Industry reaction to National Minimum Wage increase

The national minimum wage (NMW) will increase to R28.79 per hour from 1^st March 2025. This is a 4.4% increase from the current minimum wage of R27.58 per hour, or around 1.4% above the current inflation rate.

NMW for 2025 was announced by the Minister of Employment & Labour, Nomakhosazana Meth, and published in the Government Gazette number 11792 on 4^th February 2025.

Forestry workers can be found in remote rural areas in the Eastern Cape

The NMW applies to all workers in South Africa, including farm and forestry workers and domestic workers.

The only exceptions to this NMW are workers employed in expanded public works programmes like Working for Water and Working on Fire, who are entitled to a minimum wage of R15.83 per hour from 1^st March 2025. Learnership allowances have also increased.

The NMW for 2025 translates into R230.32 per 8-hour day or R1,151.60 for a 40-hour week.

FSA slams DFFE on state forests

Commented Forestry South Africa's Michael Peter: "FSA welcomes the inflation-related increase in the NMW, which considers the extremely difficult trading conditions facing the forestry Industry while also seeking to protect the livelihoods of the 145 000 workers in forestry.

"Despite this reasonable increase, current and potential forestry jobs remain in great jeopardy because of the failures of the Department of Forestry, Fisheries and the Environment (DFFE) to partner with the private sector to recapitalise degraded state forests, to accelerate new afforestation and to protect the plantation growing stock of the country. All of these factors threaten existing jobs in forestry, making growth in employment in the sector impossible.

"FSA remains committed to working with the state and other partners to overcome these obstacles created by the DFFE, as doing so will protect and increase employment, secure new fibre to underpin the many multi-billion investments already made and sustain the forestry industry in South Africa."

Sawmillers under pressure

Executive Director of Sawmilling SA, Roy Southey, said that the sawmilling industry has had an exceptionally tough 2024, and several mills closed during the year. "To have a 4.4% increase in the minimum wage adds considerable expense for sawmilling businesses, so we do not welcome the increase. But it could have been worse," said Roy.

He said the high cost of logs, load shedding, falling demand for sawn lumber, and no price movement contributed to sawmillers' woes in 2024. Mills that closed during the year include Stevens Lumber Mill in Limpopo and Merensky's Singisi mill, while others downscaled their operations to make ends meet.

Efforts to gain access to the Australian South African structural timber market also came to nought as their industry went into a severe slump in 2024.

Roy said the good news is that sawmilling prospects for 2025 are looking a bit brighter as business has started picking up.

Agri-SA CEO Johann Kotze commented that the increase "reflects the complex economic landscape currently faced by the agricultural sector in SA" and that the NMW Commission has strived to "take a balanced approach" in its decision-making process.

Meanwhile, the trade union federation Cosatu welcomed the "progressive increase" in the NMW for 2025.

The National Minimum Wage Act allows employers or employer organisations to apply to the Department of Employment and Labour for exemption from the NMW if they can prove that the minimum wage is unaffordable. This loophole provides a small window of opportunity for under-pressured employers to get authorisation to pay lower wages. Still, it is likely to be an administrative-heavy process.

16.1% minimum wage increase for forestry workers

The National Minimum Wage for farm workers – including forestry workers – has been set at R 21.69 per hour, an increase of 16.1% over the 2020 minimum wage of R18.69 per hour.

The new minimum wage takes effect from 1st March 2021.

In the past the Minimum Wage for farm workers was set slightly below the National Minimum Wage, taking into consideration factors impacting on the rural economy in South Africa. However this special dispensation for farm workers no longer applies, with the farm worker Minimum Wage reaching parity with the National Minimum Wage from 1st March 2021. Hence the big jump of 16.1%, which is way ahead of inflation, currently around 3%.

A wage of R21.69 per hour translates into R 173.52 per 8-hour day, or R 3 470.40 for a 20-day working month – before deductions.

According to Employment and Labour Minister Thulas Nxesi, the National Minimum Wage Act makes provision for employers that are genuinely unable to pay the National Minimum Wage to apply for official exemption.

While this wage increase will be good news for forestry workers, it is likely to be a challenge for many employers involved in the forest sector – particularly those reliant on manual operations – as their wage bill faces a hefty increase from March 1st.

Poor timing
According to Francois Oberholzer, Operations Manager for Forestry South Africa (FSA) which represents the majority of growers in South Africa, the timing of this wage increase is particularly unfortunate.

“The State has a history of poor timing and implementing major changes when conditions could not be worse,” commented Francois. “The implementation of the minimum wage should have been timed during periods of high growth and low unemployment. This increase comes when the country is experiencing record high unemployment and when businesses are the least profitable they have ever been.

“FSA did make a submission to the Minimum Wage Commission’s proposed increase. Like other industry associations in the agriculture sector, our recommendations were unfortunately not successful. As an industry we support the objectives of the Act regarding the need to eradicate poverty and inequality, but we would have preferred to see a phased approach to the equalization of the minimum wage.

“The 16% increase in minimum wage will without a doubt place a lot of pressure on the forestry sector. This is exacerbated by low international prices for dissolving pulp since 2019 as well as a poor production year in 2020 due to the pandemic that saw a 15% decrease in volumes produced year on year.”

According to FSA, this minimum wage could result in further job losses and increasing mechanisation in the forestry sector.

“It is a bit early to estimate any levels of job losses,” said Francois. “The forestry sector in many instances pays wages above the minimum wage. This is unfortunately not the norm and FSA will soon conduct a survey to quantify the impact of the significant increase in minimum wage which will provide some insight on possible job losses.”

Small-scale growers
Does this increase put wages out of the reach of most small-scale / community forestry operations … meaning they will likely be unable to comply, which has other consequences, e.g. they can’t get certified if they don’t comply with the minimum wage?

“The small and medium growers will undoubtedly be most severely affected,” continued Francois. “We do hope that all growers that will not be able to implement the new minimum wage apply for the exemption offered by the State.

Unfortunately, the exemption is only a one-year deferment and most small-scale growers will find it difficult to comply to the new minimum wage the following year. More information on this exemption is available on our website www.forestrysouthafrica.co.za.”

Not enough
Jerry Nkosi of the Chemical, Energy, Paper, Printing, Wood & Allied Workers’ Union (CEPPWAWU), which represents some 3 000 forestry workers, welcomed the increase in the minimum wage, but said it wasn’t enough to address the inequalities in the South African labour market.

“CEPPWAWU welcomes the announcement by Government that the NMW for the forestry and farm workers will increase from 1 March 2021,” commented Jerry. “However, given the inequality and the big gap between the income of forestry and farm workers compared to other sectors, the increase is not much significant. An increase is an increase but it is the value that counts. Is this a valuable increase? Yes. Does it address the gaps and inequalities? No.

“It is in this vein that CEPPWAWU is advocating for the amendment of the Constitution for the Wood and Paper Bargaining Council to include forestry. This will allow forestry workers to be covered by the Council and allow the Union to negotiate for them centrally.”

The forest sector currently employs around 59 000 people directly across South Africa. Latest figures show that nationally unemployment is edging above the 40% mark, with the majority of jobless people residing in rural areas.