Report on Ministerial Determination regarding Domestic Workers:Briefing by Department

Meeting report

LABOUR PORTFOLIO COMMITTEE
11 September 2001
REPORT ON MINISTERIAL DETERMINATION REGARDING DOMESTIC WORKERS: BRIEFING BY DEPARTMENT

Documents Handed Out:
Investigation into Minimum Wages and Conditions of Employment of Domestic Workers Report
Executive summary of the Report (see Appendix)
Department's Presentation on the Report

Chairperson: Mr MS Manie

SUMMARY
The meeting aimed at getting feedback and recommendations from the Committee on the report prepared by the Department of Labour following its investigation into the minimum wages and conditions of employment for domestic workers.-

MINUTES
Ms L Seftel, Chief Director: Labour Relations Programme, started by tracing the history of legal protection for domestic workers from 1994 where protection was very limited to today when the rights of the workers are safeguarded in several pieces of legislation such as the Skill Development Act and the Basic Conditions of Employment Act. This Act provides for sectoral determinations for minimum wages and the report represents the investigation into the establishment of minimum wages and conditions of employment for domestic workers.

She explained that the Department‘s terms of reference for the investigation related to the
- minimum rates of remuneration,
- conditions of employment as well as
- who should be covered by the term ‘domestic worker’.

The investigation was carried through data collection in the form of national and provincial workshops and surveys. This was followed up by consultations with members of the public. 64 hearings were conducted on a national basis and approximately 1 800 domestic workers and 350 employers attended the hearings. International experience also came into play as a means of assistance in this regard.

Ms Seftel indicated that from here the report would be published for further public comments, the comments would then be taken to the Employment Conditions Commission which in turn will consider both the report and public comments so as to advise the Minister accordingly. The Minister would thereafter publish the sectoral determination. Promulgation is aimed for December 2001 with implementation in March 2002.

The report:
- historical perspective and description of the sector,
- defining domestic work,
- present conditions of employment and wage levels,
- evaluation of the impact of the setting of minimum wages on alleviation of poverty, job creation and affordability
- recommendations.

Discussion
Mr Maphalala congratulated the Department for the work done and stated that even though the steps taken do not necessarily alleviate poverty, the movement was towards better conditions. He said that this process is not an easy one since it involves striking a balance between the interests of the employers, some of whom may not be earning much, and the workers who need to be able to sustain themselves.

Employment Contracts
Mr Rasmeni (ANC) stated that this was just the beginning of a difficult process and that it would serve as a means of uplifting the standard and quality of life of the workers. He indicated that it will ultimately lead to the stage where there will be contracts of employment between the employer and worker with both parties taking part in stipulating the conditions of employment as opposed to the current situation in which employers usually enforce employment contracts unilaterally. He also noted that some workers have started approaching consultants in recognition of their rights.

In response, Ms Seftel said that CCA still had an important role to play namely ensuring that such consultants do not take advantage of the workers, most of whom are not so well informed.

Health and Safety Issues
Mr Rasmeni indicated that some workers sustain injuries while on the job in their respective workplaces and that this issue would need to be looked at.

In response it was stated that this issue was still being examined.

Skills Development and Determination of Payment.
On the issue of developing skills Mr Rasmeni said that it was still important for domestic workers to have their skills upgraded. He suggested that possibly some incentives such as tax holidays could be given to the employers so that they do not feel overburdened.

In response Ms Seftel said that the issue of incentives to employers is being looked at and that a feasibility study is to be carried out.

A comment was made relating to education level as a measure of determining payment rate. It was felt that it need not be an issue since one does not need maths to wash and iron laundry. It was felt that the hourly rate could be an important element since the sizes of the houses and the amount of time taken to clean them vary.

Mr Moropa (ANC) felt that the skills profile had to be addressed so that it is clear as to how much value should be attached to various skills. He also stated that bearing in mind how essential such services are, he believed that the recommended starting point is quite low.

In response to these comments Advocate Ramashia, Director General in the Department of Labour, explained that in the case of domestic workers, the question of supply and demand did not seem to be of much assistance. The reason is that while there is a high demand for domestic workers, the supply was equally high and therefore the result was the drop in rates. This has been the reason for the intervention to establish a benchmark. The minimum would simply be a guideline and it is hoped that since there are employers who already pay well, they will not then decide to lower their rates.

