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.