Proposed minimum wage a chance to build a progressive SA

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THE National Minimum Wage (NMW) Advisory Panel was appointed by Nedlac in August to consult widely with sector experts. The panel has proposed an introductory R20 an hour wage, with a minimum of four hours a day.

Given that most people work around 41 hours a week, this translates into approximately R3 500 a month. Stats SA released its quarterly employment figures this week after the report’s release, showing 239 000 more people became unemployed.

Opponents of NMW argue its introduction will add to the high unemployment rate.

This threat should be foremost when we consider policies which meet the NDP’s growth and employment targets.

The panel considered our jobs crisis seriously and for this reason proposed a cautious introduction, sending a clear message to the markets giving clarity and stability of information to businesses and allowing for an adjustment period of two years. Moreover, the panel has recommended an additional year be given to small businesses to make the adjustment, and also that a simple and clear exemption process be urgently set up, meaning employers who can show inability to meet the NMW will be given temporary exemption. The report’s release coincides with ratings agencies’ announcement of South Africa’s viability as an investment choice.

The panel considered all research on possible NMW disemployment effects . The panel, however, was also cognisant of the fact that there is a systemic link between the triple challenges of unemployment, poverty and inequality in this country.

Ideally, the panel would have wanted to make a bold proposal in a time of strong economic growth, but we are aware that because so many people live in dire situations, it is imperative to start looking at measures to address our problems.

So the following points are worth repeating:

The proposed R20 an hour is a floor. The panel was clear that this was the level below which no worker should be paid.

This level could impact up to 6.2 million workers who currently do not earn R3 500. For a worker earning below R2 500 per month (over 4.5 million people) the extra one thousand rand every month will make a big difference

The panel recognises this is not a minimum living level which is closer to R4 200, but it’s the start of fundamentally changing wage and labour regimes in the country. And if implementation is managed smoothly, room exists to bring wages closer to a living level soon.

The shock that the number of R3 500 has brought into the debate exposes not that the number is low, but that so many people don’t even earn this level of wage.

The recommendation of an hourly rather than a monthly wage allows for an adjustment in hour (rather than dis-employment) where possible, meaning a beneficial impact on vulnerable sectors such as domestic workers working long hours for low pay.

The panel believes that the country’s wages need to be raised to afford every working South African a decent lifestyle, and believe that giving the working poor some relief in the form of less hours worked is an important social policy.

It effectively means that the (largely) women who make up these lowest paid sectors will be able at least to spend more time with family while employers adjust to higher wages.

The small business exemption would involve employers being able to apply on condition of sound financial proof that they cannot sustain employment at R20 an hour.

We recognise the NMW is only one tool in a set of policy options to build a better future, and needs to be explored alongside strengthening collective bargaining, wage inequality, discussions on the social wage, industrial and productivity policies and investment in our human capital.

It is also worth noting that when we look at poverty and the information on the working poor in South Africa, the picture is extremely gendered, where women make up most of those living in poverty.

So a national minimum wage has the potential to change the gender dynamics of this country.

This is an important political point for those people in our society who are triply oppressed by their race, their gender and class.

The important lesson to take from the proposal however is that the panel is not saying workers should be paid R3 500, it’s saying no worker should be paid less than R3 500. This is a watershed moment for the country, a chance to create a more progressive path for the people of South Africa.

Professor Imraan Valodia wrote this article on behalf of the NMW Advisory Panel.