National Minimum Wage Workshop: day 1

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Labour

23 June 2015
Chairperson: Ms L Yengeni (ANC)
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Meeting Summary

The workshop revolved around gathering input, comment and material from the public around the issue of a national minimum wage. This discussion was important, given that sectoral minimum wages had been running successfully for over ten years.

The presentation from the South African Domestic Service and Allied Workers Union (SADSAWU) centred on domestic workers and their battle to have a voice and break out of exploitation. It argued for a minimum wage of R4 750 per month, based on their expenses.  The current minimum wage was R2 067. The points of clarity revolved around how the union arrived at this amount, and the answers were said to be not scientific or satisfactory for the Committee.

The presentation from Mamiye Travel Tours focused on employment equity, and not on minimum wages.

The presentation by the AHI spoke about entrepreneurship transferring economic ideas into practice, and being the heartbeat of production. The AHI argued that entrepreneurship was the key driver of job growth in SA and that they needed to be nurtured and encouraged to flourish. The AHI compared the economy to a human body, that when healthy would thrive and when it was unhealthy, it would struggle. One of the unhealthy aspects was the high costs that were driving businesses under. The AHI commented that the minimum wage needed to be approached on a case-by-case scenario, rather than a blanket approach, as high labour costs may impact the economy badly. In the end, they advocated for a virtuous business cycle that focused on human and economic development.

The Confederation of South African Workers’ Unions (CONSAWU) spoke at length about the national median wage being around R2 800, with a large gap between workers’ wages and those of managers. They stressed that the debate around minimum wages must take into account the needs of workers and their families and their relative living standards. Salary levels in the public sector were between R5 000 and R8 000 per month, while the private sector had a much lower rate. This would create difficulties in establishing a national minimum wage. Wages based on sectoral determination were a necessity to prevent exploitation of workers. Minimum wages needed to take into account high food costs and transport inflation, child and social security grants, the number of household members, child pregnancies, HIV/Aids -- all challenges which were facing SA. The international poverty line was given as R12.93 a day, or $1.25, and this amount was what needed to be looked at in regard to minimum wages.

The discussion was highlighted by the Chairperson and NUMSA stating that anecdotal evidence was vital and needed to be encouraged in this debate. The Committee needed to hear the personal stories and evidence. Partnerships need to be created between business and the state for the minimum wage to work and entrepreneurship must not be smothered. Another important point raised was that overtime should be abolished in favour of increasing shifts. and that mediocrity and entitlement must not be allowed to form part of the minimum wage debate. Small businesses should be exempt from minimum wage requirements until they grew to a relevant size. The last point was that migrant workers from other countries were being attracted by SA’s minimum wages as they would work for less, which was pushing out local workers.

Meeting report

Chairperson’s opening comments

The chairperson said the Committee had work-shopped with different workers to see what they had to say about minimum wages and a national prescribed minimum wage. The final conclusion would be a product of which Nedlac, Parliament and the public would have been a part. The Committee would take all the input from the different stakeholders and workers and combine it into the final document. She asked that Members should ask only questions of clarity, as the Committee could not give direction or way forward as yet, and they should not give misleading comments.

 

South African Domestic Service and Allied Workers Union (SADSAWU)

Ms Myrtle Witbooi, General Secretary: SADSAWU, said since the beginning of slavery, domestic work had been the subject of the worst form of slavery and exploitation, with workers powerless and with no voice. In 2002, a new minimum wage had been set for domestic workers. Today, domestic workers received about R2 067 per month. Based on an example of current expenses, the minimum wage requirement today would be R4 750.  Domestic workers needed to provide for their families without having to borrow. This needed to be discussed in the context of the current situation of high unemployment and the economic crisis. An article from an SA newspaper had suggested that housewives valued domestic workers at around R3 000 per month, which was above the minimum wage. An increase in domestic minimum wages should be done in stages, in consultation with employers, to avoid job losses.

Mamiya Travel Tours

Mr Kaya Ndlumbini, owner of Mamiya Travel Tours, based his observations on his travels between Johannesburg and Cape Town in relation to the employment equity component of labour. He had observed that companies like Greyhound, Intercape, Eldos Bus, Skywise, Low Cost Airline and Safair Airlines were employing only coloureds in Cape Town. This needed to be addressed, to be in line with employment equity.

