Farmworker minimum wage battle: Is it too little or will it increase food prices?

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Farmers in drought-stricken areas, such as the Northern Cape, Eastern Cape and Western Cape, continue to face major financial challenges.
Farmers in drought-stricken areas, such as the Northern Cape, Eastern Cape and Western Cape, continue to face major financial challenges.
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  • The minister of employment and labour announced that the national minimum wage for farmworkers will increase from 1 March.
  • A farmers' union warns this is not sustainable and will lead to higher food prices and job losses.
  • The Black Farmers' Association, however, feels the increase is still not enough.

Government's increased minimum wage for farmworkers will simply lead to consumers having to pay more for food, farmers' union TLU SA has warned.

Employment and Labour Minister Thulas Nxesi announced in the Government Gazette this week that the national minimum wage for farmworkers will increase by 16% to R21.69 per hour, starting on 1 March.

According to TLU SA president Henry Geldenhuys, the ability of farmers to absorb this level of compensation is almost impossible.

"We shudder to think what the consequences will be in terms of unemployment in SA as soon as the adjusted minimum wage kicks in," Geldenhuys said this week. 

In the union's view, government should rather support the agricultural sector by creating sustainable job opportunities. TLU SA says it does not agree with government's view that an increase in the minimum wage for farmworkers will put them in a better position.

In December last year, TLU SA objected to the implementation of an increased minimum wage and advised that government should set aside the idea completely until the economy starts growing again and unemployment decreases. 

"It seems the National Minimum Wage Commission did not pay attention to any of the input from the agricultural sector," said Geldenhuys.

"If someone opts to work for R100 per day in order to earn an income, rather than relying on a grant of R40 per day, that should be their choice."

Losing jobs to mechanisation

Dr Frikkie Maré of the Faculty of Agricultural Sciences at the University of the Free State says 16% is about three times inflation and not all producers can afford such an increase. He expects that - especially in labour-intensive agricultural sectors - producers might now look at greater mechanisation. This would then lead to farmworkers losing jobs.

"Before, mechanisation might not have made sense due to labour having been cheaper, but now it might become more attractive to producers," explains Maré.

He also wonders whether many farmers, who up to now did not implement certain legally allowed deductions for benefits such as accommodation, might start doing so.

"That could mean that some farmworkers might end up with less money in their pockets on a net basis than before the minimum wage increase," says Maré.

'Mere peanuts'

However, in the view of Dr Lennox Mtshagi, president of the Black Farmers' Association of SA, the minimum wage increase is still "mere peanuts".

"It will not uplift our people. It is nothing. We don't welcome the increase and in the near future we will engage with the minister again. Farm labourers are making sure every South African has food on the table. We want better wages for those people. Like teachers and policemen, they play key roles in our lives," said Mtshagi.

The agricultural body Agri SA has echoed the view of TLU SA, and said earlier this week that the increased wages for farmworkers would be unsustainable for the sector. 

In its view, the double-digit increase will grow the agricultural wage bill to above 30% of production costs and this cost will have to be passed on to consumers, "making food unaffordable to those the minimum wage is trying to assist". 

Jobs in jeopardy

"Agri SA and its affiliates take the needs of farmworkers and their families seriously. However, the poorest households are in need of access to employment and to retain that employment. The immediate increase will place many jobs in serious jeopardy," Agri SA said in a statement.

"Agri SA brought the fact to the attention of the department that the agricultural sector is a multifaceted sector that consists of mostly small-scale and medium-scale farmers, with large-scale commercial farmers only making up a small percentage of the industry. These small-scale and medium-scale farmers have already endured the effects of the recent severe drought, compounded by the effects of the pandemic."

'Ignored by government'

The industry body also points out that its input was seemingly ignored by government in the process of determining the increase. 

"Sub-sectors such as the wine industry have endured two bans on sales, while tobacco, wool and barley producers were not declared essential services during the hard lockdown and their activities were seriously hampered during the last months. These industries are yet to recover from losses suffered during the hard lockdown, which has severely impacted the demand from the agriculture sector," explains Agri SA.

"Farmers in drought-stricken areas, such as the Northern Cape, Eastern Cape and Western Cape, continue to face major financial challenges. If farmers cannot produce food affordably and employ agricultural workers on a large scale, this will result in a food crisis and large-scale social upheaval as food insecurity and unemployment start to take root."

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