National Minimum Wage beats inflation - again

A National Minimum Wage of R27.58 per hour – effective from 1st March 2024 - has been announced by the Minister of Employment and Labour, Thulas Nxesi.

This represents a CPI + 3% increase in minimum wage, and follows a CPI + 2% increase in 2023.

This minimum wage applies to all workers in South Africa across all economic sectors – including farm/forestry workers as well as domestic workers.

The 2024 Minimum Wage means that workers in South Africa will be paid R 220.64 for a normal eight-hour day, and R 1 103.20 for a 40-hour week.

The only exceptions are:-
• Workers employed on Expanded Public Works programmes for whom the minimum wage for 2024 has been set at R15.16 per hour;
• Workers employed under Learnership agreements in terms of the Skills Development Act.

Predictably, the increase has been met with a chorus of criticism from business who claim that an above CPI wage increase is counter-productive in the current economic climate. The gist of the argument is that it will simply exacerbate unemployment as many small, medium and micro businesses will either cut their staff numbers or find other ways of reducing their wages bills, which will impact negatively on bottom rung employees at the end of the day.

Bigger businesses will in all likelihood continue to mechanise their operations and use technology innovation to reduce staff overheads. The end result will be fewer, skilled people employed at higher rates. Where does this leave unskilled school leavers seeking entry level employment in South Africa?

Many small scale tree farmers operating on communal land will not be able to afford the minimum wage, and so they will remain outside of the formal ‘legal’ economy and will continue to conduct their businesses on the economic fringes.

Commented Gerhard Papenfus of the National Employers’ Association of SA: ‘The National Minimum Wage Commission ignored the input of numerous business institutions and trade unions who warned of the dire consequences of implementing further increases, the calls for the scrapping of the National Minimum Wage, and simply proceeded with recommending the implementation of its own original proposals. The manner in which the NMWC reached its conclusion, once again, illustrates the futility of the public participation process leading up to their eventual recommendation.’

The National Minimum Wage Act does make provision for an employer or employer organisation acting on behalf of its members to apply to the Department of Employment and Labour for exemption from the NMW. This is a loophole that may yield some relief for hard-pressed employers who can demonstrate that their businesses simply can’t afford the current minimum wage, but the admin involved will be daunting.

9.6% hike in the National Minimum Wage

The new National Minimum Wage (NMW) for South Africa has been increased by 9.62%, pushing the rate for all workers in South Africa – including forestry, farm and domestic workers – to R 25.42 per hour, up from the previous rate of R23.19 per hour. The new minimum wage is effective from 1 March 2023.

This means that the monthly minimum wage for workers in South Africa – based on an 8-hour day and a 160 hour month – will be R 4 067. This represents an increase of R356.60 a month over the 2022 NMW.

The above NMW does not apply to workers employed in expanded public works programmes such as Working on Fire – these workers are entitled to a lower rate of R 13.97 per hour.

The NMW increase is slightly above the CPI which is expected to be between 5% and 6% through 2023. However basic food prices have increased well above this rate over the past year or so. Electricity prices are another red flag as energy regulator Nersa has approved an 18.65% hike in electricity tariffs for Eskom direct customers from 1 April 2023.

Therefore this NMW increase will leave workers in much the same position as they were last year, while employers will have to dig a little deeper into their pockets.

This increase in NMW is expected to be out of reach for most of the small-scale forestry growers, which means that they are non-compliant with current national legislation and therefore unable to be certified. This puts them at a disadvantage in terms of marketing their timber.

The 9.6% NMW increase for 2023 follows a 6.9% increase in 2022, and a hefty 16.1% increase for farm,, forestry and domestic workers in 2021, which brought their minimum wage up to parity with the NMW.