On the National Minimum Wage - Thulas Nxesi

Minister notes that farm employment in WCape increased by 73% after R105 per day minimum was implemented

National minimum wage fights poverty and inequality

In the ANC’s 2014 Election Manifesto, the soon to be re-elected ruling party, committed to driving a process to investigate the modality of introducing a National Minimum Wage in South Africa. With our 63% majority mandate, the ANC-led government, working together with all key social partners is currently driving that process through NEDLAC.

As the ANC, and ANC-led government we are not ‘Johnnies-Come-Lately’ to the struggle for a national minimum wage. At Kliptown, in 1955, the ANC together with its Congress Allies, including the South African Congress of Trade Unions, SACTU - the direct fore-runner of today’s COSATU - called in the Freedom Charter for a national minimum wage. We have never abandoned that vision.

We are not Johnny-Come-Lately’s, we are not amateurs, we are not demagogic entryists trying to insert ourselves from the outside into the labour movement riding on the back of worker struggles to advance our own personal ambitions. Within the ANC leadership there are many who have served decades and decades in the trade union movement. Which is why, the ANC together with its Alliance, in the immediate context of the 1994 democratic breakthrough clearly understood that simply declaring a national minimum wage on its own could have many unintended, anti-worker and anti-poor outcomes.

In the United States, for instance, where there is a National Minimum Wage, successive administrations have used a State-declared National Minimum Wage to by-pass and therefore weaken (not strengthen) the role of trade unions and worker shop-floor organisation and struggles. We understood in the mid-1990s that a National Minimum Wage needed to be embedded within a wider set of progressive advances.

That is why the ANC and its alliance partners ensured that worker rights were strongly affirmed within our progressive 1996 Constitution. We achieved this in the face of considerable opposition from certain political formations because we understood that advancing towards a national minimum wage required many other progressive advances.

The ANC-led government, working with our social partners, introduced successive waves of legislation, including the Basic Conditions of Employment Act. This Act empowers the Labour Minister, working with social partners, to make Minimum Wage Determinations for sectors in the economy where workers are particularly vulnerable.  There are currently Minimum Wage Determinations for nine sectors -including: Domestic workers; contract Cleaners; private security workers; workers in the whole-sale and retail sectors; farm and forestry workers; taxi sector workers; and those on learnerships.

In the context of these advances and in the face of persisting inequality and poverty, we have lost no time in advancing the National Minimum Wage agenda. Under the leadership of Deputy President Cyril Ramaphosa and within the framework of NEDLAC, an Indaba was convened in November last year. It involved government with our social partners - the main trade union federations (COSATU, Fedusa and NACTU), the community sector, and business.

The Indaba issued a joint declaration - the Ekurhuleni Declaration.  Amongst other things the Declaration stated that:

The Nedlac constituencies recognise:

  • That wages are the most important component of income for South Africa’s working people;
  • That income from wages is the main source of ensuring a sustainable livelihood for workers while also being a key factor in the competitiveness and sustainability of enterprises…
  • That large pay differentials between executives and low income workers undermine the prospects for cooperative labour relations and workplace cohesion.

Having forged this very important shared understanding, the ANC government and its social partners at the NEDLAC Indaba then resolved to:

  • Engage on the modalities of introducing a national minimum wage in South Africa; and
  • Explore ways of reducing pay differentials, while maximising job creation efforts”.

This agreement locked the key stake-holders into a focused process, which has made important progress, and we are now at a critical stage in that process. Under the auspices of the National Economic Development and Labour Advisory Council (NEDLAC), the work of both the Wage Inequality (Minimum Wage) Technical Task Team and the Labour Relations Technical Task Team is being monitored by the Committee of Principals chaired by the Deputy President, bringing together senior leadership of all the social partners.

The NEDLAC task teams that have been meeting since January 2015 have agreed on the following: 

  • “The national minimum wage shall be the legal floor for a defined period of time, guaranteed by law, below which no employee may be paid in South Africa.”
  • The national minimum wage will apply to all employees, both in the public and private sectors, unless provided for otherwise by an exclusion, phase-in or phase-out in an upfront agreement. 

In relation to the existing systems of collective bargaining and sectoral wage determinations, the Task Team on Wage Inequality has also agreed that:

  • Collective agreements, including bargaining council agreements, sectoral determinations and contracts of employment may not make provision for a wage that is lower than the national minimum wage, but may only vary wages upwards. 
  • Depending on the minimum wage level, however, certain exceptions may be needed. Nevertheless, it is generally agreed that comprehensive coverage is desirable and that a patchwork approach should be avoided.
  • The body that will be responsible for determining a national minimum wage will be a body similar to the Employment Conditions Commission, which currently recommends minimum wages and conditions of employment on a sector basis to the Minister of Labour.
  • The composition of the Employment Conditions Commission includes representatives of organised business and labour and independent researchers. 

A very important consideration will be the empirical evidence that is being gathered relating to the possible effects of introducing a national minimum wage. From this brief account of NEDLAC processes underway, it is clear that debates around introducing a national minimum wage are complex. Whilst international experience indicates that a national minimum wage can assist in combatting poverty and inequality, the level at which the minimum is set is going to be critical:

  • If the level is set too low, the exercise is rendered meaningless - we fail to combat ultra-exploitation, and indeed we end up reinforcing low wages;
  • If the level is set too high, this can lead to non-compliance, or more seriously, job losses.

As we grapple with these complexities, it is vital that we base our decisions upon research and concrete data rather than ideological assertion. In March 2013, following the impressive worker and community strikes in De Doorns and Hex River region, the minimum wages of farmworkers were raised from R69 per day to R105. There was much wailing and gnashing of teeth from the DA. They warned of massive job losses in the sector. So what are the facts?

According the latest Stats SA Quarterly Labour Force Survey, employment in the farming sector has gone up 25% nationally since the raised minimum wage determination. In the Western Cape farm employment has gone up by 73% in the same period!

There are a number of issues which still need to be resolved between the social partners at NEDLAC including:

  • The impact of a national minimum wage on small businesses.
  • The need to ensure a national minimum wage does not adversely affect employment.
  • Using the national minimum wage as one of the tools to alleviate poverty.
  • How to maximise compliance with a national minimum wage.

Most importantly, the process of determining the actual level for the national minimum wage will involve difficult negotiations - there are, after all, vested interests which benefit from cheap labour. We remain guided by our commitment to decent work and a living wage - whilst closely monitoring the employment effects of introducing a national minimum wage.

I appeal for support of the NEDLAC processes. We need to ensure that NEDLAC outcomes do not simply produce outcomes that are, at best, ameliorative, leaving class, race, gendered and geographical inequities in place. A sustainable National Minimum Wage must be an important component of a wider, radical strategic programme that includes an improved social security net, a wide range of employment creating strategies, including the State-led infrastructure build programme, State-led industrial policy plans, and much more.

As the NEDLAC partners have agreed, a National Minimum Wage discussion cannot be separated from closing the outrageous pay gap that exists in many parts of our economy, as we recognise that the current pay inequities are a major contributor to social instability. There are many international examples where effective National Minimum Wage policies, as part of an array of developmental initiatives, improve incomes for the working poor, preserve jobs, and actively contribute through demand stimulus to economic growth.

Comrade Thulas Nxesi is an ANC NEC member and Minister of Public Works.

This article first appeared in ANC Today, the online newsletter of the African National Congress.