Over the past few weeks, the labor movement has achieved a symbolic victory by announcing the latest amendments to the national minimum wage.
The minimum wage system, officially enacted in 2019, was a major victory for workers at the lower end of the income scale, who are characterized by a more fragile foothold in the labor market.
advertisement
Continue reading below
Read: Understanding the National Minimum Wage Law [Jan 2019]
In its first iteration, the minimum wage sought to provide guidance on how employers in various sectors should compensate workers for their contributions.
Previous models of disaggregated sectoral decisions were applied inconsistently, reducing each worker's chance of earning a fair wage depending on the lottery of which sector they happened to fall into. Ta.
Before the introduction of the minimum wage system, the open-ended question of what constituted fair remuneration was limited to employment where workers could safely negotiate down the wage curve in the knowledge that there was no objective standard. There was a view that he retained a great deal of authority. Points for comparing offered offers.
Without collective bargaining mechanisms, workers seek opportunities to work against the reality that the country's unemployment crisis means that employers will eventually find someone willing to accept whatever wage they are offered. , they will have to map their own feelings of hopelessness.
For workers whose skill sets mean they can only compete for entry-level clerical jobs, low barriers to access mean that the intensity of competition for the few jobs on offer completely eclipses individual workers' bargaining power. meant to erode.
“Government overreach”?
The introduction of the minimum wage system naturally attracted opposition from free market fundamentalists who saw it as another example of government overreach in the labor market.
The rationale behind this view is that workers should be able to freely bargain for themselves and that when an employer's labor needs and a worker's job search align, alignment of wills is achieved and employment The idea was that a relationship would form.
What this view omitted to consider was the reality that the history of labor relations in South Africa, particularly in the low-wage sector, had a history of exploitative practices that required an element of redress. was.
Wage bargaining to reduce pay does not reflect old practices of indentured servitude, but employees lack bargaining power and are unlikely to respond to employers who offer exploitative wages. I couldn't sue.
The second argument was that the introduction of a wage floor would not only impede private contracting relationships but also lead to job losses as employers would refuse to pay wages deemed to be above their ability to pay.
Since 2019, various attempts have been made to assess the impact of minimum wages on employment patterns and the labor market as a whole, with results that are controversial at best.
Less at issue is the reality that minimum wage workers are still exposed to employment access costs, such as transportation costs, and consume a disproportionately high portion of their wages.
read:
Rising food prices hit the poor hardest
Can you live on minimum wage in SA?
advertisement
Continue reading below
In recent years, inflation and the cost of living have sharply increased the prices of basic goods and services that low-income workers depend on, reducing the value of wages.
Therefore, inflation adjustments in the minimum wage help workers compensate for this dilutive effect.
A question that remains of interest to labor market observers is the question of the amount of adjustment.
The general minimum wage adjustment rates for the past two years were 9.6% in 2023 and 8.5% in 2024.
read:
The range of these increases is remarkable compared to general inflation, which has only subsided after the trampoline effect of the pandemic and the effects of geopolitical conflicts.
This means that continued government intervention is important for the future of workers, as rising employment costs above inflation will cause some employers to assess their ability to maintain wages, especially when they cannot pass them on. This could reignite arguments among skeptics that it will have a negative impact on the economy. Additional costs to customers.
Compliance avoidance
A more difficult issue relates to how employers who abuse this system can still avoid compliance with the law.
Employers who trade on the desperation of workers in remote areas where laws are seen as more elusive than available, know that workers will accept even meager wages to make ends meet. Therefore, it is safe to ignore the wage floor. Escape from poverty.
Sectors with high rates of foreign worker employment are even more likely to be underpaid given the risk that foreign workers may violate immigration or nationality laws.
When workers find themselves in this conundrum, what should be a contract based on the need to prevent exploitation and promote fair wage practices ends up being replaced by a below-minimum wage in exchange for maintaining a foothold in the economic flow. It will be replaced by morally dubious contracts to trade. It also avoids exposure to undesirable immigration rules.
The country's long-standing problems with dealing with legal compliance, immigration patterns and regulatory loopholes mean such cases will continue for many months to come.
