Voices

The national minimum wage will make a difference to SA’s inequality

2018-11-27 19:38

With the signing into law of the National Minimum Wage Act by President Cyril Ramaphosa on Friday, November 23 2018 will be remembered in this country’s history as a day when all citizens were called to action to address the shocking levels of wage inequality in South Africa.

About 6.4 million people currently earn less than R3500 a month, while we regularly hear about business leaders earning many hundreds of millions of rands.

When the advisory panel appointed by then deputy president Ramaphosa presented its report to the Nedlac social partners and the country two years ago, there was collective disbelief and outrage at the fact that almost half of those employed in South Africa earn less than R3500 a month.

The enormous value of an evidence-based approach to policymaking is that there is demonstrable proof in numbers of how low wages are and how bad the levels of wage inequality are, and what that practically means for ordinary people.

When we released the report, the research showed that up to 4.6 million workers were earning below R2500 a month. Furthermore, the evidence shows that up to 22% – that’s more than two million – workers were not covered by any sectoral minimum wage or bargaining council.

In short, we have a serious problem of poverty in South Africa and economic policy needs to address this challenge if we are to be on a growth path that will be sustainable.

The process toward agreeing on R20 an hour was both difficult and complicated. The advisory panel had to find a balance between making a material difference to the economic lives of these workers while at the same time ensuring this policy will not result in job losses. The R20 an hour, while below the living wage, aims to achieve this balance: the evidence indicates that, if the minimum wage is properly implemented, there should not be job losses. We have also consistently pointed out that building a better, more equitable country cannot be done by dragging down wages and pushing more people into poverty. Our problems will only be solved if our policy solutions are developed within a framework of addressing growing levels of inequality in South Africa.

The level of R3500 is not intended to pull workers further into poverty, but rather is indicative of how low the wages of so many millions currently are.

We must emphasise again that this is a minimum wage. Many have argued that the level of R3500 is much too low. We should emphasise that the level of R3500 is not intended to pull workers further into poverty, but rather is indicative of how low the wages of so many millions currently are.

The advantage of a legislated policy is that, in the absence of strong collective bargaining systems backed by organised trade unions, this is currently the best option for these workers to have their wages improved. And it will make a difference.

This policy will make a significant difference in practical ways to the working poor.

This policy will make a significant difference in practical ways to the working poor. It will allow people to have food on the table every day of the month; it will assist in taking care of extended family members who are unemployed by contributing towards education or transport costs for job interviews; it will ease the burden of the elderly whose social grants often have to stretch to cover all these costs; it will empower millions of women who make up the majority of these 6.4 million people, to have better options. This is significant particularly because we have entered the period of 16 days of activism on violence against women and children.

So, we now have the opportunity for all citizens in South Africa to unite around a very simple and very effective policy that will positively impact on the lives of millions of people in this country.

Those of us who employ low-paid workers, who run small businesses and who in any way provide employment to people need to commit to paying the national minimum wage. We need to remember the horror we all felt when we first realised that more then 6.4 million people do not even earn R20 an hour, and how little that is to so many of us.

We are not impervious to the fact that this level is still incredibly low.

Those of us in positions of well-paying, secure employment have to remember that the threat of unemployment is very real for people who earn the least. It is always those who have the least to lose that lose the most.

All progressive people would like average wages to be at the very least above the living level. But those of us in positions of well-paying, secure employment have to remember that the threat of unemployment is very real for people who earn the least. It is always those who have the least to lose that lose the most.

What we want to do most is eradicate the choice between poverty wages and no wages at all. And while we expect the unions to fight for higher wages, and collective bargaining processes to strengthen, we also recognise that for the lowest income earners a small increase in wages is very significant – for example, for the domestic worker currently earning R2500 the increase resulting from the national minimum wage will have a massive positive impact on members of her household. It gives her different options and creates new opportunities for members of her household. This is the minimum, it is the very least we need to do to build this country.

• Kim Jurgensen managed the national minimum wage, including the advisory panel process, in Nedlac. Professor Imraan Valodia was chair of the advisory panel. David Francis was the researcher for the advisory panel.

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May 26 2019