The type of minimum wage SA actually needs

Cape Town - South Africa needs a differentiated multi-minimum wage arrangement that must be complemented by other policy measures, cautioned the National African Federated Chamber of Commerce and Industry (Nafcoc).

The independent and non-profit business support organisation in a statement on Friday welcomed the appointment of an expert panel on minimum wage with some reservation.

Deputy President Cyril Ramaphosa, in his capacity as chair of the Committee of Principals of the National Economic Development Council (Nedlac), appointed a seven-person panel to advise on an appropriate level at which the national minimum wage could be set.

The committee comprises representatives of government, labour, business and the community. It is charged with, among others, determining the national minimum wage.

The panel is chaired by Prof. Imraan Valodia, who is a part-time member of the Competition Tribunal and a commissioner on the Employment Conditions Commission.

The other members of the panel are macro strategist Mamokete Lijane (Aluwani Capital Partners); commercial law expert Debbie Collier of the University of Cape Town (UCT); poverty and inequality expert Prof. Murray Leibbrandt of UCT; Ayabonga Cawe (economic justice Manager at Oxfam South Africa; skills development and training expert Dr Siphokazi Koyana; and economist Dr Patrick Belser of the International Labour Organisation.

"Nafcoc believes that the credibility of the panel would have been greatly enhanced if the interests of SMME's, particularly black SMME’s, were directly represented in the panel," it said.

Nafcoc said that it has been monitoring the debate on the minimum wage for some time and submits that a policy on minimum wage cannot be concluded in isolation and not take into account the unique circumstance of SMME's.  

"The SME sector, from which Nafcoc draws its members is estimated to account for 90% of all for formalised businesses, provides employment for about 60% of labour force and contributes close to 34% of GDP," it said.  

"If you include the cooperative and informal sector the size and role of Nafcoc constituency become very significant despite the importance and the centrality of the SMME to inclusive growth and development of the South African economy".

Nafcoc said that the SMME sector is faced with constrains and real challenges ranging from "restrictive laws, unreasonable health regulation, punitive tax and license fees including the current 'sugar tax' to limited financial support and banking access. Yet Big business is supported by government in terms subsidies and other incentives."

A national minimum wage, said the organisation, is an extremely important policy tool in redressing current poverty, inequalities and dependency.

"Nafcoc is of the view that while minimum wage is necessary policy tool. It is by no means sufficient. It has to be complemented by other key policy measures to minimise the unintended negatives economic effects which may result in its implementation.

In this regard Nafcoc is of the view that a differentiated multi-minimum wage arrangement will be appropriate to South Africa.  

"This minimum wage regime should be carefully sequenced in a way that it does not undermine other important transformative economic initiatives. We are of the view that the must lowest minimum must be above the poverty line and the highest should be consistent with the living wage.

"Currently there are minimum wages that are in place in terms of various bargaining council wage determinations. We believe our proposal will blend perfectly well with the current arrangements, " said Nafcoc.

It added that in their view a minimum wage will contribute towards better protection; reduce inequality and alleviate poverty for those with jobs. However, for the 9 million unemployed, the mechanism is simply "meaningless and academic".

"To the self-employed and SMME, a much more nuanced approach is needed," said Nafcoc.

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