I want to live not just exist - Minimum wage report on South Africa compiled by Hameda Deedat

The report is brief, so please incorporate the Key terms in the various sub-sections of the report.

Glossary of Terms[1] (Taken from Cottle, 2015)

Average wage: this is the typical wage or salary paid to workers in an occupation or industry. The average is calculated by adding up all the wages or salaries of people working in the position and then dividing that sum by the number of people working in the position. The amount received is the average salary.

Median wage: is the boundary between what the highest 50% of earners are paid and what the

lowest 50% of earners are paid. Thus if the median wage in South Africa is R3, 033 this means that

50% of workers are earning above the median and 50% are paid below.

Minimum wage: this is the lowest level of pay established through a minimum wage fixing

system which is guaranteed by law.

Median minimum wage: is the median of all the minimum wages in an occupation or an industry.

Gini coefficient: is a measurement of the national income distribution of a country’s residents.

This number, which ranges between 0 and 1 and is based on residents’ net income, helps define

the gap between the rich and the poor, with 0 representing perfect equality and 1 representing

perfect inequality.

Introduction:

The struggle for a National Minimum Wage (NMW) in South Africa goes as far back as 1930’s and has taken various forms in the struggle to secure a national minimum wage (NMW) in South Africa. The aim is to have a National Wage System that would enforce a minimum wage across all industries (Cottle, 2014). The aftermath of the Marikana Massacre and farm workers’ struggles of 2012, stemmed from workers’ demands for an improved minimum wages in these sectors (Ibid).  It is significant to point out that only 31% or 3.6 million workers benefit directly from collective bargaining while 69% of the formal sector workers are not covered by any form of collective bargaining. In the case of South Africa, the income for the majority of workers are solely determined by the employer (South Africa, 2014:4-27). According the Quarterly Employment Statistics (QES) conducted by Statistics South Africa (Stats- SA), the average monthly income for the formal non-agricultural sector in November 2014 was R16, 470 (equivalent to 1.1760$).

A 20 year Labour Review Report prepared by Trade and Industrial Policy Strategies (TIPS) provide a visual picture of the South African labour market employment and skills across the sectors in the table below.

Table 1:  Employment by industry, September 2001 and third quarter 2008 and 2013 [2]( TIPS, 2015, p5-6)

A5T1

1.1 .Income and disparities in TIPS Report 2015

The TIPS report found that Income differentials by race and gender declined significantly between 1994 -2012, but could not find data track the changes beyond 2012. It also found that the median earnings for a white men was six times higher than African women for the same period.  While unequal pay for the same kinds of work did not explain the disparity per se it was a significant factor influencing the inequality. The pay variance was largely related to skills or the lack thereof which saw Black and Black women in particular more likely to be employed in lower-level jobs” (TIPS, 2015). This inequality was also evident at household level with Black families household income being below R3000 (USD equivalent at current market rate 220.200$) for ‘Coloureds’ and ‘Asians’ just over R7000, (513$ equivalent at current market rate), and Whites around 20 000, (1.4680$) at current market rate equivalent)[3] for the same period. Furthermore, the report found that the overall income distribution did not improve significantly, with the richest 10% of households still capturing over half of the national income. This situation depicts the resonance of the apartheid architecture that entrenched exclusionary and highly unequal structures, which are even today inherent to and systemic of South African economy, particularly pertaining to patterns of ownership, the nature of market institutions, etc.

2. Minimum Wages

The struggle for national minimum wage in South Africa has been waging since 1935 with a review on the implementation in the 1940’s and several years to follow the call by (South African Congress of Trade Unions (SACTU)was for a national minimum wage of R50 per week. Amidst the politics a commission was set up to review the issue of a NMW yet again and stated: “although there was a difference of opinion on the issue in the commission itself, it came to a clear conclusion that a number of weighty considerations preclude a recommendation that South Africa should introduce such legislation”.  And then went on to list the issues.(Cottle, 2014, p1). Needless to say, despite the call being reiterated over the years South Africa has not been able to ratify a national minimum wage. Notwithstanding the inability to secure the NMW, minimum wages in sectors through collective bargaining at the bargaining council level, or sectoral determinations determined by the National Department of labour. 

