Forging Ahead Towards a National Minimum Wage in South Africa
The 2012 COSATU Congress resolved to campaign for a National Minimum Wage. This decision was consolidated by the Collective Bargaining and Campaigns Conference held in 2013. Through engagements with the ANC, the ruling party was persuaded to include a commitment to introducing a National Minimum Wage in its election manifesto for the 2014 national elections. After this the issue of a National Minimum Wage was discussed further in a Nedlac Labour Relations Indaba held in November 2014
At this meeting the Deputy President of the country, Comrade Cyril Ramaphosa, recommitted government to implementing a National Minimum Wage. The Indaba agreed that all parties - government, labour, business and community - should urgently engage at Nedlac on the details of introducing a National Minimum Wage. A Task Team has since been established under Nedlac and started its work in early March. The parties aim to be ready to make recommendations by July this year.
National Minimum Wage, what it will mean for collective bargaining, if it will result in job losses, and some other critical questions. The article will also highlight issues that readers should take into their union structures for discussion and mandating, especially to feed into the Nedlac process referred to above. One of the key issues for mandating will be what the actual figure for a National Minimum Wage should be.
Why do we need a National Minimum Wage?
Some people, especially in business, argue that we should just leave minimum wage setting to collective bargaining. But the reality is that out of the 10.2 million workers in the formal sector, only 3.3 million are covered by collective bargaining, either in bargaining councils or at plant level. The wages of 3.5 million workers are regulated by Sectoral Determinations, and the wages of another 2.4 million workers are not regulated at all. The absence of wage regulation for so many workers creates space for super exploitation. Over and above this, even where there is regulation, either through collective bargaining or through Sectoral Determinations, our economy is so locked into low wages, that many of the wages that are negotiated are extremely low, and even below and reasonable measure of a living level. There are a number of estimates about the minimum that is needed for a family of five to cover their basic needs. One estimate is between R4500 to R5500 a month. Over half of South African workers work hard, for long hours, but their wages are far below this. In fact half of all workers earn less than R3033. This is called the median wage. The majority of workers are therefore working to stay in poverty, unable to afford many of the most basic necessities.
It is interesting to note that the average wage looks very different. The average wages adds together all wages and salaries in the economy and divides the sum by the number of employees. The national average in 2014 is around R15,000. This high figure is because the very high incomes of a few distorts the average. The median wage is only 20% of the national average! Based on this picture of the wage structure, it then becomes obvious that a national minimum wage which is pitched significantly above the level of the current median wage could immediately play a critical role in improving the income of the bottom half of the wage structure. Based on international experience, the national minimum wage would `cascade up` the wage structure, and improve the income of other low paid workers. It would also put pressure on companies to reconfigure the wage structure, to reduce the proportion of wages and salaries currently being consumed by top management and the high paid.
Read more on page 27 http://www.cosatu.org.za/docs/shopsteward/2015/mayday.pdf
At this meeting the Deputy President of the country, Comrade Cyril Ramaphosa, recommitted government to implementing a National Minimum Wage. The Indaba agreed that all parties - government, labour, business and community - should urgently engage at Nedlac on the details of introducing a National Minimum Wage. A Task Team has since been established under Nedlac and started its work in early March. The parties aim to be ready to make recommendations by July this year.
National Minimum Wage, what it will mean for collective bargaining, if it will result in job losses, and some other critical questions. The article will also highlight issues that readers should take into their union structures for discussion and mandating, especially to feed into the Nedlac process referred to above. One of the key issues for mandating will be what the actual figure for a National Minimum Wage should be.
Why do we need a National Minimum Wage?
Some people, especially in business, argue that we should just leave minimum wage setting to collective bargaining. But the reality is that out of the 10.2 million workers in the formal sector, only 3.3 million are covered by collective bargaining, either in bargaining councils or at plant level. The wages of 3.5 million workers are regulated by Sectoral Determinations, and the wages of another 2.4 million workers are not regulated at all. The absence of wage regulation for so many workers creates space for super exploitation. Over and above this, even where there is regulation, either through collective bargaining or through Sectoral Determinations, our economy is so locked into low wages, that many of the wages that are negotiated are extremely low, and even below and reasonable measure of a living level. There are a number of estimates about the minimum that is needed for a family of five to cover their basic needs. One estimate is between R4500 to R5500 a month. Over half of South African workers work hard, for long hours, but their wages are far below this. In fact half of all workers earn less than R3033. This is called the median wage. The majority of workers are therefore working to stay in poverty, unable to afford many of the most basic necessities.
It is interesting to note that the average wage looks very different. The average wages adds together all wages and salaries in the economy and divides the sum by the number of employees. The national average in 2014 is around R15,000. This high figure is because the very high incomes of a few distorts the average. The median wage is only 20% of the national average! Based on this picture of the wage structure, it then becomes obvious that a national minimum wage which is pitched significantly above the level of the current median wage could immediately play a critical role in improving the income of the bottom half of the wage structure. Based on international experience, the national minimum wage would `cascade up` the wage structure, and improve the income of other low paid workers. It would also put pressure on companies to reconfigure the wage structure, to reduce the proportion of wages and salaries currently being consumed by top management and the high paid.
Read more on page 27 http://www.cosatu.org.za/docs/shopsteward/2015/mayday.pdf
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