Commission recommends 4.5 percent increase in national minimum wage.
Members of the National Minimum Wage Commission have recommended that the minimum wage be lifted from R20.76 an hour to R21.68 an hour.
This is an increase of 4.5 percent, which is 1.5 percentage points above the inflation rate of 3 percent a year in September.
The majority opinion of the commission defended the rise in the minimum wage during the Covid-19 economic downturn. “A modest real increase seems unlikely to aggravate the downturn and could assist by working in tandem with other measures to stimulate the economy,” they said.
The commissioners said because of the impact of food prices, inflation was higher for low-income households. The effective rate of inflation for low-income households was 3.3 percent a year, they said.
They said the current minimum wage is below the lower poverty line of R3,360 a month for a household of four people. This poverty line measures what is needed to cover food and some essential items like shelter.
Two in five households in South Africa earn this or less, they said. At R21.76 an hour, the current monthly minimum is about R3,320 a month.
According to the majority opinion, “Initial research has found that the policy did not place an undue burden on employers.”
South Africa’s minimum wage legislation currently discriminates against farmworkers and domestic workers as these workers can be paid at a rate lower than the minimum wage.
The minimum wage of domestic workers is presently 75 percent of the minimum wage, while the minimum wage of farmworkers is presently 90 percent of the minimum wage.
Most commissioners argued that the minimum wage for farmworkers should be brought to parity with the national minimum wage in the 2021 adjustment (an effective increase of R350 per month).
They said wages of domestic workers should be increased to 88 percent of the national minimum by 2021 (approximately R19 per hour), and to parity by 2022.
They found that farmworkers were not subject to the pressures that caused mass unemployment in other sectors, as their work was declared essential from the beginning of the Covid-19 crisis.
They did not support the proposals on domestic and farm workers either, arguing that “no sector can absorb such increases.”
Instead, they argued for a four-year phase-in period for both farm and domestic workers.
“This is the only reasonable proposal to avoid the negative impacts of massive wage increases,” they said.
Under the National Minimum Wage Act, the National Minimum Wage Commission annually assesses and reviews the minimum wage. The Minister of Employment and Labour then determines an adjustment based on these recommendations.
