Employment and Labour Minister Thulas Nxesi has announced that the National Minimum Wage (NMW) for each ordinary hour worked has been increased from R20.76 to R21.69 for 2021, effective March 1.
The NMW legislation came into effect on January 1, 2019, starting with R20 an hour, which is the floor level below which no employee should be paid.
When adjusting the NMW, the NMW Commission considers inflation, cost of living, gross domestic product, productivity, the ability of employers to carry on their businesses successfully and the likely impact of the recommendation adjustment on employment or the creation of employment.
This time around, the farmworker wage has been aligned with that of the NMW rate of R21.69 an hour, but domestic workers remain entitled to R19.90 an hour.
The Department of Employment and Labour (DEL) has said the domestic worker wages could potentially be aligned with the NMW during the next review.
Meanwhile, the minimum wage for farmworkers has been equalised, and will increase from the current R18.69 an hour to R21.69 an hour.
Industry organisation Agri SA says the immediate equalisation and increase in wages for farmworkers will be unsustainable for the agriculture sector.
It states that, although Agri SA takes the needs of farmworkers and their families seriously, the poorest households are still in need of access to employment and to retain those in employment – which may be put in jeopardy with the wage increase.
Agri SA notes that it has brought to the attention of the department the fact that the agricultural sector is a multifaceted sector that comprises mostly small-scale and medium-scale farmers, with large-scale commercial farmers only making up a small percentage of the industry.
“These small-scale and medium-scale farmers have already endured the effects of recent severe drought, compounded by the effects of the pandemic and it is disappointing that these crucial factors were clearly not considered,” Agri SA says.
The double-digit increase will almost certainly compromise the role of the agricultural sector in contributing to social stability in our country, Agri SA warns.
“If farmers cannot produce food affordably and employ agricultural workers on a large scale, this will result in a food crisis and large-scale social upheaval as food insecurity and unemployment start to take root.
“The government will need to decide whether it is serious about addressing unemployment. The Covid-19 pandemic continuous to wreak havoc and unemployment is on the increase. To approve of a 16% increase therefore does not make sense,” Agri SA laments.
Industry organisation the Agricultural Business Chamber (Agbiz) agrees, stating that the wage increase may well lead to job losses.
Agbiz CEO John Purchase says the increase is not aligned to economic realities.
“Agbiz has always supported a decent wage, but this amendment's timing must be questioned.
“We must note our disappointment at the latest adjustment, since it does not appear to take affordability or the current economic environment into full consideration. Last year saw the economy shrink in real terms and millions of jobs were lost across various sectors owing to the Covid-19 disruptions.
“While agriculture has been a shining star in the economy, the labour-intensive subsectors such as the wine industry, have been hard hit by the recent ban on sales. Wine and table grape farmers already face cashflow challenges, and the severe economic impact was illustrated by the respective 37% and 8% year-on-year decline in farm jobs in the Western Cape and Northern Cape in the third quarter of 2020.
“We fear the recent adjustment will add to already tough economic conditions for farm businesses," explains Purchase.
The equalisation of farmworker wages to a de facto increase in farmworkers' wages of close to 16.1%.
Purchase says that, even the subsectors that performed well in 2020 will be affected, as no sector can be expected to absorb an increase of 16.1% in a single financial year.
Despite submitting evidence-based research and inputs to this effect, it is disheartening to see that business's legitimate concerns about affordability were not taken into consideration, he adds.