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The National Minimum Wage Commission has released its annual review of the national minimum, including a proposed increase for domestic workers and other employees.
The National Minimum Wage Law, which was officially introduced in 2018, requires the commission to review the minimum wage annually, soliciting comments from both experts and the public.
The three key findings of the commission are as follows;
- Most commissioners recommend that the national minimum wage be increased by 1.5% above inflation measured by the consumer price index (CPI);
- Most also recommend that the minimum for farm workers to be aligned with the national minimum wage in 2021;
- The minimum for domestic workers is gradually increased equalize the national minimum wage by 2022.
Annual adjustment
Most of the commissioners proposed that the national minimum wage be increased by the inflation rate plus 1.5%.
The inflation rate, measured by the CPI, as of September 2020 was 3%, so the adjustment should be of the order of 4.5%, the commission said.
The national minimum wage was originally set at 20 rand per hour in 2018. In 2019, the Commission had just been established and was therefore unable to conduct a full annual review.
At that time, it recommended that the national minimum wage be increased at the inflation rate for the poorest decile of households for the year through March 2020, or 3.8%.
Therefore, the national minimum wage increased from R20.00 to R20.76 per hour as of March 2020. An increase of 4.5% would effectively see that the minimum wage would increase about 93 cents more for R21.69.
When making this adjustment, the commission must consider a variety of factors including:
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- Inflation, cost of living and the need to retain the value of the national minimum wage;
- Salary levels and results of collective bargaining;
- Gross domestic product (GDP);
- Productivity;
- Employers’ ability to conduct business successfully;
- The operation of small, medium and micro enterprises and new companies;
- The likely impact on employment or job creation.
Equality
The commission said that, ideally, a national minimum wage should apply to all employees across the country and regardless of sector.
However, to avoid excessive disruption, the Minimum Wage Law established lower minimums for agricultural and domestic workers, with a process of gradual equalization of the national minimum wage over time.
Article 6 of the law orders the Commission to make recommendations to the Minister of Employment and Labor on this matter.
In 2018, agricultural workers were entitled to a minimum wage of R18 per hour and domestic workers to a minimum wage of R15 per hour. The minimum wages of agricultural and domestic workers increased in March 2020 to R18.68 and R15.57 respectively.
The commission’s recommendation is that minimum wages for agricultural workers be equal to the national minimum wage as of the date of the blanket adjustment in 2021.
The commission recommended that the minimum wage for domestic workers be increased to 88% of the national minimum wage in 2021 and 100% in 2022.
This adjustment to the minimum wage for domestic and agricultural workers would amount to an increase of approximately R450 per month for a domestic worker and about R350 per month for a farm worker.
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