National minimum wage changes for 2024 are coming

The National Minimum Wage (NMW) Commission has opened up for all interested parties to submit written representations concerning possible adjustments to the NMW in 2024.

The closing date for the submission of written inputs is 8 September 2023.

The commission said the written comments/representations concerning possible adjustments to the national minimum wage will be considered by the commission before it publishes its annual report and recommendations on the annual review of the national minimum wage later in the year.

The current rate of NMW jumped from R23.19 to R25.42 for each ordinary hour worked, effective 1 March 2023.

The existing national minimum wage determination now includes the vulnerable sectors of farm workers and domestic workers – which are now 100% aligned with the going rate.

Representations should reach the directorate: Employment Standards, Department of Employment and Labour, Private Bag X117, Pretoria, 0001 or be sent to [email protected]

Changes coming

While the NMW commission speaks of “possible” changes to the minimum wage, the group has already committed to hikes each year above inflation at the bare minimum.

In May, the commission gazetted its medium-term NMW targets, which set a three-year goal for the minimum wage and its commitments to meeting it.

Minimum wage increases have historically been done in consultation with various stakeholders and included considerations for the wider economy and the cost of living – the process which has now opened.

While these factors will still be at play, the commission has now explicitly linked the minimum wage to economic indicators.

Specifically, future minimum wage increases will be linked to the consumer price index (CPI) as well as the median wage level in the country.

The minimum wage should increase at rates above inflation, so that wages grow in real terms and don’t lose value, the commission said.

Even though the medium-term target is now explicitly tied to CPI, the commission has already hiked the minimum wage above inflation.

The latest increase, announced in February, saw the national minimum wage hiked by 9.6% – even though annual inflation for 2023 was expected at around 6% at the time (expectations have lowered since).

While unions and labourers welcomed the increase, employers and labour organisations were less enthused. Specifically, the latter raised alarms over the increase being far above inflation, pointing out that the wage was hiked around four percentage points higher than expected inflation for the year.

This makes the cost of labour higher in a business environment already under pressure due to the prevailing economic conditions.

Smoke and mirrors

Another controversial aspect of minimum wage hikes is that they look good, but don’t deliver meaningful benefits to minimum wage earners.

Recent data from the Pietermaritzburg Economic Justice and Dignity Group demonstrated how significant hikes in necessities like electricity (up over 15% in 2023), eat away at a third of the NMW hike.

Legal experts have argued that the national minimum wage itself is mostly smoke and mirrors because of this.

The NMW is not a living wage in South Africa – and it disincentivises businesses from hiring new employees due to the cost and the stringent labour laws that often protect workers over employers.

As the wage increases, costs go up – and businesses, particularly SMEs, that can no longer afford the overheads cannot easily let workers go.

Another issue with the minimum wage is that South Africa’s unemployment rate is so high that almost half the population is without any wage at all.

The Department of Labour said that the national minimum wage has not impacted employment levels or raised unemployment in sectors it has assessed.

However, domestic workers – of the key sectors that the NMW aims to benefit – are seeing job losses while struggling to recover to pre-Covid levels.

In addition, recent salary data from the sector shows that most domestic workers still earn far below minimum wage in practice.

Read: Double-blow for domestic workers in South Africa – as the middle class calls it quits