How do you feel about a national minimum wage? Do you think it is enough? Do you feel it is enforceable? SMS us on 35697 using the keyword WAGE and tell us what you think. Include your name and province. SMSes cost R1.50 does the national minimum wage also affect Sector Education and Training Authority funds?” asked Godfrey. The employment tax incentive (ETI) will also undergo a dramatic transformation unless specific rules around it are part of the national minimum wage bill.
The subsidy has grown far beyond the initial intentions and has become a multibillion-rand expense – and an important prop for many companies’ profits. Organised business has been advocating the enlargement of the subsidy to pay for the minimum wage in “distressed” sectors.
Even without an expansion, the national minimum wage will automatically lead to higher subsidies.
The ETI covers young workers earning between R12.50 and R37.50 an hour, and all the subsidised jobs under R20 will have to adjust to this minimum.
According to Treasury’s report on the subsidy, released last year, more than half the subsidised workers earned less than R2 809 in 2014/15.
Adjusted for inflation, that would still leave more than half of ETI-subsidised jobs under the national minimum wage if it gets implemented on time next year.
The design of the ETI gives the maximum R1 000 subsidy only to jobs paying more than R2 000. Those paying less get either R750 or R500.
If all jobs get paid the R20 national minimum wage, all the current subsidies that are less than R1 000 will have to become R1 000, potentially further escalating the cost of the ETI.
Another major concern is what will happen to the existing system for setting sectoral determinations in unorganised sectors such as contract cleaning, domestic and farm work.
“Our sense is that the sectoral determinations will become dormant with seemingly no way to update them,” said Godfrey.
“They will be cast in stone and become increasingly irrelevant over time.”
The determinations do not just set a minimum wage per sector, but also a whole hierarchical schedule of wages per occupation. If these are not updated and only the national minimum wage is regularly reviewed, it would compress the other wages towards the minimum.
Determinations are set by the Employment Conditions Commission, which will apparently cease to exist when the national minimum wage bill is enacted.
Instead, a national minimum wage commission will be created to review it.
There is a fear that it will mostly be the minister of labour who ultimately decides what happens with the commission’s recommendations.
“Arguably, reviewing the national minimum wage will be as important as setting it,” said Godfrey.