Minimum Wage: ‘Commission opening a jobs bloodbath door’

Just a few days ago, the Department of Labour and Employment through the National Minimum Wage Commission proposed a national minimum wage of 1.5% above inflation as measured by the consumer price index (CPI).

The commission, which was established in 2018, said the inflation rate measured by consumer price index (CPI) as of September 2020 was 3 percent, so the adjustment should be on the order of 4,5 percent.

The Commission feels that the adjustment of the national minimum wage by 1,5 percent above inflation was not out of line with collective bargaining outcomes in 1999/20.

Agri SA however said the commission was opening a jobs bloodbath door. This follows the Commissions’ reasoning that the ‘minimum wage for farm workers in 2021 should correspond to the national minimum wage.

“The National Minimum Wage Commission must take note that unemployment is the biggest driver of poverty. Wage increases must therefore be done in a sustainable way. Economic circumstances must be taken into account. Therefore, the current proposal by the majority of commissioners that the national minimum wage is increased by 1.5% above inflation, does not make sense,” said Agri SA’s Executive Director Christo van der Rheede.

NMW Commission is made of independent experts, representatives of organised business, organised community and labour.

Agri SA further raised alarm of the fact that farmers were still recovering from the seven-year drought compounded by the lockdown and economic downturn.

“In addition, the proposal to increase the current minimum wage of farm workers from R18.68 by 16.1% to R21.68, will lead to increased mechanisation resulting in even greater job losses in the agricultural sector,” Van der Rheede added.

For its part, the NMW Commission said the annual adjustments were motivated by inflation, cost of living, GDP and other factors.

But Agri SA was not convinced by this reasoning.

“Research has shown that big shocks in movement of legislated wages cause extensive job losses. An additional increase beyond the annual increase in 2021 would be problematic. We would rather like to see a phase-in approached over a period of three years. A double-digit wage shock should be avoided at all costs,” Van der Rheeded surmised.

NMW Commission also welcomed written submissions.

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