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Towards a National Minimum Wage Social Dialogue

You’re demanding 15 bucks an hour to slap a burger on a bun?  The National Minimum Wage conundrum in South Africa

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Author: Isobel Frye

In late May 2015, our Director at SPII, Isobel Frye, attended a five-day study tour to Geneva and Berlin as part of community constituency’s negotiating team on the national minimum wage (NMW) at National Economic Development and Labour Council (Nedlac), the statutory Nedlac’s social dialogue institute in South Africa.

In 2014, the ruling party in South Africa, the African National Congress (ANC) committed to investigating the feasibility of introducing a single national minimum wage in its election manifesto. Currently, wage setting in South Africa is undertaken under a number of different auspices, including sectoral bargaining councils and statutory sectoral determinations set by the Minister of Labour for sectors seen as particularly vulnerable, such as domestic workers and farm workers.  Drawing on the significant progress in addressing poverty, inequality and unemployment experienced by Brazil with the victory of former president Lula da Silva and the workers party, the ruling alliance agreed that it was worth investigating the applicability of the three-headed reform package introduced in Brazil, which included the introduction of a national minimum wage, a reform of their collective bargaining system, and the expansion of the cash transfer bolsa familia social protection package.

In November 2014, the Deputy President (DP) chaired a labour indaba under the auspices of Nedlac.  One of the most significant outcomes of this indaba was the commitment of all the social partners to negotiate the modalities of the introduction of a single NMW, with the agreement that a progress report would be submitted to the DP in July 2015.

Since then, two task teams have been established to undertake the preparatory work to enable the committee of principals, which is made up of political principals of the social partners and the DP, to embark on formal negotiations.  These two teams are tasked with investigating the modalities of the introduction of an NMW, reducing wage inequalities, promoting social protection, and investigating reforms of the current collective bargaining system respectively.  The task teams have met frequently and are chaired by the Commission for Conciliation, Mediation and Arbitration (CCMA) commissioner Ronald Bernickow. It quickly became apparent, however, that the preparatory processes were going to take far more time than was initially supposed and the work of the task teams was then extended for an additional three months.

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The International Labour Organisation (ILO) has been extremely proactive in terms of supporting the work of the task teams on technical issues.  Furthermore, research on design, impact and related issues is also being undertaken both by the Department of Policy Research Unit (DPRU) at the University of Cape Town and the University of the Witwatersrand.

While the proceedings at task team meetings are frequently arduous, progress is being made towards the setting of a NMW.  The outstanding questions include:

  • the level of a NMW when it is introduced
  • mechanisms for increasing the NMW
  • the legal and institutional architecture for the administration of a NMW, similar to the low pay commission in the United Kingdom
  • the possibility of initial exclusions and exemptions of sectors and/or individual employers, and if this is agreed to, for how long
  • enforcement and incentives to ensure compliance.

The study tour was arranged by the German Social Democratic Friedrich Ebert Stiftung through their South African, Switzerland and German offices – and the experience was extremely valuable.  On the first two days we met at the International Labour Organisation (ILO) in Geneva and had discussions with numerous experts who provided case studies and data from across the world in respect of the design, impact and options for minimum wages. The last three days were spent with a variety of leaders in Germany who had been involved in the negotiations and design of the national minimum wage introduced in Germany in January 2015, at €8,50 per hour. These included ministers and government delegates, German Federation of Trade Unions (DGB), the united service trade union and in Metall (a metalworkers trade union), the German Employers’ Association, and last but not least, the formidable Zolle, or customs officials whose responsibility it is to enforce the payment of the NMW which is done with great vigour and are subject to criminal prosecutions.

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It is quite clear that wage policy in South Africa has to shift if we are to break from the apartheid wage structure that continues to dominate the gross income inequalities.  The reluctance of certain social partners to embrace this step as a necessary development in the longer-term sustainability in South Africa is unfortunate, as are the veiled threats of large-scale retrenchments.  Our constitution talks about the need to heal the past divisions in our country – the introduction of an NMW and comprehensive social protection to address the needs of the unemployed as the first step towards the attainment of a decent living level is long overdue. We call on all to support this initiative.

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