National Minimum Wage Proposed
01-12-2016

On 20th November 2016, Deputy President Cyril Ramaphosa, released the minimum wage report which proposes a National Minimum Wage (NMW) of R3 500 per month (R20 per hour).

The minimum wage report was presented to the National Economic Development and Labour Council (NEDLAC) by the panel appointed to advise on the level at which South Africa’s national minimum wage should be set.

Currently, minimum wages in South Africa are fixed by sector, or established through bargaining councils led by unions. This has allowed for greater flexibility when agreeing rates of pay, but has also resulted in disruptive strikes and time-consuming wage negotiations.

It is hoped that a NMW figure will help to resolve ongoing labour issues in the country.  Unemployment and labour problems are currently under the microscope as they are an important factor being considered by credit rating agencies. Their decision on whether to downgrade South Africa’s credit rating will be announced in December.

Setting a national minimum wage is sensitive and debatable.  Some say that it will have a negative effect on the economy and will lead to increased unemployment, especially in sectors like farming. Others feel that the current system for determining wages is adequate and should not be changed.  By setting a national minimum wage, it is hoped that all workers will get a fairer deal overall.

The proposed R3 500 NMW is just a starting point for discussion. Based on research carried out by Wits University, the ‘optimal’ level for NMW is between R4 000 and R5 500.  At this level, the net benefit to the economy would apparently outweigh the job losses which would result from the introduction of NMW.

For it to be written into law, the NMW must be agreed by leaders in labour, business, government and communities.  There is already much heated debate around the proposed figure, and it is likely to be a long time before agreement on a final NMW figure is reached. 

The suggested date for implementation of the national minimum wage is 1 July 2019.