Johannesburg | For the year 2022, South Africa’s Department of Employment and Labour is seeking public input on a new minimum wage target for the country.
An annual review of the minimum wage is conducted by the National Minimum Wage Commission (NMWC) as mandated by the National Minimum Wage Act. Thulas Nxesi, minister of employment and labor, then makes a decision based on these suggestions.
It has been claimed that the national minimum wage may be utilized to raise more South Africans out of poverty, but businesses have warned that future increases in the minimum wage would be unsustainable and result in significant job losses.
It was in March 2021 that Nxesi introduced the most recent minimum wage adjustment for South Africa, bringing the current total to R21.69 for each average hour of work.
As in past years, a number of worker groups are exempt from the adjustment, including:
The majority of commissioners proposed raising the national minimum wage by 1% over inflation, as calculated by the consumer price index (CPI).
A minority advocated for a 1.5 percent increase above inflation, as measured by the CPI, in the national minimum wage.
All commissioners also suggested that, in accordance with a decision made in 2021, the minimum wage for domestic employees be raised to the national minimum wage in 2022.
While the precise totals would still need to be certified by labour minister Thulas Nxesi, this would bring the minimum wage closer to R23/hour and for the first time see domestic workers receive more than R20/hour.
The National Minimum Wage Commission has acknowledged reasonable worries about the impact of the country’s annual national minimum wage changes on employment.
The national minimum wage adjustment also coincides with the current Covid epidemic, making evaluating and isolating the impact of a national minimum wage hike problematic.
Given the current South African economic climate, the effects of the Covid-19 lockdown, and recent losses due to violent looting in mid-2021, an increase in the NMW would be disastrous to businesses and the economy in general, according to the National Employers Association of South Africa in an October report.
“In a country like South Africa, which is already struggling with unprecedented rates of unemployment, extreme poverty, overburdened employers and business owners, and a veneer-thin trust in the government and its ability to care for its most vulnerable citizens, unaffordable NMW will completely cripple the already crippled economy, leaving employers, business owners, their employees, and their dependents destitute.”
If firms are unable to afford an increase, they will be forced to reduce working hours or retrench their staff, according to the report.
“What the government appears to overlook is that when one employee is laid off, it is not only that individual who suffers.” In South Africa, one worker is typically the sole source of income for a family of four or five individuals. This means that the implications of that one employee’s retrenchment would affect them all.”
The fact that an employer may not appoint a person at a rate lower than the minimum wage, even with the consent of such a person, deprives a potential employee of earning a living and condemns him to a life of abject poverty, according to Neasa.
“It is incumbent on the government to examine its future stance on raising minimum wages and to weigh employers’ concerns to increases.” Their priority should be to avoid severe future economic consequences for the country, as well as a surge in unemployment.
“It is time for the government to examine all legislative initiatives, of which the NMW is only one, and determine which discourages employment.”