Covid-19 Watch

National Minimum Wage: An impasse looming

The window of submitting written responses on the National Minimum Wage (NMW) officially closed on 20 December 2020. 

Strong calls against the increase of the minimum wage were clear signs that the debate was largely based on economics as Eddie Cottle, a respected labor pioneer would put it. 

“The arguments for and against an NWM was a reflection of class interests with bosses, political parties, governments and some conservation academics even trade unions opposing the introduction of a national minimum wage,” he wrote in a seminal piece for the International Labour Organisation (2015) ‘Towards a South African National Minimum Wage.’ 

However, these calls by industries have been genuine to some degree especially after the ripple effect of Covid-19 affecting mostly South Africa’s agricultural exports. 

Still recovering from the covid-19 shock, the National Minimum Wage Commission moved to recommend for there to be an equalisation for farmworkers at CPI +1,5%, effectively according to the industry implying a ‘de facto 16% increase for farmworkers.’ 

Politically, the DA advanced a thought that a double-digit increase in the minimum wage would in all “likelihood lead to increased mechanization resulting in even greater job losses in the agricultural sector.” 

In a leaked 14-page document Mzansi Agriculture Talk has seen, the Agricultural Business Chamber draft submission seemed to share a similar view but was more critical in how the Commission came to its conclusion. 

“Even if no further restrictions are imposed, even the most optimistic estimates for an economic recovery predict that the South African economy will only reach 2019 levels again by 2023/24. The recommendations made by the majority report is, therefore, with respect, completely out of touch with the economic realities of the day.” 

The Agricultural Business Chamber went further admitting that some agricultural industries were not affected by COVID-19. The horticulture industry which had a high number of workforce was one of the few industries which recorded major job losses. 

Going back to Eddie Cottle, the economics of minimum wage seemed to have squarely focussed on the jobs bloodbath than the amount of revenue generated by the agricultural sector during the lockdown. 

Seemingly, workers were subsiding their employers by accepting low wages according to Cottle. 

“Those who do not support an NMW or at least a ‘living national minimum wage’ tend to confine the debate to a single dimension of higher wages causing unemployment by causing lower profits and thus a lack of investment. They base their views on the low wage growth path inherited from apartheid and perpetuated by the African National Congress (ANC) government.”

Ironically, in the last seven years or so, the agriculture sector was subjected to extreme shocks such as the drought, avian influenza, listeria but at no point was there strong economic calls ‘on catastrophic effects on jobs and employment levels.’ 

Author of ‘Violations of farmworkers’ labour rights in post-apartheid South Africa’ Stephen Devereux (2019)’ highlights that the restructured agricultural system has always favoured commercial farmers against farmworkers in any given context or scenario. 

“Apart from farmers themselves, the government is responsible for failing to enforce compliance with pro-worker legislation, while trade unions have failed to represent farm workers and hold farmers and government to account.” 

South Africa has never had a coherent wage policy partly due to the ruling party (the African National Congress – ANC) dualistic approach of embracing market forces and its tier support on the other hand for worker rights. 

The National Minimum Wage Act, which aims to reduce inequalities by increasing wages for the worst paid workers is merely legislation permeating room for exploitation.  

“If employers feel that the increase would inevitably lead to job losses, they can apply for an exemption” reads the Act. 

Given that the largest union COSATU had already laid down the gauntlet towards the state playing a greater role in promoting Collective bargaining, a state of impasse is looming ‘one that would break or alter the apartheid wage structure decisively.’

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