National Minimum Wage: Cosatu calls for R4,125 to R5,276 a month

The Freedom Charter called for a National Minimum Wage (NMW) as one of its key demands.

Sixty years after the adoption of the Freedom Charter, millions of South African workers remain super-exploited, stuck in the cheap labour system, and are part of the working poor. That is, although they work full time, they and their families continue to live in poverty, and still cannot afford basic necessities.

To address this situation the Cosatu 11th Congress in 2012 and the Collective Bargaining Conference in 2013 called for the implementation of a legislated National Minimum Wage, linked to a Minimum Living Level, as part of a comprehensive National Wage Policy, including the introduction of wall to wall collective bargaining, and comprehensive social protection, to address working poverty and wage inequality.

The National Minimum Wage floor is not intended to replace the campaign for a Living Wage, or to substitute for collective bargaining, but rather to act as a springboard to support these. Cosatu, supported by the international experience, further rejected the notion that a NMW would lead to high levels of job loss. In fact the NMW, by raising working people’s incomes, could complement other economic and industrial policies, by stimulating demand in the economy.

At the Nedlac Summit in September 2014, Deputy President Cyril Ramaphosa announced that an Indaba would be convened to

• address the untenable labour relations environment that gives rise to wage inequality and prolonged violent strikes;
• deliberate on measures to combat wage inequality, and examine the role of a national minimum wage in dealing with poverty and inequality, including the modalities of implementing a national minimum wage;
• consider measures to address the causes of violent and protracted strikes; and
• measures to promote inclusive negotiations and bargaining processes.

On 4 November 2014 the Nedlac Indaba was convened, and adopted the Ekurhuleni Declaration which agreed to engage on an NMW, as a means of addressing wage inequality. Terms of reference for the negotiations were adopted in February 2015, and task teams were set up to engage in negotiations.

Negotiations have made virtually no progress in the past four months, and have now entered a deadlock. This is because business has refused to engage on the level, or any issue related to the level of the National Minimum Wage. While labour, community and government agree that the first NMW must be the outcome of negotiations, business are insisting that the setting of the level must be outsourced to an “independent body of experts”.

Congress rejects the continuous delaying tactics and foot-dragging by business.

The urgent finalisation of an agreement on the NMW is non-negotiable for the working class. We will now engage in mass mobilisation to ensure that what has not been agreed in the boardrooms, will be resolved in the streets and workplaces. If the deadlock is not satisfactorily resolved by December 4, we will immediately begin to mobilise for a Day of Action for a National Minimum Wage in January 2016

Congress supports the position taken by labour’s negotiators in Nedlac that the figure for a NMW must be based on the relevant benchmarks advanced in the negotiations, namely:

• Using the international benchmark for setting a National Minimum Wage at 40% - 50% of the average wage. An indication of the average wages of SA workers is the average wage for formal sector workers, which is R10,274 according to the latest available information.. So a NMW set at 40 to 50% of this estimated average would be in the range of R4 110- R5 137.

• Using the poverty line or minimum living level as a second key benchmark for setting a NMW. The basic needs poverty line produced by Stats SA has been revised by SALDRU at UCT in 2015 and has been found to be R1,319 per person or R5,276 for a household of four.

• The Wits NMW Research Initiative has produced a working poor line. This research indicates that a worker, with an average number of dependents, needs to earn R4,125 in wage income just to lift her or his head and those of their dependents above the poverty line.

Congress supports the joint approach of the Labour and Community constituencies in Nedlac who, as a basis for negotiating a NMW figure, have agreed to advance a range for the NMW which reflects these benchmarks.

We reject the research presented by Treasury which suggests that even a NMW set at the ridiculously low level of R1,258 per month would cause substantial job loss! Research produced by Wits shows that a NMW of between R3,500 and R6,000 could be introduced without major negative effects, and would have many positive effects on the economy.

Congress believes that these three benchmarks indicate a useful range within which negotiators should negotiate the NMW level. We also recognise that we may not be able to immediately achieve a NMW at the level which workers legitimately desire, and there may need to be a process of transition to achieve our desired target. But the first NMW should not be below the range indicated above.

At the same time, an initial level for introducing the first NMW, in line with these benchmarks outlined above, must be combined with a bold strategy, as has been done in Latin America, of progressively increasing the value of the NMW over the medium term. To this end, we support labour’s proposal that the competent authority overseeing increases in the NMW, must be given a roadmap with targets to determine the future setting of the NMW.

We further support the need for concrete measures to address the massive pay gaps caused by ultra low wages alongside obscene executive pay, to work towards a ratio of 16:1 between the top and bottom of the wage structure, as agreed at our 2013 Conference.

The agreement in Nedlac is that the NMW must set an economy wide wage floor below which no worker should fall, unless exclusions or exemptions are agreed to upfront. We support the approach in Nedlac to only exclude very limited categories, such as the intelligence services, and some others excluded from the Basic Conditions of Employment Act, such as unpaid volunteers.

Labour has agreed to consider a tiered system whereby domestic, public works, and farm workers start off with a slightly lower NMW, for example 70- 80% of the general NMW, and then phase into one rate over a set timeframe. However, this is only acceptable if the NMW is set at least within the range stipulated above (R4,125-R5,276).

Labour has proposed that the NMW be calculated through a combination of hourly, weekly and monthly reference periods, with a guaranteed payment for minimum hours worked, and a premium paid for those working under a stipulated number of hours. Congress endorses this approach to prevent employers reducing pay through cutting the number of hours.

The campaign for a National Minimum Wage must be combined with a campaign for a living wage, and establishment of comprehensive Centralised Bargaining in all sectors of the economy.

The Freedom Charter states that: “The state shall recognise the right and duty of all to work, and to draw full unemployment benefits”. Congress resolves to embark on an intensified campaign to establish a comprehensive social protection floor that caters for all, including the unemployed and underemployed, who currently fall through the cracks.

See also:

• Three part series by UCT economists on the national minimum wage

• Call for national minimum wage of R5,000 per month

• Poverty report strengthens COSATU’s case for national minimum wage and comprehensive social security

• Minimum wage debate: the old cheap labour system will get us nowhere

• At what level should a national minimum wage be set?

• What is at issue in the minimum wage debate?

Views expressed are not necessarily GroundUp’s.