Cel­e­brat­ing the new min­i­mum wage deal

The ad­vi­sory panel es­tab­lished by Ned­lac last year pro­posed a his­toric NMW of R20 per hour

African Independent - - BUSINESS - IM­RAAN VALODIA

SOUTH Africans will re­mem­ber Fe­bru­ary 2017 as a his­toric time in our his­tory of ad­dress­ing poverty and in­equal­ity in South Africa.

This is the time when we joined the in­ter­na­tional com­mu­nity of car­ing and humane economies and agreed on the es­tab­lish­ment of a na­tional min­i­mum wage (NMW).

The ad­vi­sory panel es­tab­lished by Ned­lac last year pro­posed a NMW of R20/hour. This works out to roughly R3 500 a month for each worker, de­pend­ing on the hours of work.

The panel, in its re­port, ac­knowl­edged this is a very low fig­ure. It’s be­low the poverty line, it’s be­low the liv­ing wage.

It won’t sup­port a fam­ily of four com­fort­ably. The panel re­ceived some crit­i­cism, and no doubt there will be other in­di­vid­u­als who com­pletely re­ject this fig­ure when it is signed off.

The panel was told by some in­di­vid­u­als the fig­ure was way too low, that it did not make a sig­nif­i­cant dif­fer­ence to poor work­ers, and that it con­tin­ued a sys­tem of poverty wages and the work­ing poor.

On the other hand, the panel was also crit­i­cised for the level be­ing set too high. In­di­vid­u­als from the other end of the spec­trum said it was not a pol­icy South Africa could af­ford to in­tro­duce in an econ­omy with such high lev­els of un­em­ploy­ment, and at a time when our econ­omy is al­most stag­nant, with growth fore­casts for the next three years be­ing very low.

We were told that such a high fig­ure would lead to a jobs blood­bath – and as we all know the very last thing this coun­try can af­ford is for still more peo­ple to join the ranks of the un­em­ployed.

Th­ese crit­ics ac­cused the panel of not car­ing about the un­em­ployed and that it was fo­cus­ing on the priv­i­leged – that is, those al­ready em­ployed at the ex­pense of those des­per­ately seek­ing em­ploy­ment at any cost.

We spent many hours de­bat­ing th­ese is­sues. We were cer­tain we wanted to pro­pose some­thing that would make a sig­nif­i­cant dif­fer­ence to the poor­est of work­ers. But we were equally cer­tain we wanted to pro­tect jobs and not add fur­ther to this mas­sive cri­sis of un­em­ploy­ment.

So we came up with a pro­posal we be­lieved struck a bal­ance be­tween th­ese com­pet­ing con­cerns.

We pro­posed no worker (ex­cept those ex­cluded or those who are be­ing brought into the sys­tem through a tiered ar­range­ment) earn less than R20 an hour.

R20 feels low to us, but even at that rate we have been warned some busi­nesses will find it very hard to pay their staff that amount and there is a risk they will shut down and re­trench work­ers.

We also took note of the fact that work­ers who are most vul­ner­a­ble, who are earn­ing th­ese very low wages, are gen­er­ally not or­gan­ised by the trade union move­ments and do not have the ben­e­fit of col­lec­tive bar­gain­ing deals which could ne­go­ti­ate higher wages. It is also im­por­tant to note we are not propos­ing that any­one should earn R20/hour. Rather, our pro­posal is that no one should earn less than R20/hour. This nu­ance is very im­por­tant.

It was as shock­ing to us as it was to the rest of the coun­try to dis­cover that 47% of work­ers in this coun­try earn be­low the pro­posed in­tro­duc­tory level. The pic­ture we were able to paint from the 3 month process of en­gage­ment and anal­y­sis was one of ex­treme poverty and des­per­a­tion among many South Africans.

This pol­icy is not an un­usual one. It is im­por­tant here to make some points about in­tro­duc­ing a na­tional min­i­mum wage. Firstly, no-one can ac­cu­rately pre­dict the fu­ture and so there is no def­i­nite way of telling, with 100% cer­tainty, what ef­fect it will have.

Se­condly, we be­lieve the in­tro­duc­tion has been cau­tious enough that it will give busi­nesses suf­fi­cient time to ad­just and en­sure the pub­lic are ad­e­quately in­formed about the process. Thirdly, it is our strong be­lief some­thing had to be done. There was no in­di­ca­tion that any­thing else was go­ing to shift to sig­nif­i­cantly raise the wages of th­ese work­ers.

Fourthly, we care­fully stud­ied the in­ter­na­tional ex­pe­ri­ence and had the ben­e­fit of se­nior ILO econ­o­mist, Dr Patrick Belser, to ad­vise us.

We were en­cour­aged that no coun­try has re­ported the in­tro­duc­tion of a na­tional min­i­mum wage was a mis­take and did more harm than good.

Pro­fes­sor Im­raan Valodia is chair of the NMW Ad­vi­sory Panel

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