Raise national minimum wage
Business will ask that the state pays for part of the national minimum wage
Trade unions are pushing for a number of changes to the proposed national minimum wage that would make it a far more meaningful intervention – but still not a living wage. The unions’ main way to get a higher minimum wage is by demanding the scrapping of a key feature of the expert panel’s report and its R20-perhour proposal.
This is the so-called wage freeze, whereby the R20 only really becomes enforceable in 2019, making the national minimum wage in effect R20 in 2019 terms. That is more like R17 an hour currently. The point of this is to make the national minimum wage segue painlessly with most of the existing sectoral determinations.
The panel’s proposal leads to few actual wage increases across the most important low-waged sectors such as domestic work, contract cleaning, farm work, private security and hospitality. The unions’ proposal changes that dramatically. They call for R20 an hour to become effective next year, and for it to increase by inflation plus 1 or 2 percentage points a year from the start.
That means something in the region of R23 an hour by 2019.
Using a fairly commonplace 45-hour work week, the unions’ proposal comes to R4 450 a month by 2019 instead of the R3 870 you get using the panel’s proposal.
City Press has seen the labour response tabled at the National Economic Development and Labour Council (Nedlac), but understands that the business group at Nedlac also wants a number of changes that include the state coughing up for the national minimum wage in some “fragile” sectors.
This would be by using the Employment Tax Incentive (youth wage subsidy) to subsidise increased wages.
The law already allows government to “designate” sectors where the subsidy can then be claimed – even for older workers.
This mechanism has not yet been used and business’ proposal would further entrench the subsidy that it has already fought hard to defend.
The youth wage subsidy has spectacularly blown its initial budget of R5 billion over three years – it instead now costs at least R4 billion in a single year.
Organised business recently succeeded in getting Treasury to back down from a plan to cap the Employment Tax Incentive at R20 million per company per year.
The business group in Nedlac is also concerned about the expert panel’s “problematic” use of a 40-hour week as a baseline. The R20 wage becomes the much-publicised R3 500 if you work on average 40 hours a week.
According to the head of the panel, Imraan Valodia, the idea was to exert downward pressure on the prevalent practice of the 45- or 48-hour weeks that are considered normal in many service sectors.
The most likely adjustments employers will make is to increase wages and counterbalance that by reducing hours.
A source close to the talks says that the expert panel’s proposal to implement the national minimum wage next year is considered highly unlikely.
This is in part because a new socioeconomic impact assessment will probably be conducted to estimate the potential effects on earnings and employment.
City Press understands that Nedlac nevertheless wants something on the national minimum wage as well as the new strike rules ready in time for the state of the nation address in February.
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