> Timo Shihepo
WINDHOEK–SOUTH Africa’s bold move to impose a monthly minimum wage of R3,500 ($242) or R20 per hour across the board had industry warning of thousands of job cuts this week.
Labour, joined by opposition political parties, complained the minimum wage was still too low.
South Africa’s moves were being watched by regional governments, labour unions and business.
Pro-business economic analysts, however, maintain that the SADC region – because of its economic positioning and skills gap – is not suited for a minimum wage.
“A national minimum wage can only work where there is decent national productivity growth, flexible labour markets, a low share of non-wage compensation by employers and low unemployment. South Africa, as well as the rest of the region, fails on all of these,” said financial research group Nomura.
“South Africa has minimal productivity growth, very poor labour market flexibility, a high share of non-wage compensation by employers (medical, housing, dependents education support etc) and 36 per cent true broad unemployment.”
South Africa’s treasury, it emerged, also opposed the new minimum wage proposals announced by Vice President Cyril Ramaphosa last weekend. The new minimum wage will take effect in July 2019, if approved.
Treasury warned that a minimum wage above R3,000 would result in 715,000 job losses and an economic shrink of 2.1 percent.
The treasury’s dire warning was contained in the recommendations report currently under consideration by labour, government and business in the National Economic Development and Labour Council (NEDLAC).
In a twist of irony, the ANC government found itself not only being assailed by business, but the opposition too – but for different reasons.
“The proposal will not lead to the desired resolution of the problem of inequality. Instead, it is going to institutionalise these inequalities at low poverty wages,” said Mbuyiseni Ndlozi, spokesperson for the Economic Freedom Fighters (EFF).
“Any minimum wage that is below R4,500 will not make any difference to the lives of workers or the resolution of inequality in wages and actual living conditions.”
The EFF rejected calls for exceptions to be made for farmworkers and domestic workers.
“We reiterate that no-one, from petrol attendants, security guards, farm and domestic workers, to cashiers in all big retail stores; no one must earn less than R4,500 per month,” the EFF said, while threatening to mobilise workers to stage protests.
Ramaphosa admitted the road to a final agreement will be long, with the July 2019 implementation date liable to change.
“There is no agreement as yet; what we’ve agreed on is a process. Right now there’s no agreement, we are urging all parties to consult. Will business, unions and government agree to this? No! This is a process we’ve all looked forward to. Now there’s a figure around the table. So let’s have a discussion,” he said.
“Whoever is paying low wages, adjust yourselves. We need to move higher. Is this a living wage? No. This is not a living wage.”
Around 47 percent of South Africans who do have work earn a wage below R3,500 – way below the poverty datum line. Prof Chris Malikane of the University of Witwatersrand told a Johannesburg radio station: “You would need R12,000 to sustain a basic household.”
In SADC, Malawi is the only country with a definite national minimum wage. The new minimum wage, which came into effect in January this year, stands at K15,000 (R295.18) per month for a six day working week. Analysts say it is embarrassingly too little, but perhaps reflects on the size of Malawi’s economy.
In Namibia, the office of the labour commissioner said it plans to submit a report to the Minister of Labour and Social Welfare to launch a discussion about a minimum wage.
Currently in Namibia only mining, construction, security, domestic workers and agricultural sectors have set basic levels of payment through collective bargaining.
In Zimbabwe and Botswana, the minimum wage is sector based, and not all jobs are covered.
In Botswana, a new policy introduced in June this year and effective until May 30, 2017, says construction workers should be paid a minimum wage of R7.13 per hour while domestic workers have their minimum wage set at R3.95 per hour.
Herbert Jauch, the founding director of the Labour Resource and Research Institute (LaRRI) in Namibia told The Southern Times that a national minimum wage must be set at a level that takes workers and their families out of poverty but in a capitalist economy there is always a fear that a substantial minimum wage will lead to retrenchments.
Jauch says “it would be nice” if there was a standard minimum wage for SADC countries but said this was practically impossible to enforce without a harmonisation of economic conditions and departing substantially from the free market philosophy as entrenched through neo-liberal policies in most SADC countries.
“Economic structures and wage levels differ substantially across the SADC region and unless there is a systematic and deliberate levelling first, it will be impossible to introduce the same standard minimum wage for the region,” said Jauch.
Jauch said any government that is serious about fighting poverty has to introduce a national minimum wage that allows workers and their families to move out of poverty.
He added that only a minority of workers are covered by trade unions and collective bargaining and unions need to continue negotiating for better wages and benefits for their members.
Jauch said the national minimum wage is especially important for non-unionised workers and it needs to be enforced and implemented consistently. Governments, he said, also have to establish efficient enforcement mechanisms to avoid a scenario where this minimum wage exists on paper but is not paid to many workers in vulnerable positions.
Namibia’s permanent secretary in the ministry of labour, Bro-Mathew Shinguadja, said the process of introducing a national minimum wage is cumbersome and takes time.
“People talk about the country being 26 years without a minimum wage but what they don’t know is that you just don’t wake up and say you are bringing up a minimum wage,” he said.
“You first have to consult the stakeholders and this process did not just start this year, it started as early as 1994 whereby we visited many countries to see how they are doing it.”