How the R28.79 Minimum Wage is transforming South African labour

The National Minimum Wage (NMW) has been one of the most important poverty alleviation interventions by the government led by the ANC in the recent past. On March 1, we welcomed the NMW’s increase by inflation plus 1%, bringing it to R28.79 an hour. The NMW was one of the clarion calls of the Freedom Charter 70 years ago. This progressive demand was made during the darkest days of apartheid when workers, overwhelmingly African, Coloured, and Indian, as well as women, were paid little more than slave wages.

This has been a demand that Cosatu and our predecessors campaigned for over many decades, with its legislation into law shepherded by the Federation with the active support of the ANC and now President Cyril Ramaphosa.

The trend of millions of workers, urban and rural, predominantly in the private sector, earning so little that they are condemned to lives of absolute misery has continued despite the legal ending of apartheid. Prior to the introduction of the NMW in 2019, farmworkers were paid as little as R6 an hour; domestic workers were similarly paid peanuts.

The National Minimum Wage Act (NMW Act) was a product of extensive engagements over two years at the National Economic Development and Labour Council (Nedlac) between the government, business, and labour, with consensus reached on an NMW of R20 an hour that would be overseen by a Commission consisting of representatives from social partners and academic experts.

The Nedlac engagements took on board international best practice, in particular from leading industrial economies, e.g., Brazil, Germany, and the United States, where an NMW has helped reduce poverty and inequality as well as stimulate inclusive growth and jobs.

Since then, it has been adjusted annually to protect it from inflation and ensure it retains poverty alleviation and inequality reduction effects. Cosatu has been able to ensure, through its submissions to and engagements at the NMW Commission, that it has risen from R20 to R28.79 overall. We have also been able to lift 1 million farmworkers, who were originally pegged at R18, and 1 million domestic workers at R15, respectively, to the NMW level. In simple terms, farmworkers who a decade ago needed to work two hours to buy a loaf of bread can now nearly buy two loaves of bread with an hour’s wages.

Critics of the NMW argued that it would lead to a bloodbath of job losses, especially for vulnerable workers. This is why farm and domestic workers were pegged at 90% and 75% of the NMW for the initial roll-out phase, allowing employers time to adjust. Independent research has shown that it has not led to job losses and, in fact, has been a critical source of economic stimulus as workers spend their wages on goods.

Critics argue that an NMW is an inhibitor to economic growth and jobs, yet they cannot explain why this growth and jobs were not there before the introduction of the NMW six short years ago, let alone why the apartheid regime, which thrived on an economy free of labour protections and low wages, yielded the world’s highest rates of inequality, poverty, and unemployment - a legacy we are still battling to overcome today.

If we are to boost economic growth, then we need to ensure that not only do employers comply with the NMW, but that workers are paid a living wage. Workers cannot be expected to be productive when they are forced to walk for long hours to work as they cannot afford public transport or the basic foods, medication, and shelter needed for their bodies to remain healthy. Neither can the economy grow if consumers, e.g., workers, cannot afford to buy the goods it produces.

While economic growth is key to creating jobs and better wages, it is critical that the Department of Trade, Industry and Competition finalise regulations for the Companies Amendment’s provisions requiring listed and state-owned companies to disclose their wage gaps, and the salaries of their highest and lowest paid employees, as part of nudging companies to reduce the obscene differences in what they pay those on top compared to those on the bottom.

The government must reinforce the various elements of the social wage, e.g., subsidised public transport and housing, free basic services, no-fee schools, and National Student Financial Aid Scheme (NSFAS) funding for tertiary education, VAT-exempted essential goods, and social grants for 27 million citizens. These have cushioned millions from absolute poverty but have shown strain from recent budget cuts.

While Cosatu celebrates these hard-won gains, and an NMW raising the wages of over 6 million workers, we are deeply angered by numerous employers who break the law and ignore the NMW as well as other progressive labour rights. Although all laws experience offenders, we cannot condone such behaviour. At the heart of this is the high rate of unemployment and employers willing to exploit workers’ desperation and poverty.

The NMW Act allows employers who genuinely cannot afford the NMW to apply for limited exemptions. The Department of Employment and Labour increased the number of labour inspectors in 2020 by 25% to 2,000. Plans to increase these to 20 000 by 2026 have started with the recent advert for 10,000 inspector posts to be funded by the Unemployment Insurance Fund (UIF). These will be a massive boost to ensuring workplaces abide by our labour laws, from the NMW to health and safety, paid leave, overtime requirements, and compliance with pension fund and third-party payments. Cosatu will be strengthening its partnership with labour inspectors to ensure workers’ rights are protected.

Parliament and the President recently assented to the Employment Equity Amendment Act, requiring companies doing business with the state to be in compliance with the Employment Equity and NMW Acts. This will be a powerful incentive for those who abide by our labour laws and a disincentive for those who don’t. Similarly, we need to hear the voice of Organised Business urging their members to respect workers’ legally enshrined rights. Change is not easy, but these are the foundations for a more just and equal society.

Cosatu General Secretary Solly Phetoe
BUSINESS REPORT