Cape Times

Is the new national minimum wage a sustainabi­lity concern?

- INES MEYER Professor Ines Meyer, SA Research Chair Initiative: Creation of Decent Work & Sustainabl­e Livelihood at UCT, who also chairs the Living Wage South Africa Network.

ON MARCH 1, the national minimum wage increased by 8.5% from R25.42 to R27.58 per ordinary hour worked. But is it enough? It is definitely a step in the right direction, but still doesn’t allow workers to live a dignified existence. While 8.5% might sound a lot, you need to consider that it translates to just R2 more per hour.

I am a staunch promoter of the living wage concept that is gaining popularity in many countries. I recently returned from India where I attended meetings with living wage proponents from around the globe.

Among these were members of the Internatio­nal Labour Organizati­on (ILO), whose governing body just endorsed living wages as central to economic and social developmen­t.

It means that ILO employer, government and worker representa­tives agree that living wages need to be part of labour standards in ILO member countries – among them South Africa.

Living wage vs minimum wage

A living wage is remunerati­on that is sufficient for an individual to provide their family with the basic necessitie­s of life, allows them to save, and thus cover unexpected emergencie­s. The required amount should be based on evidence.

While legislated minimum wages compel companies to pay workers not less than the prescribed amount, they seldom satisfy living wage criteria.

A person labouring at minimum wage for nine hours a day over the typical 22 working days per month stands to earn less than R5 500. This is hardly enough to survive, and affords little chance of a decent, healthy or happy lifestyle.

A job paying minimum wage keeps people in poverty. As an employer, I need to be aware that I actively prevent people from a dignified life.

A sustainabi­lity concern

Over the last decade, corporate sustainabi­lity reporting has been gaining momentum, the core focus is typically on ESG – environmen­tal, social and governance concerns.

Such reporting allows organisati­ons to be transparen­t with the public about their impact on people, planet and prosperity within their operationa­l ecosystem, as well as their integrity as a going concern.

ESG frameworks assume that prosperity not only refers to the profit a company makes but also to how it improves or degrades the economic conditions of the community within which it operates. This includes the financial well-being of its workers.

While some have decried the latest minimum wage increase as too costly and likely to raise unemployme­nt, paying employees humanely attracts investment.

In a world where tempers run high on social concerns, a good report can work in an organisati­on’s favour while a bad report can adversely affect their share price, and investors.

A company cannot be earnest about good ESG while its workers remain living in poverty even though they are employed.

Scaling up to a living wage

Unlike the legally enforced minimum wage, a living wage is meant to be adopted voluntaril­y by employers as an act of human decency.

It demonstrat­es that the employer is genuinely concerned about their

workers’ constituti­onal right to dignity and not just checking a compliance box. Pay is not just an amount; it also communicat­es to the employee how they are seen and valued as human beings by their employer.

This demands a mindset shift from profits at all costs to profits resulting from recognisin­g workers as fellow human beings whose personal economic enrichment contribute­s to the national economy’s sustainabi­lity.

Living wages increase buying power, and thus create a stronger market. Research suggests that offering decent working conditions, including decent pay, leads to economic growth.

Unlike often believed, we do not require economic growth first to create jobs. Living wages have been successful­ly implemente­d in other countries, such as the UK and New Zealand, with little impact on profits or employment opportunit­ies.

I started conducting independen­t research to determine a living wage range in South Africa. For the past two years, I asked workers across the country about their current income and the degree of choice they experience­d in a variety of life domains.

Through this our research group has estimated an ideal living wage for South Africa at between R12 000 to

R15 000 per month. This is the cash amount required, exclusive of potential non-monetary contributi­ons made by an employer.

We realise this is quite a leap and that organisati­ons need time to gradually implement it, but when approached as a strategic imperative, it is as possible as any other business endeavour. And there are companies in South Africa who have started doing so.

 ?? ?? A PERSON labouring at minimum wage for nine hours a day over the typical 22 working days per month stands to earn less than R5 500. | KAREN SANDISON Independen­t Newspapers
A PERSON labouring at minimum wage for nine hours a day over the typical 22 working days per month stands to earn less than R5 500. | KAREN SANDISON Independen­t Newspapers
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