The National Minimum Wage

Tuesday, April 26, 2016

By Nicci Whitear-Nel (BA LLB) – Senior Lecturer – School of Law, University of KwaZulu-Natal

The South African government has committed to introducing a national minimum wage. At present minimum wages are set in various specific sectors but there is no minimum wage legislation which applies to all employees in South Africa. The detail is yet to be thrashed out. This is a hotly contested topic and there is no doubt that the design and implementation of the national minimum wage legislation – and the level at which it set – will be crucial.

There are some who are convinced that the introduction of the national minimum wage will have a devastating effect on employment. However, statistical modelling by Wits University’s National Minimum Wage Research initiative shows that setting the national minimum wage in the amount of between R3500 and R6000 per month will have a negligible detrimental effect on employment. This research is borne out by the extensive international research in this regard conducted in both the developed and the developing world.

In South Africa, when minimum wages were introduced in the domestic worker and security guard sector they did not have a negative impact of employment levels in those sectors. It is widely agreed that employees with the South African average of four dependants who earn less than R4000 per month are not able to lift themselves and their families above the poverty line and are referred to as ‘the working poor.’ Shockingly, over 40 percent of South African workers earn below this level. In the agricultural and domestic sectors it is estimated that a staggering 90 – 95 percent of employees earn below this level.

Overwhelmingly, evidence shows that introducing national minimum wages contributes significantly to reducing inequality in society. Currently, South Africa is one of the most unequal countries in the world. On average the top 10 percent of wage earners earn more than 24 times more than the bottom 10 percent, while the top five percent of the highest earners earn just about 50 percent more than the bottom five percent of earners. This gap is widening at an alarming rate. In 2010 the gap between the top and bottom five percent earners was 20 times less than it is today.

Interestingly, wage differentials rather than unemployment are regarded as driving inequality. The latest figures show that unemployment is rife – particularly among the youth (18 – 25 years old), where the official rate of unemployment almost doubles to approximately 52 percent. At the 29th Annual Labour Law Conference (ALLC), taking place for the first time at Emperors Palace from 24 to 25 August 2016, there will be a special session devoted to youth unemployment.

There will also be a detailed presentation on issues concerning the national minimum wage and the practicalities involved in its design and implementation. The conference will also tackle the fraught question of how to reinvigorate social dialogue on these key issues between the social partners. This is especially important given the challenges that trade unions and trade union federations are facing in these uncertain times. There will be two slots dealing with trade unions specifically - one entitled ‘The Role of Trade Unions in Recessionary Times’ and the other entitled ‘Challenges facing Trade Union Federations”.

For bookings or more information regarding the 29th Annual Labour Law Conference from 24 to 25 August 2016 at Emperors Palace, Kempton Park Gauteng, contact Erin on 031 303 9852 or email erin@confco.co.za. Visit http://www.annuallabourlawconference.co.za/

 
About the Author

Nicci Whitear-Nel (BA LLB) is a Senior Lecturer at the University of KwaZulu-Natal’s School of Law.  She practiced as an attorney before joining the university. She maintains links with the legal profession, and believes this is beneficial to her and to her students as it feeds both her research and teaching functions. She has written four books and is also qualified as a Commissioner of the Commission for Conciliation, Mediation and Arbitration. She is also presently a consultant at Austen Smith attorneys in Pietermaritzburg.