 Presentation by Afrikaansehandel Instituut (AHI) Business Network

Mr Christo van der Rheede, Chief Executive Officer (CEO): AHI, spoke about the resources of capital, land and people that were needed to create economic growth. Entrepreneurship was needed to transfer economic ideas into practice -- they were the heartbeat of production. Government relied on the entrepreneur, with their contribution around 83% of the GDP. Entrepreneurs created a large amount of jobs. SA had the highest unemployment between the ages of 15 and 24 in the world. Youth subsidies had been provided to encourage and stimulate employment in this age bracket. 90% of jobs created between 1998 and 2005 were in small and medium enterprises (SMEs). Programmes for affirmative action and black economic empowerment worked well in a growing economy, but could raise social tensions in a falling economy. SA needed fit businesses, businesses that were healthy and thriving. Most enterprises were suffering as a result of high costs that were suffocating them, such as high electricity, transport and borrowing rates. Organisational economics was needed through networking, keeping the cash in the community.  South African needed to target a virtuous cycle of development, which would lead to human and economic development. China was a good example of a virtuous cycle, while Nigeria was in a vicious cycle. A minimum wage served as a human development and economic growth imperative. One should not use a one-shoe-fits-all scenario when it came to minimum wages.  Minimum wages had to take into account the effects on employment. It should be set in sectors, based on regulation and input from the different sectors.

Confederation of South African Workers’ Unions (CONSAWU)

Ms Rene Govender, CONSAWU co-ordinator, spoke at length about the national median wage being around R2 800, with a large gap between workers’ wages and managers’ salaries. The debate around minimum wages should take into account the needs of workers and their families and their relative living standards. Sectoral determinations set a minimum standard below which no employer may go. Salary levels in the public sector were between R5 000 and R8 000 per month, while the private sector had a much lower rate. This would create difficulties in establishing a national minimum wage. A funeral policy was critical -- even more important than food for these workers. CONSAWU had approximately two million workers living and working in poverty. Social security grants would need to be taken into account when calculating household incomes. Food and transport were subject to high inflation and needed to be analysed for determining the minimum wage. Wages based on sectoral determinations were a necessity to prevent exploitation of workers. The international poverty line was R12.93 a day, or $1.25. The minimum wages for domestic workers of R2 000 were just above this poverty line.

The high percentage of HIV Aids, migrant workers, high teenage pregnancies and large household numbers posed unique challenges in this country. The frequent wage negotiation protests and strikes indicated the issues that face this country. The gap between what CEOs earn and the minimum wages was extremely dramatic. A national minimum wage would need to be supported by other social security measures.  The sectoral minimum wage had been a great benefit to the country over the last ten years. However, raising it might lead to costs being unsustainable for companies to operate. A minimum wage of R3 500 per month would be very close to the poverty line index when supporting six to eight people in a household. This might affect the criteria for qualifying for child support grants, however. There were 16 million social grant recipients, with 11 million child grants in SA. This needed to be incorporated into the minimum wage debate. The construction of a “care economy” was what CONSAWU would like to focus on. It believed the family unit was the key area that needed to be looked at when discussing minimum wages.

Discussion

Mr D America (DA) asked for clarity on the amount of R4 750 that SADSAWU had come up with, questioning its relevancy. He said that the presentation by Mamiya dealt with employment equity, which was not under discussion today. They could bring it to another workshop on equity.

Mr M Bagraim (DA) said that domestic workers formed the base line, or litmus test, for minimum wages as the lowest paid workers in the economy. They were therefore very important and needed to be given careful consideration.

The Chairperson commented that the presenters needed to provide motivation for their figures. They needed to narrate their personal experience so the Committee would know what was happening on the ground with workers and actual businesses.   They needed to be closer to home.  

She thanked everyone for their participation in the meeting. The national minimum wage would have to take certain factors into account, and would have to make a dent in poverty.

Ms Witbooi stated that the figure of R4 750 given in the presentation was in line with minimum wages and what the workers needed to live. Yes, it was just an example. She then posed a question of her own, asking what the minimum wage was in the travel industry. As soon as the minimum wage was raised, employment might be affected -- how did Mr Van der Rheede believe it would be dealt with?

Ms F Loliwe (ANC) commented that the minimum requirement for domestic workers was a random example, not a scenario or based on actual figures. She then asked what the wages of persons in the travel industry was.

Mr Ndlumbini stated that a tour guide was paid daily and some were permanent employees, depending on which company they were working for.

