 instead of the R3 870 you get using the panel’s proposal.

City Press has seen the labour response tabled at the National Economic Development and Labour Council (Nedlac), but understands that the business group at Nedlac also wants a number of changes that include the state coughing up for the national minimum wage in some “fragile” sectors.

This would be by using the Employment Tax Incentive (youth wage subsidy) to subsidise increased wages.

The law already allows government to “designate” sectors where the subsidy can then be claimed – even for older workers.

This mechanism has not yet been used and business’ proposal would further entrench the subsidy that it has already fought hard to defend.

The youth wage subsidy has spectacularly blown its initial budget of R5 billion over three years – it instead now costs at least R4 billion in a single year.

Organised business recently succeeded in getting Treasury to back down from a plan to cap the Employment Tax Incentive at R20 million per company per year.

The business group in Nedlac is also concerned about the expert panel’s “problematic” use of a 40-hour week as a baseline. The R20 wage becomes the much-publicised R3 500 if you work on average 40 hours a week.

According to the head of the panel, Imraan Valodia, the idea was to exert downward pressure on the prevalent practice of the 45- or 48-hour weeks that are considered normal in many service sectors.

The most likely adjustments employers will make is to increase wages and counterbalance that by reducing hours.

A source close to the talks says that the expert panel’s proposal to implement the national minimum wage next year is considered highly unlikely.

This is in part because a new socioeconomic impact assessment will probably be conducted to estimate the potential effects on earnings and employment.

City Press understands that Nedlac nevertheless wants something on the national minimum wage as well as the new strike rules ready in time for the State of the Nation Address in February.


The Nedlac labour constituency also wants to keep a real living wage on the table, even while calling R20 a “workable starting point”.

Even the higher minimum wage the unions are calling for still falls short of what is generally viewed as necessary to support human life.

This is estimated at about R4 500 per month on the presumption that a wage earner has the national average number of dependents.

The unions are asking for the explicit inclusion of a “medium-term target” towards which the minimum wage should get increased over time.

This should get announced alongside the initial minimum wage, they say.

This should be “at least R4 500 in 2017 values”, according to the document.

It doesn’t say what is meant by the medium term, but R4 500 in 2017 money terms is a substantially different proposition from what the panel has proposed.

It is based on the 40-hour week the panel used, coming to R26 per hour.

Adding inflation, this target ends up being about R29 in 2019 compared with the R20 the panel proposed.


. Part-time workers get a 25% higher minimum wage. This should be triggered by working less than 27 hours in a week.

. Don’t exclude the Expanded Public Works Programme (EPWP)

Unions say that EPWP workers should get a lower wage, which is already proposed for farm and domestic workers, instead of the EPWP being exempted from the minimum wage.

. Don’t exclude learnerships.

The panel said people on learnerships can get excluded to protect skills programmes.

The unions say this is “double-dipping” because employers already get tax breaks and grants for learnerships.

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nedlac  |  youth wage subsidy  |  minimum wage


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