National Minimum Wage: Agriculture Sector - discussion document by Research Unit

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Employment and Labour

21 October 2015
Chairperson: Ms L Yengeni (ANC)
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Meeting Summary

The Research Unit Content Advisor gave the Portfolio Committee on Labour a presentation on the National Minimum Wage discussion document.

He said the impact of a minimum wage on sectors of employment such as the agricultural economy included a reduction in hours worked, a reduction in non-wage benefits, a reduction in training, changes in employment composition, higher prices for consumers, an improvement in management efficiency, efficiency responses from workers, wage compression, a reduction in profit, increases in demand and reduced turnover.

South Africa had the third highest unemployment rate in the world for people between the ages of 15 and 24. More than 50% of young South Africans in that age bracket were estimated to be unemployed. Some of the reasons behind recent employment losses in the agricultural sector included excess employment prior to the sectoral determination and higher wage bill which had encouraged farmers to shed excess unskilled labourers and replace them with more skilled workers, and farmers increasing capital investment – tractors, machinery and implements --in anticipation of this legislation, thus displacing farm labour.

The DA Members said they felt that the report was not impartial and was being used to further the ANC agenda. When the statistics had initially been presented to the Committee, the tone of the study had been to shed light on the impact of a national minimum wage on the employment sector. It was unfair to place responsibility entirely on legislators, because employment as a whole -- and especially in the agriculture sector -- was on a downward spiral. In many other countries, the imposition of a national minimum wage usually led to a decrease in employment, and widespread job losses.

The EFF Member said that he wished the Research Unit had been able to provide a more in-depth study that delved into the root causes of the job losses. Nonetheless, the report showed that farm workers were treated almost like slaves. He was concerned that lawmakers would be swayed by the fear of increased job losses, but people could not ignore that with all changes there had to be some growing pains, but the change had to happen.

The ANC Members insisted that the main task of the Committee was to implement a national minimal wage, not fight over its benefits, if any. They advised the Members not to go down an unnecessary war path. If they needed an opportunity to get familiar with the Committee’s mandate, they should refer to the mandate to implement a national minimum wage in the President’s State of the Nation Address.

The Chairperson said that the Committee had come to the end of the discussion, and that the issues would need to be reassessed. She acknowledged that she considered the report to be well rounded and that it had led to a fruitful discussion. However, she noted that some Members seemed to be allergic to the phrase “national minimum wage.”

Meeting report

Briefing by Research Unit

Mr Ekhsaan Jawoodeen, Research Unit Content Advisor, said the presentation of the National Minimum Wage: Further Comments discussion document would entail the agricultural economy, employment statistics in the agricultural sector, and living and working conditions on South African farms. It was accompanied by further comments on the gross domestic product (GDP), the contribution to employment, total income, census data, and employment relations, and although he would not read the entire document, he advised the Members to acquaint themselves with it.

Agricultural Economy

The impact of a minimum wage on such sectors of employment as the agricultural economy included.

  • Reduction in hours worked;
  • Reduction in non-wage benefits;
  • Reduction in training;
  • Changes in employment composition;
  • Higher prices for consumers;
  • Improvement in management efficiency;
  • Efficiency responses from workers;
  • Wage compression;
  • Reduction in profit;
  • Increases in demand;
  • Reduced turnover.

Employment statistics in agricultural sector

Mr Jawoodeen said South Africa had the third highest unemployment rate in the world for people between the ages of 15 and24. He estimated that more than 50% of young South Africans in this age bracket were unemployed.

He briefed the committee on the challenges of overall unemployment in the country, as well as highlighting some of the reasons behind recent employment losses in the agricultural sector. These included excess employment prior to the sectoral determination and higher wage bill which had encouraged farmers to shed excess unskilled labourers and replace them with more skilled workers, and farmers increasing capital investment – tractors, machinery and implements --in anticipation of this legislation, thus displacing farm labour.