Job Losses and Insurance.
Mr Clelland (DP) indicated that there are two sides to the coin. On one hand, setting minimum wages is the best thing to do to protect workers. On the other hand, it could be felt that this is a deterrent to encouraging employment. Although he found the report to be a balanced one, he indicated that the consequences of these recommendations had to be looked at closely.

He asked about the implications for job losses, that is, whether the employers would not then opt for carrying out the tasks themselves.

Advocate Ramashia noted that members seemed to appreciate the importance of the report and the conflicting interests involved. He pointed out that setting minimum rates caters for the best interests of the workers and that there was no doubt that there was demand for their skills in that employers could not be in a position to do such work themselves. Therefore, he feels that this role should be affirmed.

Mr Clelland asked about the employer’s payment of unemployment insurance, how it should be carried out taking into account it involved small amounts spread over time.

In response, Advocate Ramashia indicated that there was an ongoing investigation via the Unemployment Insurance Bill and that such issues would be looked at.

Ms Thabethe (ANC) stated that it is important for reports of this nature to be publicised as discrimination of workers by their employers is still continuing. She gave the example of some workers being allowed to vote during the elections only on condition that they vote for the political party supported by their employer. She criticised Mr Clelland’ s attitude regarding the essentiality of the workers’ services. She was of the view that there was no doubt about the significance of the role played by domestic workers.

Mr Moropa (ANC)- followed up on this issue saying that there is a political history relating to the whole issue and that there is even a race element linked to it.

Mr Clelland then made reference to estimations in the report compiled by the Department indicating the possibility in the long run of 69 000 domestic workers becoming jobless in urban areas alone.

In response Ms Seftel said that this estimation represented "the possibility of the maximum number of people who could be made jobless" but it was difficult to predict. However, she pointed out that there had been growth in the sector with an increase in the number of domestic workers despite all these ongoing changes and that this was a positive indication.

Accommodation
On this issue, Ms Thabethe indicated that a 25% deduction of the workers’ payments was too much as the wages are already minimal. Mr Rasmeni agreed with her.

The Chair was of the view that certain minimum standards had to be maintained in order to categorise a place as befitting usage for accommodation purposes.

Mr Rasmeni agreed stating that placing employees in "wendy houses" could not be regarded as adequate accommodation.

It was felt that the Department should be involved in ensuring that there are proper accommodation facilities for workers.

Mr Seftel however, was of the view that accommodation and matters pertaining to it fell outside the scope of labour issues.

Enforcement
Ms Thabethe asked how enforcement of these issues was to be ensured.

In response Advocate Ramashia explained that it was hoped that the employers would act humanely so that the need for enforcement measures would not have to arise at all. The idea is promotion of voluntary compliance. However, the number of labour inspectors would have to be increased to facilitate for enforcement should need arise.

The Chair said the Committee should also come up with ideas as to how enforcement is to be carried out. There should be an intensive awareness campaign.

The Chair asked what the Department’s next step was.

Ms Seftel said that the next step would be to make people aware of the importance of domestic work and that it should be valued highly. She noted that there is currently a survey being conducted which relates to the valuation and rating of domestic skills.

The Chair concluded by requesting that Department allow the Committee and Employment Conditions Commission (ECC) to have sight of the report before it is passed on to the Minister.

Appendix:
EXECUTIVE SUMMARY

INVESTIGATION INTO MINIMUM WAGES AND CONDITIONS OF EMPLOYMENT OF DOMESTIC WORKERS

1. Introduction
The state carries the responsibility of protecting vulnerable workers. Domestic workers enjoy protection under the Basic Conditions of Employment Act, 1997 (BCEA). However these standards are not always tailored to their specific needs. The BCEA does not itself lay down minimum wages, but provides for sectoral determinations, which do so for particular sectors. The Minister of Labour therefore instructed the Director-General to conduct an investigation into the establishment of minimum wages and conditions of employment for domestic workers.

Domestic workers represent a particularly vulnerable category of workers. In general, domestic work is an undervalued activity performed by people from disadvantaged social groups. It is work with perceived low economic value and limited social recognition.

