Cape Town – Deputy President Cyril Ramaphosa on Wednesday acknowledged that the proposed national minimum wage at R3 500 is neither a living wage nor a decent one, but it’s a good launching pad from where wages can be pulled up.
Responding to questions in the National Assembly on the implementation of a national minimum wage, Ramaphosa said the panel at the National Economic Development and Labour Council (Nedlac), which is deliberating on the proposed minimum wage, is expected to make announcement about an agreed number before the end of the year.
READ: Proposed minimum wage sparks heated debate
“Once announced the legislative process will commence and the Bill should go through the parliamentary processes for the better part of next year,” Ramaphosa said, “but parts of the agreement should see implementation by July 2017.”
Approximately 47% of South Africans, according to Ramaphosa, earn below R3 500, while 51% live on less than R1 600 per month.
“If we have a minimum wage it will be a radical shift to address wage inequality in the country. It’s estimated that between 6 million and 7 million people in South Africa are earning less than R3 500 and in many ways a minimum wage will lift as many as those out of poverty.”
Balancing act
In a follow-up question, the ANC’s Lumka Yengeni asked Ramaphosa how exactly the Nedlac panel arrived at the proposed R3 500 figure.
“There are people saying R3 500 is too little and then figures of R12 500 were thrown around, while others said R5 000. What aspects were considered in arriving at R3 5 00?”
Ramaphosa said the panel considered the low level of growth in the South African economy, but also looked at South Africa’s peers, such as Brazil, Turkey and Mexico and how a minimum wage has affected them.
READ: How experts arrived at SA's minimum wage
“They also took into account the basket of wages in South Africa and did a mean calculation at an average,” Ramaphosa said. “In addition a median calculation was done, which gave the panel an amount of R20 per hour for 40 hours per week,” he said.
Mitigating job losses
Ramaphosa said the panel was cognisant of possible job losses as a result of the implementation of a national minimum wage and for that reason a phased approach will be followed whereby certain sectors, such as businesses in distress, would be able to apply for exemption under certain circumstances.
Ian Ollis from the Democratic Alliance asked Ramaphosa if he was aware of a report by National Treasury that estimates job losses of 700 000 and a decline in the economy by 2.1%.
Ramaphosa responded that job losses associated with the implementation of a national minimum wage was a “universal experience”.
“There’s not a single country in the world that hasn’t suffered job losses. But the key question is: do we continue with wage inequality forever and a day, or do we move to an upper level where a national minimum wage will drag people up.”
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