Inside Labour: Discontent and the coming minimum wage

FUEL prices went up again last week, with hardly a whisper of comment. Perhaps we have become inured to such economic pain. Or perhaps, like some media houses, we misread the latest statistics, a good example of why the expression 'lies, damned lies and then statistics' remains current.

The latest figures from the statistician general reflect the change in prices from January to August when there was a relative fall. But since August the price of petrol has risen by 82 cents a litre, diesel by R1.06 and paraffin by 29.5c, surpassing the price levels for January.

So the fuel price rise does amount to pain as it will again adversely affect every wage earner - and increase the desperation among the millions of unemployed: fuel price rises feed fairly quickly into the overall economy.

The effect is usually felt fairly rapidly in fares for taxis, the country’s major means of commuter transport. And, as commuters around the country legitmately grumble, once fares go up they seldom, if ever, come down.

The consumer ultimately pays

Because food is trucked from place to place, the increased cost of (usually) diesel is passed on. The consumer ultimately pays. And there are regional differences: the ongoing drought in the Western Cape, for example, means generally higher prices for vegetables in that region.

Paraffin also remains a major source for heating and cooking in rural areas and in informal settlements. As a result, poor families, using paraffin to cook, are hit at least twice: for the cooking and any rise in the price of food, even if the official inflation rate (CPI) is lower this month or year than last.

There will always be debates about how much a fuel price rise will affect different sectors of the population. But what is certain is that it will adversely affect the disposable income of every family, although in disproportionate ways.

A good example is in a wage gap in municipal pay. A worker carrying out the dirty, smelly and essential labour of rubbish collection, for example, earns on average R72 000 a year, while a white collar councillor is paid between R450 000 and R830 000.

Herein lies one of the reasons for the vicious inner party battles under way in several regions. However, that is a separate issue although it, too, is a reflection of economic desperation.

Those men and women fortunate to have jobs and who will suffer the most pain through price rises will be in the low paid areas such as workers in the domestic and farm and forestry sectors, along with those who labour in the hospitality industry.

In the hospitality and domestic sectors in particular, there is a great deal of part-time work, but even for those individuals employed for a 45-hour week, pay rates are often well below any estimated poverty line.

Wages in these sectors are set by ministerial determination and, in recent years, have been based on the official inflation rate plus 1% or up to 2.5%, ostensibly to make up for the historic lag in pay. However, the quoted, national inflation rate varies from region to region and between urban and rural areas.

And, as this column has frequently pointed out, official inflation is invariably much lower than the rate experienced by the low paid because of their spending patterns.

The estimated 1 million domestic workers, for example, have in nominal terms improved their minimum wages by 8.5% over the past decade. But even on official calculations, this means only a 3% increase in real pay.

Today the minimum - in probably most cases the actual - hourly rate for a domestic worker in a metropolitan area is R12.42, or R559 for a 45-hour week. This is scheduled to be adjusted by the current inflation rate plus 2.5% in December.

If that rate is assessed at 6%, this will add just R205.92 to the R2 422.54 monthly pay of an urban domestic worker. Inflation may be assessed at less.

Farm and forestry workers are marginally better off and their next pay rise is scheduled for March, when the government promises to introduce a national minimum wage of R3 500 a month. Currently, their minimum hourly pay rate is R15.39 or R138.52 for a nine-hour day, with weekly income set at R692.62 or R3 001.13 a month.

Minimum rates in the hospitality industry range between R16.36 to R18.25 an hour or R3 193 and R3 559 a month. These rates are scheduled to be increased by CPI plus 1.5% in July next year.

Against this background, it is easy to see why many in the labour movement see the introduction of a R3 500 minimum wage as only helping to fuel the fires of discontent, even if it brings the ministerially determined wages up to that level.

* Add your voice or just drop Terry a labour question. Follow Terry on twitter @telbelsa.

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