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SA's lowest paid must get above-inflation wage increases in the coming years


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SA's lowest paid must get above-inflation wage increases in the coming years

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SA's lowest paid must get above-inflation wage increases in the coming years

South African Rands
Photo by Bloomberg

9th May 2023

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Many of South Africa's domestic workers, and other groups paid the bare legal minimum, will see above-inflation increases in coming years in terms of a new plan.

On Monday, the National Minimum Wage Commission gazetted a new medium-term target for the minimum wage, fulfilling a legislative requirement for such a roadmap.

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The plan had been to consider the minimum wage in terms of living standards and link it to wages in general, so that those earning the minimum wage would, at the very least, not fall behind increases in pay across the economy.

But the commission has now explicitly linked the target to the consumer price index (CPI), saying it will increase the minimum wage gradually in real terms.

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The target is still also linked to other wages, as well as to living standards, as had been the plan in December – but with a change in priority.

The commission had planned to decree that every worker "must earn enough to maintain a decent standard of living". In the final version, that has been replaced by the softer "should", potentially offering less leeway for future activists to argue for huge jumps in the minimum wage in order to achieve the definition of what is enough: "sufficient to support themselves and their families at a level that is both socially acceptable and economically viable".

Where things are easier to measure, though, the target has been hardened. As of December, the plan had been to say the target "should ensure that the value of the national minimum wage does not decline relative to the median wage."

That has become "will", which means minimum-wage earners will – rather than may – benefit too if large pressure groups, such as civil servants, negotiate sufficiently large increases.

The commission has likewise said it "will" – rather than try or aspire to – increase the minimum wage above the level of inflation.

The full, final medium-term target for the national minimum wage reads:

All wage-earning workers should earn a wage sufficient to maintain a decent standard of living, defined as sufficient to support themselves and their families at a level that is both socially acceptable and economically viable. The target will ensure that the value of the national minimum wage does not decline relative to the median wage. To achieve this target, the Commission will increase the value of the minimum wage gradually over time in real terms (that is, relative to CPI).

In February, Employment and Labour Minister Thulas Nxesi decreed a 9.6% increase in the minimum wage, to R25.42 per hour, well ahead of annual inflation of 6.9%.

The increase, effective from March, saw full-time domestic workers earn at least R4 000 per month for the first time.

That is not quite the lowest possible pay, however. People employed in the government's expanded public works (EPW) system may be paid as little as R13.97 per hour, or roughly 55% the minimum wage for everyone else.

The National Minimum Wage Commission had recommended an increase closer to CPI, at between half and one percentage point above inflation. Employers said they could not afford that; unions said it was way too low.

The 2023 increase was particularly aggressive in terms of inflation, but in 2022 the minimum wage also increased faster than CPI, at 6.9% more for workers while the average basket of goods cost 5.7% more.

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