South Africa’s minimum wage hike was not a ‘thumbs up’: Minister


Employment and Labor Minister Thulas Nxesi reiterated that the adjustment of the national minimum wage rate was the result of a broad consultation process.

The minister made the comment on Monday in response to an outcry over the newly adjusted National Minimum Wage (NMW) rates.

Last week, the ministry announced that the NMW had risen to R21.69 from R20.76 as of March.

The minimum wage is a tool to ensure that vulnerable workers do not fall below the poverty line and it is designed to reduce inequalities and huge income disparities in the national labor market.

“As we’ve pointed out before, minimum wage is really what it says. But it is not based on thumb sucking but on a well thought out process which allows all interested parties to have their voices heard.

I noted with concern the objections of some stakeholders to the adjustment of the NMW and recognize that the COVID-19 pandemic has had a hard impact on most employers, ”the Minister said.

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Nxesi said the NMW Act, however, allows employers who are genuinely unable to pay the proposed adjustment to use the exemption procedures in order to be exempt from the NMW.

Changing the minimum wage this year, the ministry said the minister took into account all legal requirements, the commission’s report as well as various stakeholder contributions.

This, the statement read, was based on these and on the results of the initial research undertaken on the impact of the introduction of the national minimum wage.

Regarding the contributions received in response to the opinion published by the NMW Commission on its recommendations, stakeholders were divided in their recommendations.

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Some supported the recommended adjustments, arguing for an increase above inflation as well as immediate equalization of the domestic and worker sectors.

“Indeed, some stakeholders were against the recommended adjustment based on the impact it will have on employment / unemployment, weak economic growth, the impact of COVID-19 on business operations as well as costs. production levels for farmers who will have to bear the brunt of the increase, ”Nxesi said.

Research conducted by the Development Policy Research Unit (DPRU) at the University of Cape Town and the Center for Social Development in Africa (CSDA) at the University of Johannesburg found that there was no had no negative impact on employment due to the introduction of the national minimum wage.

However, they said the reason could be because employers are already adjusting almost two years before implementation.

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Furthermore, research found that the introduction of the national minimum wage led to a statistically significant but smaller than expected increase in the wages of the workers it covers and that, in general, there was broad compliance. in agriculture, with slightly lower levels of domestic work. Unfortunately, employees felt that the minimum wage for agricultural and domestic workers was too low.

“The domestic worker sector on the other hand, judging by the results of the quarterly Labor Force Survey, was severely affected by the initial levels of foreclosure and the recommendation was therefore to increase the minimum wage to 88% of the national minimum wage, which translates to Rand 19.09 per hour on March 1, 2021, ”the Minister said.

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