NO to National Minimum Wage Commission’s proposed increases

Dear Cape Town

The Democratic Alliance (DA) has submitted its input to the National Minimum Wage Commission on the annual review of the National Minimum Wage (NMW).

We oppose the proposed above-inflation increases and support the minority recommendations in the report, which are premised on the need to avoid and minimise job losses.

Any adjustment to the NMW must take into consideration its probable impact on jobs. This is especially important at a time when Covid-19 and the associated national lockdowns have wreaked havoc on the economy. Retrenchments are on the rise and unemployment is at an all-time high: 43.1% in the 3rd quarter of 2020 on the expanded definition of unemployment, according to Statistics SA’s latest Quarterly Labour Force Survey. Growth forecasts, meanwhile, remain dire.

In these circumstances, it would not be wise to increase the NMW by 1.5% above inflation over the next two years or to increase the minimum wage by 16.1% for farmworkers and by 20.65% for domestic workers – all of which adjustments are recommended by the Commission.

No sector will be able to absorb such increases at a time of serious economic decline. As it is, the domestic service sector has been particularly hard hit by Covid-19 with many employers struggling to keep on their domestic workers. In the agricultural sector, research has shown that large legislated wage increases cause extensive job losses. A double-digit increase in the minimum wage will in all likelihood lead to increased mechanisation resulting in even greater job losses in the agricultural sector. Then too, many parts of the country are still trapped in a five to seven-year drought cycle, which has negatively affected the agricultural sector.

The DA supports sustainable wage increases in the agricultural- and domestic service sectors. We do not believe that increases should be forced by way of regulation. Increases should be determined by employers and trade unions entering into negotiations. With due regard to NMW legislation as it stands, however, the DA concurs with the minority recommendations in the report.

The DA urges the Commission to take the current economic climate into consideration and reassess its recommendations. The DA does not support legislated minimum wages but fully understands the reality of National Minimum Wage legislation. In order to work within the legislative framework, the DA hereby calls upon the Commission to put any further increases on hold during this unprecedented period of negative growth. The government itself has had to renege on the three year wage agreement that it entered into with public servants. In the same way, many employers will not be able to sustain the increases currently proposed by the Commission.

Regards

Dr Michael Cardo MP and Michael Bagraim MP