An analysis of pre-implementation and post-implementation concerns and issues raised by organized labour, business and government regarding the setting of the South African National Minimum Wage

Abstract

The introduction of a National Minimum Wage (NMW) in South Africa precipitated contentious debates between and within organised labour, business and government. This research report analyses the pre-implementation and post-implementation concerns and issues that were raised by these stakeholders. The two issues most in contention were the wage level and an exemption, with a lower minimum wage, for domestic, farm and Expanded Public Works Programme (EPWP) workers. To analyse the arguments and positions of organised labour, business and government, discourse analysis was applied as a methodology to analyse newspaper articles, press release statements, workshop reports, public hearings and discussion papers between 2014, when the Ekurhuleni Declaration was signed and social partners committed to engage in a process of social dialogue regarding the NMW, and 2020 when I completed research. This report situates these arguments within the tension between Keynesian and neoclassical economic frameworks, which it is argued frame these key disagreements. It explores these tensions within an analysis of who the stakeholders represent, their conflicting ideological positions, power dynamics, class interests, and issues of race and gender inequality. The findings illustrated that prior to the implementation of the NMW, labour organisations such as the Congress of South African Trade Unions (COSATU) and the Federation of Unions of South Africa (FEDUSA) took a politically pragmatic approach which aligned with the interests of business and government, accepting a NMW level of R20 per hour, while South African Federation of Trade Unions (SAFTU) and the National Union of Metalworkers South Africa (NUMSA) argued that the level was set too low and was far from a “living wage” and called for a NMW of R12 500 per month. However, post-implementation of the NMW, labour organisations ultimately joined forces in calling for an increase that keeps up with inflation and facilitates the phase-in of domestic, farm and EPWP workers at a single NMW. Labour organisations declared that the tiered wages were exploitative and discriminatory. Business initially opposed the introduction of a NMW in South Africa and proposed the adjustment of sectorial minimum wages instead. The concern for business was that a NMW would fail to account for the various economic factors in different sectors, strain the economy and lead to job losses that would particularly affect low-skilled and low-wage workers. iii However, business eventually accepted a NMW at a level of R20 per hour and supported the tiered system as an ideal strategy that aligned with international trends and would avoid negative employment effects. Aligning with the concerns raised by business, government accepted the proposal to set the NMW at R20 per hour and supported the tiered system as a strategy to allow business and the economy to adjust to the NMW, with minimal job losses.