National Minimum Wage boost dealt no knocks to the economy yet - Nxesi

Minister Thulas Nxesi.
Minister Thulas Nxesi.
  • Employment and Labour Minister Thulas Nxesi said the National Minimum Wage has benefitted millions of low-income earners since its introduction.
  • He said the increased rate to R23.19 per hour was expected to benefit up to 892 000 domestic workers and 800 000 farmworkers.
  • In addition, the UIF also helped millions of workers who lost their ability to work due to the Covid-19 national lockdown restrictions and last year's July unrest.

The recently adjusted National Minimum Wage has delivered no major knock to employment figures, Employment and Labour MinisterThulas Nxesi said on Tuesday. 

Nxesi tabled his budget vote in a virtual sitting of Parliament on Tuesday afternoon, against the backdrop of strikes or threats of industrial action over wages at companies including Sibanye Stillwater, York Timber Holdings and even the South African Revenue Service (SARS).

Nxesi said since its introduction in 2018, the National Minimum Wage set a precedent in the protection of low-earning (vulnerable) workers in South Africa and "provided a platform for reducing inequality and the huge disparities in income in the labour market".

The 6.9% adjustment increased rates from R21.69 to R23.19 per hour effective from 1 March this year, applicable to all sectors, including the farming and domestic work sectors. It would not set the South African economy back, but benefit millions of low-income earners in various sectors around the country, Nxesi said.

He added that the increase is expected to benefit up to 892 000 domestic workers and 800 000 farmworkers.

"Contrary to the opposition's belief that the introduction of the minimum wage would have a negative impact on employment levels, the research findings indicate that there is no major negative impact on employment as a result of the National Minimum Wage," Nxesi said.

A cushion for the vulnerable

Nxesi said while South Africa's economy was already underperforming before 2020. Factors that worsened poverty, inequality, and unemployment include the restrictions associated with the Covid-19 national lockdown, the July riots, geopolitical instability, and devastating floods.

READ | Nxesi denies Labour Migration Policy is apartheid-style job reservation

He said in recent years, the Unemployment Insurance Fund (UIF) played a significant role in cushioning workers and businesses from these headwinds, with over R64 billion spent towards the Covid-19 Temporary Employer-Employee Relief Scheme (TERS).

"In response to the July riots, TERS funded another programme, Workers Affected by Unrest, or WABU. To date, over 4 000 employees were paid the relief at an expenditure of about R14 million. More WABU payments will be made upon completion of the due diligence process," Nxesi said.

He said the Industrial Development Corporation approved 41 qualifying transactions worth R2.3 billion. He said R130 million of this was for companies in distress and struggling with job preservation, particularly SMEs, black industrialists, women-owned companies and startups.

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