Living and working conditions on South African farms

Mr Jawoodeen moved on to the living and working conditions on South African farms, referring to the 2015 International Labour Organisation (ILO) study that had discussed key trends, emergent issues, and underlying structural problems. It was his analysis of this study that raised the challenges faced. He claimed that it was unfair to use the minimum wage as an indication of employment. Because agriculture was a seasonal sector, these elements also played a role and caused the statistics to fluctuate. The sector was too dynamic to be summarized by a few factors, and he asked Members to be careful, because introducing a minimum wage would have an impact on employment.

He thanked the Members for their time, and asked that they take the time to get a more in-depth understanding of the discussion document compiled for the Committee.

The Chairperson thanked the Research Unit, but emphasised that this meeting was a continuation of a previous meeting and as such, the presentation was not starting from the beginning and explained why Mr Jawoodeen had given a synopsis. Today’s meeting was purely for factual purposes, rather than a discussion.

Discussion

Mr M Bagraim (DA) questioned the specificity of the type of employment that had been used in the study, and asked whether the study had taken account of the fact that many farmers were still taking on unskilled workers over specific seasons and for fewer hours, as opposed to a full eight-hour work day. He referred to page four of the discussion document, pointing out that the minimum wage impacts listed created a problem where the unorganized farms were flouting laws with regard to their workers not getting sick leave, or paid leave, or letters of appointment, which would result in illegal agreements between employees and employer. He emphasized that if one made employment expensive then out of desperation, workers would be forced into unlawful employment. He implored the other Members to be vigilant in exercising their mandate.

Mr I Ollis (DA) strongly emphasised that he felt that the report was not impartial and was being used to further the ANC agenda. He said that when the statistics had initially been presented to the Committee the tone of the study had been to shed light on the impact of a national minimum wage on the employment sector. He claimed that it was unfair to place responsibility entirely on legislators, because employment as a whole -- and especially in the agriculture sector -- was on a downward spiral. He brought to the attention of Members that in many other countries, the imposition of a national minimum wage usually led to a decrease in employment, and widespread job losses. The Research Unit had tried to sway the Committee with facts that were not wholesome.

Mr P Moteka (EFF) said that he wished the Research Unit had been able to provide a more in-depth study that delved into the root causes of the job losses. Nonetheless, the report showed that farm workers were treated almost like slaves. He knew of labourers that were paid a rate of R105 per day, and they were considered amongst the highest paid, and that only 20% of them were contributing to a pension scheme. He was concerned that lawmakers would be swayed by the fear of increased job losses, but he said that people could not ignore that with all changes there had to be some growing pains, but the change had to happen.

Ms F Loliwe (ANC) felt that since the study had touched on other matters, it was prudent that they consolidate all the information to be able to fulfill the mandate of the Committee. She stressed that the main task of the Committee was to implement a national minimal wage, not fight over its benefits, if any.

Mr Bagraim commented that he was unaware that the Committee had already decided that a national minimum wage was to be implemented. He was under the impression that the purpose of the meeting was indeed to investigate its feasibility and therefore its benefits, if any.

Ms Loliwe responded that the mandate of the Committee was to implement. Any other discussion must be based on facilitating that mandate, but not on interrogating the principle of a National Minimum Wage.

Mr Bagraim said he strongly disagreed with Ms Loliwe.

The Chairperson responded by asking Members to familiarise themselves with the State of the Nation Address, in which the Committee had been given its directive. She reminded them that they were not meant to be spectators in the law-making process. A national minimum wage would affect so many labourers that it was important that the Committee diligently investigated and questioned where necessary.

Mr Ollis said that the Committee was the one which decided to investigate, and not any other official mandate. He spoke on behalf of his political party, the DA, saying that they felt the Committee was using money unduly to conduct these so-called investigations and studies, yet no decision had been made. He asked Members to remain independent, and to act as a check to balance the power exercised by the Executive.

The Chairperson quickly readdressed the Committee on what exactly she had meant by the mandate given during the State of the Nation Address. She agreed that their mandate was to provide oversight, and that included establishing how to implement a national minimum wage after a sufficient investigation. She highlighted that those in the room, as elected officials, would not benefit from a national minimum wage, but they were representatives of the people who would. She then asked the DA Members present to offer solutions instead of just opposing.

