Alarm bells over minimum wage in South Africa

Minimum Wage in South Africa: A Balancing Act

The implementation of a minimum wage in South Africa requires careful consideration to avoid an increase in unemployment, warns Michael Bagraim, a labour lawyer from Bagraim Attorneys. Although thousands of workers still earn below the minimum wage, some trade unions are reluctant to approach employers for fear of being retrenched. While a minimum wage ensures decent pay for workers, some businesses are hesitant to hire more employees due to the additional costs incurred.

According to Bagraim, the minimum wage is a double-edged sword that has contributed to the unemployment queue. Unlike other countries that prioritize wage increases, South Africa has a duty to create more employment opportunities. The Department of Employment and Labour recently announced a national minimum wage increase of 9.6%, raising it to R25.42 per hour, effective 1 March 2023.

Bagraim suggests that when legislating the minimum wage or considering adjustments, market forces and a risk-orientated approach should be taken into account. Instead of imposing a blanket minimum wage, he proposes that an inspector assess individual businesses’ financial standings and provide exemptions for a limited period.

The current employment environment is already contentious, where labour laws can hinder businesses from creating more jobs due to the process of firing a person or having to approach the CCMA. Bagraim emphasizes that the actual minimum wage in South Africa is R0, as almost 50% of the population is unemployed, and the current minimum wage is not a living wage.

The minister of labour, Thembelani Thulas Nxesi, announced in April that the new minimum wage had not impacted employment numbers in several sectors, including mining, agriculture, manufacturing, trade, and construction. However, attorney Daniel van der Merwe, the National Collective Bargaining Co-ordinator for the Consolidated Employers’ Organisation, raised concerns about the sustainability of SMEs in South Africa following the increase. As SMEs are the largest employers in the country, Van der Merwe argued that their inputs should have been considered in determining a fair minimum wage level.

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