Labour and busi­ness given key de­mands for min­i­mum wage

CityPress - - Business - DE­WALD VAN RENS­BURG de­wald.vrens­burg@city­

The na­tional min­i­mum wage (NMW) will be R20 an hour, but not the R20 an hour pro­posed by an ex­pert panel last year. The panel, led by Pro­fes­sor Im­raan Valo­dia, the dean of com­merce, law and man­age­ment at Wits, had in ef­fect called for R20 in 2019 rand terms, so that would be more like R17 an hour.

The fi­nal agree­ment made pub­lic this week calls for R20 in 2018 rand terms, which leads to a roughly 7% higher min­i­mum wage in real terms.

This seem­ingly mi­nor change will, how­ever, make the NMW a big­ger in­ter­ven­tion.

The panel’s pro­posal would have in­ten­tion­ally left most of the ex­ist­ing sec­toral de­ter­mi­na­tions for lowwage sec­tors un­af­fected be­cause their min­i­mum wages are set to reach R20 by 2019 any­way. Now, the low­est wages in sec­tors in­clud­ing do­mes­tic work, farm work, se­cu­rity, re­tail and hos­pi­tal­ity may ac­tu­ally get bumped up­wards.

This is one of few con­ces­sions the labour union con­stituency at the Na­tional Eco­nomic Devel­op­ment and Labour Coun­cil (Ned­lac) seems to have been able to se­cure out of a laun­dry list sub­mit­ted late last year.

The NMW agree­ment sets May 1 2018 as the im­ple­men­ta­tion date, which is much sooner than

Do you think the R20 an hour Na­tional Min­i­mum Wage is good enough?

SMS us on 35697 us­ing the key­word WAGE and tell us what you think. Please in­clude your name and prov­ince. SMSes cost R1.50 the ex­pert panel had en­vis­aged.

“Our sense in the panel was that you are go­ing to need two years to set up the ma­chin­ery and get it all done,” Valo­dia told City Press this week.

“I think it is am­bi­tious, but if gov­ern­ment thinks it can do this, let’s wait and see. It has ac­cepted the bulk of what we sug­gested. The only sub­stan­tial change is re­ally the time frame.

“There are things in there that we did not deal with,” he added. A WIN FOR BUSI­NESS One of the things not dealt with is the in­clu­sion of ref­er­ences to “tax in­cen­tives” in the agree­ment.

City Press re­ported late last year how the busi­ness ne­go­tia­tors at Ned­lac were push­ing for the ever-ex­pand­ing Em­ploy­ment Tax In­cen­tive (youth wage sub­sidy) to be used to par­tially pay for the NMW in “frag­ile sec­tors”.

The fi­nal agree­ment states that “tax in­cen­tives” may not only get used to help “frag­ile sec­tors, but may also be used to sup­port em­ploy­ers that ap­ply for ex­emp­tion from the NMW”.

Deputy Pres­i­dent Cyril Ramaphosa this week said the Em­ploy­ment Tax In­cen­tive as well as other kinds of busi­ness sub­si­dies would be con­sid­ered.

Tanya Co­hen, the CEO of Busi­ness Unity SA, said the po­ten­tial scale of sub­si­dies the NMW could trig­ger had not been quan­ti­fied, but “Trea­sury is work­ing on it. They want to know if it is fis­cally fea­si­ble.”

Co­hen said there were, how­ever, ar­eas iden­ti­fied where the tax in­cen­tives might play a role, in­clud­ing small to medium-sized en­ter­prises and start-ups, as well as sub­sec­tors such as fur­ni­ture man­u­fac­tur­ing.

Valo­dia is, how­ever, scep­ti­cal of sup­port­ing the NMW with the Em­ploy­ment Tax In­cen­tive.

“You have to be in the tax net to be­gin with. You have to be pay­ing taxes to ben­e­fit from an in­cen­tive,” he said.

“Many small busi­nesses, es­pe­cially in that start-up phase, are making losses and are not likely to be pay­ing taxes. It is not un­like in­di­vid­ual taxes. When you use the tax sys­tem for ben­e­fits, you are only get­ting the ben­e­fits to the rich,” he said.

“On the other hand, the state can sub­sidise some­thing else to en­able them to meet the com­mit­ments.”

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