Government Plans To Increase Minimum Wage

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The National Minimum Wage is viewed as an important tool used to reduce poverty in South Africa. A recent proposal by the country’s labour department could see the minimum wage paid to individuals increase in 2023.

 


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The Department of Employment and Labour (DEL) is calling for stakeholders and members of the public to comment on a proposal that, if implemented, would increase the National Minimum Wage (NMW) by 8%.

The NMW is viewed as an important instrument which allows workers in South Africa to uplift themselves out of poverty and improve their lives.

NMW Chairperson Professor Adriaan van der Walt said that all wage-earning workers must earn enough money to sustain themselves and their families. This sustenance must be at a level that is socially acceptable and economically viable.

In its preliminary report, the NMW Commission aimed for an annual increase in the NMW in the range of consumer price index (CPI) +0.5 percent and CPI +1 percent for 2023. CPI averaged around 7% during 2022 which would mean that the adjustment to the minimum wage could be an increase of 8%.

Several factors are considered when determining the NMW. These factors include inflation, wage levels and collective bargaining outcomes, Gross Domestic Product, productivity and the likely impact adjustments to the NMW would have on employment and employment creation. 

The Current Minimum Wage In South Africa Works As Follows:

  • Every general worker’s minimum wage is R23.19 per hour 
  • Domestic Workers minimum wage is R23.19 per hour
  • Workers employed in expanded works programmes earn a minimum wage of R12.75 per hour

The Congress Of South Africa Trade Unions (Cosatu) welcomed the proposal of an above-inflation increase to the minimum wage. The union said the offer was reasonable and would repel inflation. However, the union was aiming for a bigger increase.

Cosatu General Secretary Solly Phetoe says that while an 8% increment to the NMW is welcomed, it won't do much in improving the lives of the workers who receive it.

An 8% increase in the NMW would see workers earn around R25 an hour. This also means that if a worker earns R25 an hour and works eight hours for 20 days a month, they would earn above R4000 a month.

National Employers Association’s Gerhard Papenfus says no one can argue against an increase in the minimum wage. However, they say there are two sides to a coin and the increase could also impact businesses and result in them decreasing the number of workers they employ and how many hours these workers work.

They said, “You can make a minimum wage whatever you want to make it, the question is how will the market respond in South Africa with an unemployment rate, unofficial between 40 and 50% and I'm not arguing for lowering of wages, I'm just saying this is quite a dilemma.”

This call for written submissions was published in accordance with section 6(2) of the National Minimum Wage Act, No. 9 of 2018. Comments can be emailed to [email protected] by Friday,13 January 2023.

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