Domestic work is performed in the homes of the worker’s employers and their main duties include cleaning, cooking, gardening, looking after children the old and the frail and driving for the household.

Domestic work is perceived as an extension of unpaid household duties. Consequently women domestic workers are not always seen as wage labourers.

2. Profile of a domestic worker
The picture of domestic work that emerges is one of people – mainly women – entering the domestic service not by choice, but rather as a means to alleviate poverty.

Domestic workers as members of a community service sector tend to exhibit similar characteristics globally: isolation, invisibility and low organization.

Black women mainly perform domestic work in South Africa. The majority of workers have a primary education or less. Their average age is 41 years. The majority of workers are based in rural areas.

Domestic workers find themselves within a highly individualized employment relationship, subjected to unequal power relations, which contributes towards their vulnerability

The challenge is to find a balance between decent employment standards, flexibility to meet the needs of the employers within the sector, and maintenance or increasing levels of employment

3. Present conditions of employment
The Basic Conditions of Employment, Act 1997, is already applicable to domestic workers. These conditions compare positively with international standards. Observations from the hearings indicated that there is a lack of awareness about some aspects of the legislation.

The investigation revealed that the management and control of working time is difficult and complex. Different standards regarding hours of work apply to live-in and live-out domestic workers and the first category of workers generally is worst off. They are more likely to have to be available for work at all hours, have inadequate resting time, etc. Employers seldom consult the legislation when overtime, Sunday time and payment for work on a Public Holiday is calculated. The sectoral determination should clearly determine working time issues. A contract of employment would also be useful in formalizing arrangements in this respect.

Domestic workers experienced incidents of intolerance when it came to the granting of sick and family responsibility leave. However should the relationship be good, few problems are experienced and some employers grant more leave than prescribed by the legislation. The major proportion of annual leave is taken during December and April of each year. The recording of the different periods and types of leave is problematic and the sectoral determination could address this issue by providing standardized leave forms.

The provision of a contract of employment or issuing of written particulars of employment was a common demand and could form the cornerstone though which the employer/employee relationship could be formalized.

In respect of accommodation, domestic workers complained less about the standards of their accommodation and more about their privacy and refusal by the employer to receive friends and family. A contract of employment/agreement would be useful to regulate arrangements in this respect.

The provisions on termination of employment and payment of severance pay as contained in the BCEA are sufficient. However a probation period of several months is proposed since the relationship is highly individualized. A wrong choice in this respect could put the domestic worker and household through unnecessary trauma.

Other benefits such as food, clothes, medical assistance, when they are provided, are more often than not provided free of charge. No conclusive proof could be found that lower wages are paid in lieu of such benefits.

Employers seldom complied with the provision in the BCEA that stipulates that a certain amount had to be added to the wage for the calculation of overtime pay, Sunday pay, pro rata leave, etc. The continuation of the payment in kind provisions must be carefully considered in that it is difficult to determine the monetary value of the said benefit.

4. Present wage levels
Domestic workers are some of the lowest earners in the South African labour market. The evidence shows that they receive substantially lower earnings than other occupational groups except farm workers. The national median wages for domestic workers in 2000 were R409,00 in rural areas and R588,00 per month in urban areas. A domestic worker will earn about 20% of the wage of a clerk. If occupations are aggregated into skilled, semi-skilled and unskilled categories the following trends emerge:

domestic workers earn between 7% and 12% of the income earned by skilled workers
the wage of domestic workers is between 20% and 30% of the semi-skilled workers
excluding farm workers, domestic workers earn between 37% and 43% of the wage of unskilled workers.

The rural wages is about 70% of the urban wage. Clearly, as would be expected, earnings for domestics are distinguished according to location.

The age data reveals that older domestic workers generally earn more than younger ones.

The highest earners were those in Gauteng. This is expected given that the province is highly urbanised and that it is the richest province in the country. Somewhat surprisingly, the provinces with the highest wages after Gauteng were found in Mpumalanga and the Northern province, the latter being one of the poorest provinces in the country. The relatively low wages for the Western Cape may be explained by the significant number of rural domestic workers included in this province. The lowest earners were located in the Free State, followed by the Northern Cape and Eastern Cape, with the Free State reporting the lowest wage of R326,00 per month.

