Considering the high cost of living alongside other socio economic challenges, political parties agreed at the National Economic Development and Labour Council (Nedlac), to increase minimum wage to R20 per hour.
The parties agreed on Monday not just on the new minimum wage of R20 per hour, but also on the establishment of a National Minimum Wage Commission (NMWC) that will be mandated to review the minimum wages every year.
This agreement comes in response to President Jacob Zuma’s call in the 2014 State of the Nation address where he urged the National Economic Development and Labour Council (NEDLAC) to explore issues such as wage inequality in the Country.
Following this, an Advisory Panel (Panel) was established in August 2016 to consult with NEDLAC, its social partners, experts from various areas of the labour market, and other interested parties.
The proposed starting amount suggested by the Panel is R3,440 with an hourly wage of R20, which would make the weekly wage R800 (if the employee works for 40 hours a week).
The new national minimum wage will be officially signed off on Tuesday, 7 February with President Jacob Zuma officially announcing the new wage at this state of the nation address on Thursday (9 February). However, the wage will be officially instituted as of May 2018.
Among the first assessments of the effect of the introduction of the minimum wage will be how it affected the country’s unemployment level which went up to 27% in the last quarter of 2016.
Economists have warned that setting any national minimum wage would likely lead to job losses – while other sectors have argued that the current system for determining wages suits the country better.
“The social partners commit to make every effort to avoid job losses that may arise in the short term from the introduction of the new minimum wage, and further commit to grow employment in the medium to long term through inclusive growth,” the document of agreement says, pointing out that it would be accompanied by a “code of good practice for collective bargaining, industrial action and picketing, as well as an accord on collective bargaining and industrial action”.
A signing ceremony will be held in Cape Town on Tuesday even as President Jacob Zuma is set to announce the minimum wage during his state of the nation address on Thursday.
The Presidency also confirmed that Zuma will witness the signing of the agreement on the minimum wage along with Deputy President Cyril Ramaphosa, who spearheaded the Nedlac process.