2.1 Minimum wages for farm and domestic workers in TIPS Report 2015

The right to a minimum wage at sectoral level, through the introduction of the Basic Conditions of employment Act, in 2002 substantially improved the lives for numbers of workers particularly those for whom the Act now prescribed a minimum wages (DPRU, 2010). By 2012, twelve sectoral determinations covering 4,6 million workers came into effect and covered 40% of employed workers, and more significantly, two thirds of whom were general workers and also predominantly women, since domestic workers and farm workers who were, and continue to be the most vulnerable and paid the least. In 2002, the median pay for domestic workers and farm workers was R400 and R500 a month respectively. By 2007, five years after the introduction of the minimum wage, the median pay for domestic workers was R900 a month. This was constituted an increase of over 80% in real terms while farm workers’, were paid R960, with median income of over 50% in real terms.  Critical to point out was that prior to 1997 and despite the introduction of the BCEA in 2002 it took 5 years to get compliance in these sectors.  Unfortunately, by contrast, the median pay for other semi-skilled and elementary workers stagnated (TIPS, 2015).

After 2007, wage increases for farm and domestic workers ranged between 1% and 3% a year, after despite being lowest but ironically their wage increment was comparatively faster than that of other lower-level workers. By 2012, the median pay for full-time farm workers was R1500. This is incite of the minimum wage being R2000. The same can be said for domestic workers who were earning R1300 when the minimum was almost R1750 (TIPS, 2015).

Sector

Wage increase2014

Real wages 2014

Wage increase2015

Real wages 2015

Agriculture

R2660/ 195,24$

R2498 /183,35$

 

 

Whole sale and retail

R3037 /222,61$

R2852 /209,30$

3077/ 225,85$

2935 / 215,42$

Construction

R3068 /225,19$

R2881 /211.46$

 

 

Finance

R3266 /239,72$

R3067 /225,42$

3432 /251,90$

3274/213,34$

Manufacturing

R3603/ 264,46$

R3383/ 248,31$

3045 /223,50$

2905 /213,22$

Transport

R4735 /347,54$

R4446 /326,33$

4268 /313,27$

4072 /298,88$

Community

R5435 /398,92$

R5085 /373,23$

4200 /308,00$

4007/294,11$

Mining

R5512 /404,58$

R5176/ 379,91$

 

 

Electricity

R6021 /441,94$

R5654 /415,00$

 

 


Category of Workers                   

Wage Increase

2014

Real Wages 2014

Domestic workers

R 1632/ 119,79$

R2532 / 185,85$

Expanded Public works Program

R1839 / 134,98$

R1708 / 125,39$

Taxi

R2274 / 166,91$

R2236 / 164,12$

Whole Sale and Retail  (area B)

R2301 / 168,89$

R2160 / 158,54$

Forestry

R2420 / 177,63$

R2273 / 166,84$

Farm Workers

R2420 / 177,63$

R2273 / 166,84$

Hospitality<10 employees

R2600 / 190,84$

R2441 / 179,17$

Whole sale and retail Area

R2613 / 191,79$

R2453 /180,05$

Contract Cleaning Area C

R2679 / 196,64$

R2516 /185,67$

Hospitality > 10 employees

R2898 / 212,77$

R2723 /199,87$

Private Security

R2901 / 213.93$

R2724 / 199,94$

Contract Cleaning Area A

R2941 / 215,36$

R2762 / 203,00$

Drawing on the same data the table below provides a picture for minimum wages set by the Department of labour at sectoral level – referred to locally as sectoral determinations. The presentation of the data is delineated by worker category. It is critical to point out that Domestic workers had the lowest wage at R1, 632 per month for 2014, while the contract cleaning had the highest, at R2, 941, both yet again sectors which are characterised by precarious working conditions and dominated by women.

The year 2012 marked a turning point in South Africa history in relations to minimum wages for mine and farm workers, when mine workers at Marikana mine and the farm workers  in the Western Cape at different intervals in 2012, wage struggle against their bosses for improved wages and working conditions. The struggle was formidable and marks a turning point not only for workers in this sector, but for all workers as it ripened the stage for the contentious and unresolved debate on a NMW to re-emerge with new vigour.

