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November : What are the implications of the National Minimum Wage?

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24 November, 2017

What are the implications of the National Minimum Wage?

President Zuma tasked deputy-President Ramaphosa to initiate a so-called social dialogue to have constructive engagement and agreement relating to a national minimum wage, about three years ago. Workers in certain sectors, such as agriculture and domestic workers, as well as 12 others, already have minimum wages and conditions of service, which are contained in sectoral determinations. Further to these, the idea was to set a universal minimum standard for all workers in South Africa.

What is the agreed minimum wage?

In February 2017 an agreement was reached at the National Economic Development and Labour Council (NEDLAC) between representatives of organised business, labour, community and government that a minimum amount of R20 per hour will be payable as National Minimum Wage. Given the challenges in the domestic worker- and agricultural sector, the decision was taken to phase these two sectors into the dispensation, which means that farmworkers will be paid R18 per hour, and domestic workers R15 per hour.

What is the definition of "farmworker" versus "domestic worker"?

According to the current sectoral determination, domestic workers and security guards employed on farms will be deemed to be farmworkers, and will have to be apid R18 per hour from 1 May 2018.

When will the minimum wage be phased in?

Government has not changed its stance that the minimum wage will come into effect on 1 May 2018. Agri SA was involved in the National Minimum Wage Task team at NEDLAC where the National Minimum Wage Act was discussed and finalised, and the Act itself now has to go through the normal parliamentary process before being implemented.

What is the financial impact on the agricultural sector?

The current minimum wage is (according to the sectoral determination), R15,39 per hour. This amount would have risen to approximately R16,15 per hour on 1 March 2018, and will now rise to R18 per hour on 1 May 2018.

What about job losses?

Even though the National Minimum Wage Act says that employees may not lose their jobs due to the implementation of the minimum wage, the reality is that there might be job losses since the affordability of a wage bill has a large impact on any business' finances, and a farm is a business. We are concerned about the effect, because no one wants to cause job losses. It is important to remember that the agricultural sector has had minimum wages since 2008, minimum wages are not news to us. What is increasingly difficult is balancing the need to pay workers fairly with the survival of a farming operation. Aside from a business, a farm is the key to food security. If minimum wages continue to rise unchecked, there will be a ripple effect that cannot be ignored.

What can a farmer, who cannot afford the minimum wage, do?

The Act makes provision for an exemption process, which must be handled within 30 days. It's an administrative process where proof of financial difficulty must be presented. At this stage the process will be handled electronically, and if an employer receives no feedback within 30 days, the exemption is deemed to have been granted.

Jahni de Villiers
Hoof: Arbeid en Ontwikkeling
Agri SA

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