Mr Bagraim, in response to the Chairperson’s comments, said that he felt she was shutting down half of the debate. The purpose of the Research Unit was to provide information for the Committee to then discuss and deliberate. He felt that the mandate had not been to investigate implementation, but to investigate a national minimum wage. Even during the presentation by the Research Unit, new matters had been raised, and it would be negligent to consider side-stepping a thorough inquiry.

Mr Ollis said that he was personally unhappy with the report from the Research Unit. He was concerned that it was not inclusive of many other indicating factors of employment, and how it would be affected by a national minimum wage. He was concerned that the report was distorting the facts. He recalled a public hearing where he had had to walk out because he had held a dissenting opinion with regard to a national minimum wage and had not been allowed to speak.

The Chairperson, in an attempt to redirect the discussion, said that the Committee should not deviate from the focus of the meeting. She told the Member that he seemed to be being selective in his reference to the report, and as such was trying to distract from the point. She emphasised that a report, if done correctly, would often have positions that differed in order to give the relevant parties a wholesome perspective. It was the job of Members of the Committee to sift through the statistics and decide what was good for the people.

Mr Moteka said that the Members should not drift too far from the focus of the meeting. The meeting had not been convened to determine if a national minimum wage was good or bad, but rather to determine its feasibility. There was a process in which members would reach a consensus, and the way forward would be determined. When other members said that a national minimum wage would hurt businesses, this was a misrepresentation because only 10% of revenue went to workers.

Ms Loliwe advised the Members not to go down an unnecessary war path. If they needed an opportunity to get familiar with the Committee’s mandate, they should refer to the excerpt from the State of the Nation Address.

The Chairperson said that the Committee could not go round for too long, and thanked the Research Unit for its work and for the presentation. She said that the Committee had come to the end of the discussion, and that the issues would need to be reassessed. She acknowledged that she considered the report to be well rounded and that it had led to a fruitful discussion. However, she noted that some Members seemed to be allergic to the phrase “national minimum wage.” She asked Members to remember that facts would not be useful if they were applied only when they were convenient.

Mr Moteka reminded the Chairperson that his question regarding the reasons for job losses had not been answered.

The Chairperson responded by saying that the Research Unit would come back so that there would be a continuous report discussion. She excused the Research Unit and thanked them again.

Consideration of Committee Minutes

The Chairperson asked if there are any matters arising with regard to the draft minutes of 14 October 2015. No matters were raised, the adoption was seconded, and the minutes adopted.

Budgetary Review and Recommendation Report of the Portfolio Committee

Ms Loliwe requested the Members to turn to the recommendations of the report, where she suggested some amendments be made to certain recommendations she thought to be contradictory -- more specifically, bullet point number 13.

Mr Moteka (EFF), asked whether making such an amendment was procedurally allowed.

Ms S van Schalkwyk (ANC) responded that the amendment had already been agreed upon but had not been removed from the draft report. She seconded the motion by Ms Loliwe. She also informed the Committee that procedural issues would not be a problem because the deadline for the change had been extended, and the revision had been made before that time had been reached.

Mr Ollis said that either way it was irrelevant, because as of 14h00 it would be illegal to alter the budget. So any technical changes should not even be discussed, as it was a waste of time.

The Chairperson responded that although the change may seem insignificant, no changes could be made at that time.

She then proceeded on to housekeeping matters, with reference to the date for a discussion on the Unemployment Insurance Fund Bill. It had been suggested that the date be 30 October 2015. She then reminded the Committee that the Bill needed to be advertised to the public to gather their opinion on it. She asked the Members if they felt public hearings should be held.

Mr Bagraim and Mr Ollis both informed the Committee that they would not be available on that date, and would therefore be absent with apologies. They both agreed that the Bill had great potential and may not need prolonged public hearings, as that may be too costly.

The Chairperson asked if there were any further questions or comments.

Ms FS Loliwe (ANC) requested that during the next meeting, the proposed dates be predetermined to allow Members to prepare adequately.

The Chairperson thanked the Members for their input and attendance and concluded the meeting.

The meeting was adjourned. 

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