Minimum wage bill erodes R20m deal

Johannesburg - The National Minimum Wage (NMW) Bill has backtracked from last year’s agreement between unions and businesses in numerous small ways that water down the watershed new intervention in the labour market, warn unions.

A joint submission by union federations party to the talks warns that this kind of chipping away at the already-contentious R20-per-hour deal “will lead to major unhappiness and possible action”.

The three federations – Cosatu, Nactu and Fedusa – have been taking enormous flak from their new rival Saftu, which has outright rejected the R20 deal.

Saftu is larger than Nactu and Fedusa combined, but had no input to the deal with Nedlac, the body comprising government, business, labour and community organisations.

The labour department finally acknowledged this week one grave mistake in the bill which City Press first reported on in December last year.

This is the changed definition of “worker” in the bill, making it exclude independent contractors.

This sloppy change left parts of the accompanying amendment bill to the Basic Conditions of Employment Act (BCEA) nonsensical.

Shane Godfrey, a senior researcher at the University of Cape Town’s labour and enterprise policy research group, pointed this out shortly after the bill was released for comment last year.

The department said it was definitely a mistake and not an intentional regression on the coverage of the bill.

The mistake crept in “during the certification process between the office of the chief state law adviser and the department’s drafters”, it said this week.

“Our understanding is that we will submit our consolidated list of corrections and amendments on all three bills to the portfolio committee,” said department spokesperson Teboho Thejane.

“This process will also have to coincide with the portfolio committee’s own engagement with the public in a comments process. While we acknowledge that there are no definite dates attached to the process we envisage it will take place in the next two months,” he said.

It has become increasingly unlikely that the NMW will be implemented by Workers’ Day this year as had been planned.

The business entity party to the NMW talks, Business Unity SA (Busa), has made no submissions on the bill, but acknowledges the mistake around the definition of “worker”.

“Generally, the bills align with the agreements reached. While business cannot say that we are entirely happy with the bills, the content thereof reflects the agreements reached and we will be standing behind what has been agreed,” said Busa CEO Tanya Cohen.

But Cosatu, Fedusa and Nactu have pointed out several points where the bill falls short of the deal they struck at Nedlac and make some far-reaching proposals to shore up the NMW:

  • Like the Nedlac deal, the bill starts farm workers and domestic workers off at 90% and 75% of the R20 NMW, respectively. But the bill has no explicit mechanism for closing this gap in time; the Nedlac deal called for equalisation within a few years. The unions want a single NMW to be universal by 2020.
  • The bill proposes a formula for fines to be paid by employers that underpay workers. The unions say this is far too paltry a penalty. Instead, offenders should be barred from doing business with the state and serial offenders should face criminal sanction, they say.
  • The unions have warned against the sloppy destruction of the current sectoral determination system proposed by the BCEA amendments that accompany the NMW bill.

As things stand the bill might even reduce wages in many sectors because sectoral determinations fall away after three years and the bill simply assumes those workers will be catered for by collective bargaining by then.

The unions propose that determinations get extended for longer if these bargaining structures fail to materialise.

  • The bill allows employer groups to apply for exemptions instead of employers having to apply individually and prove they cannot afford it. This opens the door to blanket sectoral exemptions and should not be allowed, said the unions.
  • The bill requires that a medium-term target for raising the NMW gets set only several years from now. The unions want a target within a year.
  • The bill does not explicitly state that unemployment insurance and other contributions need to be on top off, and not part of, the R20. The unions say all deductions must be limited to 25% of the bill.
  • The bill does not guarantee that the NMW will rise by at least inflation even though the Nedlac agreement was that the real value of the NMW would be protected.

The unions say the bill should make the adjustments of the NMW take inflation and wellbeing into account.

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