FEDHASA Cape pleased with minimum wage increase

Peter Cumberlege, legislative consultant for FEDHASA Cape - the official voice and representative of the hospitality industry, said: "An increase to the minimum wage has a far greater impact on smaller businesses, such as boutique hotels, bed and breakfasts and privately owned restaurants, as the larger hospitality groups and independents usually pay well above the minimum.

"Therefore, in addition to motivating constraint in our official submission to the Department of Labour, it was equally important to ensure that our Small Accommodation and Restaurant Segments were well represented at each public hearing to ensure that the increase was as fair as possible.

Expected as high as 3%

"As a result of the recent wage turmoil in the Western Cape agricultural sector, my expectation was that this increase may well have been as high as 3% - so I am pleased with the outcome."

Michelè de Witt, chairman of FEDHASA Cape, said: "An increase to the minimum wage can often have a detrimental impact on small businesses - and on a larger scale - the economy. Faced with higher labour costs, these businesses raise their prices, cut their profit margins - or retrench staff. Competitive pressures usually prevent them from boosting prices, which leaves them with the unpleasant choice of either cutting jobs or accepting lower profits. In fact, economists estimate that each 10% rise in the minimum wage leads to a 1% to 2% decline in the employment of low-skilled workers."

The current wage increases have been determined by utilising the CPI, excluding the Owner's Equivalent Rent for the month of April. The actual minimum wage for establishments with 10 or less employees is R2514.86 per month, and R2692.74 per month for those with 10 or more employees.

"We are extremely pleased with this outcome, because although it is necessary for businesses to take account the rising cost of living and adjust wages accordingly, we believe that this increase still grants our Small Accommodation and Restaurant Segment members a fair chance at growing their businesses," concluded de Witt.