A NMW is regarded as the beginning in the process towards protecting the most vulnerable workers in South Africa.144 The intended result of a higher minimum
wage being the reduction of the inequality gap and supporting economic growth, presuming that consumption demand will increase and stimulate the economy.145
The Wiehahn Commission of enquiry was established in 1977 after the Durban strike of 1973 and the Soweto uprising in 1976. The commission recommended that legislations should be introduced which should encourage and promote free collective bargaining and that unemployment levels would rise should a National Minimum Wage (NMW) be introduced. These recommendations were critical to future policy development in South Africa.146
Although the introduction of a NMW was not recommended, it was suggested that the ILO prescribes an approach towards introduction thereof.147
The introduction of a NMW was once again concluded in the National Manpower report of 1983. The report stated that the introduction of a NMW would adversely affect production and development growth. It would result in development initiatives being less labour intensive.148
In the Freedom Charter of 1985, COSATU called for a “legally enforced national minimum living wage for all workers”. It was also acknowledged that other policies that have the aim of economic restructuring should augment the NMW.149
The Election Manifesto of 2014 accepted to investigate the introduction of a NMW. A committee was appointed who consisted of labour, business and government.150
144 Head “National Minimum Wage Bill: What are the arguments for and against it?” May 2018
https://www.thesouthafrican.com/national-minimum-wage-bill-arguments-for-and-against-it (accessed 2018-06-27).
145 Omarjee “Why national minimum wage is good for SA economy” July 2016
https://www.fin24.com/Economy/why-national-minimum-wage-is-good-for-SA-economy (accessed 2018-06-27).
146 Cottle Towards a South African National Minimum Wage (2015) International Labour Office. 147 Ibid.
148 Ibid.
On the 8th of February 2017, deputy president Cyril Ramaphosa announced that the
National Economic Development and Labour Council (Nedlac) signed an agreement with measures that will strengthen the stability in our labour market and collective bargaining environment and a model to introduce a NMW. It was perceived that the introduction of a NMW would set a firm foundation for a living wage. The implementation date was agreed on to be no later than 1 May 2018 at a rate of R20.00 per hour, which translates to R3 500.00 a month for employees, working 40 hours per week.151
Farm workers and domestic workers would be phased in over a two-year period with farm workers earning 90% of the NMW and domestic workers 75% thereof. A provision was made for exemptions and the impact of the NMW need to be assessed on reviewing of the NMW. 152
The NMW was not implemented on the 1st of May 2018. It is located in three bills:
the National Minimum Wage Bill, the Basic Condition of Employment Amendment Bill and the Labour Relations Amendment Bill.153 The NMW was implemented on the 1st
of January 2019.154
The South African economy is currently a poor performing economy facing a variety of serious problems where unemployment is at a high and GDP growth is very low (0.8% in 2016).155
150 Cottle Towards a National Minimum Wage.
151 “Statement by Deputy President Cyril Ramaphosa on the finalisation of agreements on labour
stability and a National Minimum Wage” February 2017
http://www.thepresidency.gov.za/speeches/statement-deputy-president-cyril-ramaphosa-finalisation- agreements-labour-stability-and-a-national-minimum-wage (accessed 2018-11-09).
152 Agreement on the introduction of the National Minimum Wage 7 February 2018
http://new.nedlac.org.za/wp-content/uploads/2014/10/Agreement-on-the-Introduction-of-the-national- minimum-wage.pdf (accessed 2018-11-09).
153 Magubane, L “Give national minimum wage a chance – Treasury 7 July 2018
https://www.fin24.com/Economy/give-national-minimum-wage-a-chance-treasury-20180707-2 (accessed 2018-11-10).
154 Neselow, T “Ramaphosa: ‘Historic’ minimum wage to come into effect on January 1, 2019” 1
December 2018 https://www.fin24.com/Economy/ramaphosa-historic-minimum-wage-to-come-into- effect-on-january-1-2019-20181207 (accessed 2019-01-24).
155 “A National Minimum Wage for South Africa” 2016 National Minimum Wage Panel Report to the
The NMW affects various sectors. Sectors, where vulnerable workers are recognized, will be afforded the opportunity to phase in the NMW to minimise disemployment.156 80% of workers in the agricultural sector earns below R3500.00
per month.157
It is of concern that increasing the lowest level of wages, without a similar increase in productivity, the impact will have a negative effect on the macro economy. Research found that the introduction of a NMW should not be used as the only policy intervention with the purpose of reallocating national income. It should be used in conjunction with other policy interventions. The impact of the NMW will however, have a positive effect on the functional distribution of income.158
Research cannot predict with certainty on how employment would be affected in a developing country like South Africa. It is of concern that a minimum wage, which is set too high, would create a shift of employees from the formal sector to the informal sector and subsequently cause disemployment among less-skilled workers. The consequence would be that wages are pushed down and it leads to a lower rate of compliance.159
The impact of the NMW would impacts differently on different sectors.160