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South Africa set to resolve minimum wage dilemma



Analysts fear it may compound economic woes


By Ada Anioji


Taking a break from its paralysing #StateCapture troubles, the Government of South Africa says it may very well be on the verge of taking critical decisons on its lingering minimum wage crisis.

Specifically, a government advisory panel will give its recommendation for a new national minimum wage on Sunday, Deputy President Cyril Ramaphosa has said.

Wages and salaries are politically sensitive in South Africa, where the official unemployment rate is close to 25 percent and inequality remains glaring over 20 years after the demise of apartheid.

 Supporters of a minimum wage say it can stimulate growth as workers can spend more while reducing inequality. Critics say it could lead to increase unemployment as employers will be unable to afford higher wage bills.

“The magical number that everyone is waiting for will be out on Sunday,” Ramaphosa said on the sidelines of a labour conference in Johannesburg, local news agency EyeWitness News reported.

He set up a panel drawn from labour, private sector and academics to propose the minimum wage as part of Pretoria’s efforts to address income disparities, low wages and a wave of violent and protracted strikes in recent years.

The recommendations will be discussed at the National Economic Development and Labour Council, which brings together representatives from business, labour, community groups and the government to find common ground on social and economic issues.

Monthly earnings for employees averaged 18,045 rand ($1,200) per month in May 2016, according to Statistics South Africa.

But many workers earn far less than that, with domestic workers and farm labourers among the lowest paid.

Analysts have said the recommended minimum wage will likely be in the range of 3,500 to 4,500 rand per month.

Separately, a state agency has recommended a pay freeze for President Jacob Zuma, his cabinet, lawmakers in parliament, judges and the various ethnic kings and queens.

The Independent Commission for the Remuneration of Public Office-Bearers said in a statement the decision was taken after the Treasury expressed concerns about the tight state budget.

Finance Minister Pravin Gordhan last month slashed the 2016 growth forecast for Africa’s most industrialised economy to 0.5 percent from 0.9 percent and proposed spending cuts needed to avoid credit ratings downgrades.


Deputy President, Cyril Ramaphosa


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