Mr Woody Aroun, Parliamentary Officer for Numsa, said that people could go to the trade bargaining council to get information on wages, or they could go to Stats SA. Anecdotal evidence was very relevant and might not be scientific, but it was just as important and should not be ignored. He then posed the question to the workshop -- was government sticking to sectoral minimum wages or were they going to go with a national minimum wage? This was the debate. Sectoral wages were already in place and had been running for a number of years.

Mr Mthobeli January, Chairperson: Small Business Development Portfolio, Cape Chamber of Commerce, said that SMEs had been a major contributor to job creation. The National Development Plan (NDP) targeted 11 million jobs, and so this sector needed assistance. How did this Committee make sure that new entrants in the service sector were accommodated? The Committee needed to look at minimum wages. Slow economic growth needed to be tackled. Most of the companies with two to ten employees were under pressure and faced numerous challenges. They needed to be addressed when looking at minimum wages.

Mr Mncesdisi Mbolekwa, Provincial Secretary for the Prisons Civil Rights Union (POPCRU) and a Congress of South African Trade Unions (COSATU) member, asked what the AHI position on minimum wage was.

Mr Abraham Daniels, Provincial Educator: Food and Allied Workers Union (FAWU), said that the minimum wage needed to be well vested into sectors. How did the  AHI believe that this needed to be implemented, and what levels should they be at?

Mr Van der Rheede spoke about the apartheid legacy that had pushed workers into labour reserves in the townships. This structural legacy needed to be overcome though minimum wages, which the AHI agreed with.  It did not support a blanket national minimum wage approach though. It believed in a sectoral approach, using material and input from each sector and bargaining councils. There were a lot of costs in business that needed to be taken into account in this regard. A study done in New York had found that minimum wages did not affect jobs, and in a few other African countries minimum wages had not impacted on job creation.

SA needed vibrant incentives to encourage business, such as youth wage subsidies. SA also needed a vibrant and strong state that did not favour only capital. They needed to work hand and hand. Poor service delivery needed to be addressed. Partnerships needed to be created between business and the state. Slavery and the abuse of workers was out. Hasty decisions around poverty, inequality and unemployment must not be made. Most of the businesses he had dealt with did look after their employees, and treated and paid them well. SA must not destroy the spirit of entrepreneurship at all costs.

Ms Sharon Nembaleni, NUMSA researcher, asked whether they were not ignoring the incentives to business when looking at a blanket minimum wage, in response to Mr January’s question. When taking the R12 500 minimum wages from Marikana, this fell above the poverty line.

Ms Karen Simms, HR consultant and business owner, commented that scholars could get R1 500 through a Sector Education and Training Authority (SETA). There were discriminations between SETAs though. Mediocrity needed to be addressed. SA had to make sure that the minimum wage did not reward those without education or degrees more than people with degrees. Putting systems in place for up-skilling was required. Employers needed to make sure that employees did not come with a sense of entitlement and that they structured incentives correctly for employees, with bonus and performance incentives. On overtime, one should rather have additional shifts that were worked.  This would increase employment. Small businesses should be exempt from this requirement until they grew to a relevant size.

Mr Willem van Jaarsveld, from the Limpopo farming community, said that it was very important to discuss minimum wages. There had been a huge hike in minimum wages of around 51% which had led to 73 000 job losses in agriculture. Agricultural specifics need to be taken into account. SA’s three neighbourhood countries have a third of SA’s minimum wage and a weaker currency, which had led to an influx of foreign workers. There were no border controls to prevent foreigners from flooding in. There would be major consequences arising from a universal national minimum wage decision.

Ms Khayo Ndlumbeni, a business owner, stated that minimum wages needed to be waived for very small businesses where, in some cases, they would go under if they were compelled to pay a certain amount.

Ms Melanie Roy, National Researcher at NUMSA, stated that a national minimum wage needed to increase the standard of living of people. They should be better off, not worse off. Some industries were seasonal and so a blanket national minimum wage would not work. For example, the fishing industry was an effort-based system, not a budget-based system. The minimum wage was based on what they caught. SMEs from fisheries had one or two boats.

Mr Russell Dudley, UCT, said that job security was the key. If SA pushed wages above a certain level, workers could get kicked out of the system. There was still a divide in the racial wage system, with whites earning more than black people.

The meeting was adjourned.

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