National minimum wage: What business leaders, Malema and the government say about it

Government wants the national minimum wage (NMW) to be implemented later this year. However, there are still disputes regarding what the NMW should be.

A recent study by the National Minimum Wage Research Initiative (NMW-RI), an independent academic research project run by the Corporate Strategy and Industrial Development Research Unit in the School of Economic and Business Sciences at the University of the Witwatersrand, suggested a NMW wage of R5,500.

Setting a NMW

According to the Labour Research Service (LRS), when determining a NMW the following needs to be considered:

1. The needs of workers and their families
2. The general level of wages in the country
3. The cost of living and changes therein
4. Social security benefits
5. The relative living standards of other social groups and
6. Economic factors, including the requirements for economic development, levels of productivity and the level of employment.

Furthermore, it is important to note that there is a difference between NMW and a living wage. The NMW-RI explained: “The purpose of minimum wages is to ensure wages are able to cover the basic needs of workers and their families, taking into account relevant economic factors.”

In February 2016 the working poor line (poverty line), according to the NMW-RI was R4,317. The poverty line covers “only the basic necessity that a person needs to survive and are not an indication of a ‘decent’ standard of living. Nevertheless, these thresholds serve as indicators of the basic needs of workers and their dependents.”

The research by the NMW-RI, concluded that “a phased-in national minimum wage in the R3 500 to R5 500 band has positive effects on the economy and is economically sustainable.”

Other proposals

The NMW-RI is not the only organisation to recommend a value for a NMW. According to a report, trade union COSATU is campaigning for a NMW in line with that suggested by the NMW-RI. The Economic Freedom Fighters (EFF) have also made their voice heard, calling for a NMW of R4,500.

Some business leaders, by contrast, are not in favour of such a high value. They want a NMW of R1,800.

It appears that there is still a way to go before business leaders and various stakeholders can agree on a NMW which addresses people’s needs, while being economically sustainable not only to business, but to the country as well.

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