The Gini coefficient provides information on income inequality. The national Gini is about 0.6, reflecting, as is well known, a highly unequal society. The Gini for domestic workers is about 0.4. What this suggests is that, relative to the national estimate, there is a lower level of income inequality amongst domestic workers themselves. This serves to highlight the fact that in the wage determination around domestic workers, the problem is not high levels of differential earnings amongst these workers, but rather the very low absolute levels of earnings of these employees.

Information gathered from the hearings and surveys on wage levels vary. It is not possible to make direct comparison between what domestic workers reported and employers’ reports Employers tend to report higher wage levels, which probably include compensation for payment in kind. Wage levels vary between areas within a province as well as between provinces, which strongly suggest that the determination of a minimum wage should follow the same trends.

Although some domestic workers felt strongly about the implementation of a skill based minimum wage, this is probably premature in that no standards exist to evaluate the present skills or to determine the monetary value thereof. An hourly based minimum wage seems to be more appropriate since employers would be able to determine the number of hours they would be able to afford.

Employers and domestic workers responded positively to the inclusion of domestic workers in the Unemployment Insurance Fund as well as the Compensation Fund. The administration and collection of contributions raised concerns. Domestic workers felt strongly about the establishment of a compulsory provident fund. Those who attended the hearings were prepared to pay up to R50 per month in this respect. Employers did not share their enthusiasm. Additional costs were their greatest objection.

5. Feasibility of setting a minimum wage for domestic workers
In evaluating the feasibility of setting a minimum wage for domestic workers the Department of Labour considered a number of factors, namely,

the needs of the domestic workers and employers
the impact of minimum wages on poverty alleviation
the impact of minimum wages on employment creation
te present wage levels as reported by domestic workers and employers.

During the last five years employment levels for domestic workers have increased despite the implementations of new labour laws. This clearly points to the need for domestic work. However in assessing the wage paid by employers it was established that it is low and that it constitute a combination of cash and benefits.

Setting a minimum wage would not eradicate poverty but would greatly assist in improving the livelihood of domestic workers.

Rural domestic workers are more likely to be affected negatively should minimum wages be set at too high a level. Although the simulation exercises had some weaknesses, they suggest that job losses could occur. However the number of job losses can be minimised by setting an appropriately low minimum wage. Setting a minimum wage for domestic workers is therefore feasible and appropriate if location (urban-rural) differentials are taken into consideration in determining the actual levels.

6. Recommendations
6.1 Scope of the Sectoral Determination
It is recommended that the sectoral determination apply to all employers and employees in the domestic worker sector in the Republic of South Africa, including those employed by employment agencies and those who operate as independent contractors but deserve protection as workers.

6.2 Wage differentiation per area
There is a strong link between the earnings of domestic workers and the particular region where they live. Stated crudely, domestic workers in poorer provinces are likely to earn lower wages than those living in richer provinces. The differences are quite large in relative terms. The same principal apply in relation to location i.e. whether a domestic worker is in an urban or rural area. For this reason, one national wage might not be feasible, at least at this stage, and that differentiation could be based on an urban and rural divide. The wage schedule must thus be constructed in such a way that it provides for different wage levels in different locations.

The National Demarcation Board completed the demarcation of new municipal boundaries in preparation for the local government elections of late 2000. The demarcation distinguished between three categories, namely metropolitan, local and district councils. These three divisions correspond in broad terms to the richest, middle-income and poorest types of areas within the country. It is recommended that the area and scope of the sectoral determination be determined by using the National Demarcation Board classifications. The sector should be demarcated as follows:

Area A: municipal council areas where the urban portion is 61% and higher

Area B: municipal council areas where the urban portion is between 41% to 60%

Area C: municipal council areas where the urban portion is 40% and less.

6.3 Basis of contract
It is recommended that domestic workers be paid according to the number of hours worked. For example if the minimum wage is set at R3,07 per hour a domestic worker who is working 45 hours per week should be paid R138,46 per week. If a domestic workers is working 30 hours per week he or she must be paid R92,10 per week.

6.4 Four-hour proviso
It is recommended that if an employee works for less than four hours per day he/or she shall be deemed to have worked for four hours on that day and be paid for at least four hours.

