Ramaphosa announces minimum wage advisory panel

Publish date: 17 August 2016
Issue Number: 152
Diary: Legalbrief Workplace

 

Deputy President Cyril Ramaphosa has‚ in his capacity as chair of the Committee of Principals of the National Economic Development Council (Nedlac)‚ appointed a seven-person panel to advise Nedlac on an appropriate level at which the national minimum wage should be set, reports The Times. The Nedlac Committee of Principals comprises representatives of government‚ labour‚ business and the community charged with‚ among others‚ determining the national minimum wage. ‘The appointment of the advisors takes place against the background of consensus among Nedlac social partners to introduce a national minimum wage as part of efforts to restore the dignity of the majority of South Africans‚ address the triple challenges of poverty‚ under-development and inequality‚ and reduce pay differentials while maximising job creation‚’ Presidency spokesperson Ronnie Mamoepa said.

Full report in The Times

Statement

In March this year, Ramaphosa said a national minimum wage could go a long way to provide a much-needed injection into SA’s economy. Fin24 reports that in his view SA is progressing well with its implementation, compared to other countries like Germany and Brazil. This is, however, not the view of the Free Market Foundation (FMF), whose director Temba Nolutshungu is quoted as saying that the proposed minimum wage will hamper rather than stimulate job creation in SA. ‘Instead of considering national minimum wages intended to raise the wages of people who already have jobs, government should be giving its full attention to creating conditions that will lead to an increase in the demand for labour,’ added FMF director Eustace Davie. Ilan Strauss, a macroeconomist and development economist, who consults for the UN’s Conference on Trade and Development, said the primary benefits of a national minimum wage for SA are through its notable impacts on reducing poverty and inequality. ‘A national minimum wage is a potentially important plank in any suite of measures that aims to expand the South African economy in a balanced and sustainable manner. Positive measures are needed on both the supply and demand sides to boost the domestic economy,’ Strauss is quoted in the report as saying.

Full Fin24 report

A Financial Mail report says that after 18 months of negotiations, the parties in Nedlac are deadlocked with labour favouring a national minimum of around R3 500/month, business arguing for R1 800/month and government somewhere between the two. And, the report says, their task hasn’t been made easier by two of SA’s top universities producing large bodies of diametrically opposed research. Wits University’s National Minimum Wage Research Initiative finds that an NMW, if set at a meaningful level above the lowest sectoral minimum wages, could reduce working poverty and inequality in SA while lifting income, spending, productivity, investment, output and growth. And it could do so without causing significant job losses. University of Cape Town research finds, however, that a minimum wage of R3 400 could cause more than 500 000 job losses even under moderate assumptions. Moreover, any beneficial impact on wage inequality and poverty would be relatively modest, given that many of SA’s poorest households have very few or no wage earners. The report says the panel’s job is to make sense of the conflicting research to enable government to choose that benign level for an NMW, where the protection of workers’ wages is balanced against the need to prevent job losses.

Full Financial Mail report

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