SA unpicks Piketty’s Brazil knot
He says we should follow the country’s lead on a minimum wage, but we may have already done so
Superstar economist Thomas Piketty waded into the prickly minimum wage debate while on tour in South Africa last week. The author of the bestseller Capital in the 21st Century is better known for advocating a global wealth tax to address growing inequality, but he also advocated a national minimum wage in South Africa when he spoke in Soweto on Saturday.
Echoing sentiments long voiced by trade union federation Cosatu, Piketty upheld Brazil as a role model for South Africa. “There are countries in the world, not only in the rich world, but also emerging countries like Brazil, who have a national minimum wage, who were able to find the right level for the national minimum wage,” he said.
Piketty added that South Africa, although substantially smaller, should also be able to find the right level to avoid the extreme exploitation of low-skilled workers.
The decision to ratchet up the national minimum wage in the Latin-American country was made consciously more than a decade ago and the move is widely credited for playing a significant role in halving the unemployment rate, dramatically lowering the poverty rate and reducing inequality.
Although the “right level” for Brazil is a federal national minimum wage of 788 Brazilian real (about R2 730), the level at which a local minimum wage should be set remains, as Cosatu has put it, the elephant in the room. The federation has suggested a minimum of between about R4 500 and R5 500 a month.
Brazil’s federal minimum, if converted into rands, is on a par with many sectoral minimum determinations in South Africa.
For example, R2 606 is the monthly minimum for forestry and farmworkers, and R2 850 for taxi drivers and administrative workers. But it is higher than the monthly minimum of R2 065 for a domestic working in a metropolitan area, or the R1 625 floor determined by the minister for expanded public works programme workers.
In a forthcoming working paper co-authored by Jeremy Seekings and Nicoli Nattrass at the University of Cape Town’s Centre for Social Science Research, they argue that “South Africa’s existing sectoral minimums are not low in comparison with the Brazilian national minimum. Indeed, they are remarkably in line with it.”