6.5 Determining the wage levels
It is recommended that minimum wage levels be considered in line with the way in which the sector would be demarcated. The levels for rural, urban-rural and urban areas should be R2,05, R2,56 and R3,07 per hour, respectively for the first 12 month after promulgation. It would mean that if domestic workers are working 45 hours per week the monthly wage in rural areas would be R400,00 in urban-rural areas R500,00 and urban areas R600,00 per month.

The table below contains the proposed minimum wages. [PMG Ed note: Table not included]

6.6 Wage increases and application period of the sectoral determination
It is recommended that the wages be prescribed for a three-year period. There should be across the board wage increases of 7% per year in the second and third year of application.

6.7 Payment in kind
It is recommended that no deductions should be allowed except in respect of accommodation. However, employers will not be expected to increase wages to accommodate payment in kind when calculating over time, Sunday time, etc as presently provided for in transitional arrangements in the Basic Conditions of Employment Act, 1997.

6.8 Phasing in of the sectoral determination
It is recommended that the minimum wages be phased in over a short period of time i.e. that employers should not be required to pay the minimum wage for the first three month after the promulgation of the determination. The other clauses will be immediately applicable.

6.9 Conditions of employment
It is recommended that the conditions of employment of domestic workers mirror those contained in the Basic Conditions of Employment Act, 1997 (BCEA). However to provide for the unique circumstance of the sector, the following variations to the BCEA is recommended:

6.9.1 Overtime
Weekly limitations should be extended to 15 hours per week. In instances were employees will be required to work overtime on a regular basis an agreement may provide for an employer to-

increase the monthly wage by one sixth for every five hours of overtime worked per week
increase the monthly wage by two sixth for every ten hours of overtime worked per week
increase the monthly wage by three sixth for every fifteen hours of overtime worked per week.

Employers and domestic workers who choose this method of payment will not be required to pay overtime premium otherwise required.

6.9.2 Night Work
The following are recommended pertaining to night work:

An employer may require a domestic worker to sleep-in but not more than five times in a month or 50 times in a year.

An employee who is required to sleep-in must agree to it in writing.

An employee who is regularly required to sleep-in between 20:00 – 06:00 must be paid an allowance of R16.00 per shift or granted on additional week’s leave per annum.

6.9.3 Family Responsibility Leave
It is recommended that family responsibility leave be extended to five days per annum:

(a) when the employee’s child is born;

(b) when the employee’s child is sick; or

(c) In the event of the death the employee’s spouse or life partner; the employee’s parent, adoptive parent, grandparent, child, adopted child, grandchild or sibling.

6.9.4 Administrative Obligations
It is recommended that domestic workers be issued with a pay slip or wage envelope.

An employer must keep an attendance register, which indicates the hours of work, overtime, night work, work on a Sunday and public holiday unless an agreement regarding the issues mentioned has been concluded.

6.9.5 Deductions
The following is recommended pertaining to deductions and other acts concerning remuneration:

No employer shall be allowed to penalize domestic workers for any damages that might occur during the performance of their duties.

6.9.6 Accommodation
The following is recommended pertaining to accommodation:

(a) An employer shall not as a condition of employment require an employee to work for longer than 10 hours a week without remuneration in exchange for accommodation.

(b) An employer may deduct an amount of not more than 25% of the wage in lieu of accommodation provided that the following conditions are met:

The room must be weatherproof and generally kept in a good condition.
The room must have at least one window and door, which can be locked.
The room must be fitted with a toilet and bath or shower if the domestic worker does not have 24-hour access to another bathroom.

6.9.7 Code of Good Practice
It is recommended that a code of good practice be developed to regulate the following:

Termination of employment with a specific focus on different types of employment contracts.
Severance pay in relation to what would constitute a claim in this respect.

6.9.8 Allowances
It is recommended that the sectoral determination does not prescribe allowance but that a code of good practice be developed to regulate the payment thereof.

6.9.10 Social Security
Domestic workers across the board supported the establishment of a provident fund. Employers on the other hand resisted this notion to the extent that they felt that such a requirement is not compulsory at their own work places. It would require additional costs that could have gone to higher wages. Employers were also worried about the enforcement and administration of such fund.

The Unemployment Insurance Fund is presently busy with an investigation regarding the extension of benefit to the domestic worker sector. It is recommended that the process of establishing a provident fund be taken forward through that forum.