Minimum wage has serious implications for business

The BMF's Dumisani Mpafa supports a national minimum wage in principle but warns the implications have to be carefully assessed as it could increase the ranks of the unemployed. Image: BMF

Several trade unions, however, strongly support the proposal and have indicated they will fight hard to get it adopted.

The comments were made during a workshop on its introduction held by Parliament's portfolio committee over several days. The issue was placed on the agenda by President Jacob Zuma, who said in his state of the nation address earlier this year that the government would investigate the proposal over the next five years.

Business Unity SA and the Black Management Forum (BMF) warned in submissions to the committee that the issue was a complex one, which could have negative consequences for the South African economy.

Democratic Alliance MP Michael Bagraim questioned the need for a national minimum wage when Labour Minister Mildred Oliphant already had the power to extend sectoral determinations.

Implications need to be carefully assessed

BMF Board Member and Chairman of its Policy and Research committee, Dumisani Mpafa, and Head of Research Mbhazima Makhubela supported a national minimum wage in principle as a way to address inequality. However, they stressed that the full implications of such a policy needed careful examination before it was adopted.

A total of 73,000 jobs were lost in agriculture after a minimum wage was introduced and with South Africa's already high unemployment rate, the economy cannot afford further job losses. Image: LED

"Its introduction should not be seen as a panacea", they said. "This economy is constrained by myriad challenges, (such as) low growth rates, under-investment by the private sector, structural unemployment and an increasingly volatile industrial relations environment."

They said the introduction of a national minimum wage would not achieve much if it were not accompanied by a serious rethink on executive pay, including the possibility of placing a lid on it.

Earnings differential

"The earnings differentials between executives and workers in this country are obscene," the BMF representatives said, noting SA was one of the most inequitable countries in the world.

They referred to research by University of Cape Town economist Nicoli Nattrass, which showed that rapidly rising minimum wages in non-metropolitan areas had driven many low-wage, labour-intensive manufacturers out of business. Clothing and textile factories that survived between 1995 and 2014 did so because they did not comply with minimum-wage determinations.

But Congress of South African Trade Unions Strategist Neil Coleman said much misinformation was being spread to oppose a national minimum wage, the introduction of which the federation would fight hard for. "The advantage of a national minimum would overcome the fragmentation of existing sectoral determinations," he said.

Association of Mining and Construction Union General Secretary Jeff Mphahlele urged government to implement the proposal.

Busa Executive Director Vanessa Phala said it was researching international and local experiences. "It is important to avoid a repetition of events in agriculture which led to the loss of about 73,000 jobs," she said.

Source: Business Day via I-Net Bridge