2.2 From a minimum wage to a National Minimum Wage: Demands by South African workers

Wages in South Africa have always been determined through negotiating between employers and trade unions on behalf of workers. This negotiation then concluded an agreement on minimum wages and conditions of employment in a given sector. This implied that by law employers were legally obliged to pay no less. Inherently this implied and that most vulnerable employees from were protected against excessive exploitation. While minimum wages are set, it does not preclude the right of workers to demand and negotiate for higher wage through their unions or representatives. South African workers have realised this right, but are now demanding a national minimum wage (Cottle, 2015). Noting the income disparity in South Africa between the highest and lowest earnings in 2010, the top 5% earned close to 30 times more than the lowest 5% of employees. In 2014, this variance had increased to almost 50 times.

” The bottom 25% (2. 9 million) of workers earned below R1, 574 per month, 50% (5.8 million of an 11.7 million workforce) of workers earned below the median wage of R3, 033 per month.” (Whereas the top 25% of workers (or 2.9 million) earned up to R8, 000 per month, the top 5% (585 000) of workers earned up to R24, 000 per month (Cottle, 2015: 18).

2.3 Addressing the gender wage disparity through the NMW.

In terms of gender for the period 2010 - 2014, the monthly median earnings for men increased from R3, 200 to R3, 500 while the increase for women was a mere R200, (from R2, 400 to R2, 600), reflecting a huge discrepancy of R900 per month between the genders  (Benjamin, 2015).

It is strongly argued that a securing a National Minimum Wage (NMW) for all workers apart from the key significant gains to be made for workers across the board, its most critical point of interventions would be settling the gender disparity especially at the lower end of the labour market which is where women predominate and precarious work feminised.

3. Conclusion

Workers struggles in South Africa for decent work and minimum wages while having made significant strides over the years have not fundamentally transformed the lives of workers their families and the working class as a whole. South African workers by and large live below the poverty line. This crisis is exacerbated by the attempts to remove the finance minister Pravin Gordhan and the # Fees must fall and # Zuma must fall campaigns. The cumulative effect has placed strain not only on the currency, but on workers and the working class, with rising costs for food, water, and other basic essentials, and ironically fuels the imperative for a NMW. Needless to say the jury is still out as debates forge on around the NMW wage, in the interim sectors like mining continue to shed jobs. According to STATS SA: the  South  African growth rate “annualized 3.3 percent on quarter in the three months to June of 2016, recovering from a 1.2 percent contraction in the previous period and beating market expectations of a 2.3 percent increase. Stats SA further reports that South Africa's unemployment rate slightly decreased to 26.6 percent in the June quarter of 2016 from 26.7 percent in the three months to March. Unemployment Rate in South Africa averaged 25.31 percent from 2000 until 2016, reaching an all time high of 31.20 percent in the first quarter of 2003 and a record low of 21.50 percent in the fourth quarter of 2008. 

References:

  1. Benjamin N; 2015: “How Can a National Minimum Wage Contribute To Narrowing The Gender Pay Gap and Moving Us Closer To Gender Equality?” Labour Research Service, Vol 15.
  2. Cottle, E 2015: At what level should a National Minimum Wage in South Africa be fixed?  Labour Research Service, Vol 15 
  3. Cottle E, 2015; Towards a South African National Minimum Wage, International Labour Organization 2015 
  4. Coleman, N. 2013; National Minimum Wage, Paper  no 7, Global Labour University, International Labour Organization,
  5. Labour Research Service 2015;  Bargaining Indicators, Vol 15, LRS
  6. Labour Research Service 2015,  Bargaining Indicators, vol 8 ,no.8,  LRS
  7. Neva Makgetla, 2015; 20 year review of  the South African labour market and its institutionsUnpublished working paper for TIPS
  8. Statistics South Africa, 2016

[1] Taken from, Eddie Cottle, 2015: Glossary Towards a South African National Minimum Wage

[2] Source: Calculated from, Statistics South Africa, Labour Force Survey September 2001 and Quarterly Labour Force Survey, Third Quarter 2008 and 2013, series on employment by main industry. Electronic databases.

[3] Calculated from series on earnings for employees and for employers and the self employed, race and gender, in Statistics South Africa. Labour Market Dynamics 2012. Electronic database.