UCT responds on minimum wage

I would like to address two points in the analysis of the minimum wage for outsourced workers at the University of Cape Town, presented by Josh Budlender and Johan Lorenzen, UCT’s muddled minimum wage.

UCT’s outsourcing policy is designed to improve efficiency and to optimise costs to the university. As a publicly funded institution, we have a duty to spend as wisely and effectively as possible. Outsourcing support services helps us to do that.

But another consideration has always been the welfare and the fair treatment of the colleagues who are contracted to UCT via outsourcing contracts with their respective employers, and this is the first point I wish to address. UCT is committed to ensuring that these colleagues do not come under any disadvantage as a result of their status as outsourced workers. For this reason, the university has drawn up, and enforces, a code of conduct that must be signed and adhered to by the outsourced companies. One of the conditions of UCT’s outsourcing policy is to ensure a minimum wage is paid to every outsourced worker that is higher than the country’s minimum wage.

Outsourced workers can easily be exploited, especially from a financial perspective. UCT has demonstrated leadership in this domain, not only through the manner in which the university engages with the outsourced workers, upholding fair treatment and workers’ rights, but also in determining a minimum level of pay. The challenge has been in finding a correct methodology in calculating such a level, which is appropriate and fair, and which generally will be higher than the sectorial determination. This would mean that outsourced workers at UCT could earn more than their colleagues in the same company performing outsourced work somewhere else. In fact, the article by Budlender and Lorenzen is challenging the UCT approach of determining this level of minimum wage, which as indicated before, is setting a benchmark of fair treatment and an appropriate pay-level for outsourced workers.

The second point is Budlender and Lorenzen’s discussion of UCT’s use of the Supplemented Living Level (SLL) – which, as they correctly point out, is an outmoded measure. The SLL was introduced by the Bureau of Market Research (BMR) at the University of South Africa, and the last publication of the SLL by the BMR was in 2003. UCT has made its own annual adjustments to the SLL over these years using the quintile 2 inflation rate. The UCT adjusted SLL remains significantly higher than the industry norm.

As from 2015, UCT will introduce a minimum wage for outsourced workers based on the UCT adjusted SLL. This minimum wage (and not the SLL or UCT adjusted SLL) will serve as the basis for future wage-setting determination. The university wants to emphasise that its commitment to the welfare of outsourced workers remains strong and that it will continue to seek to set a minimum wage that exceeds the industry norm.