Minimum wage increase won’t go very far for poor families, say experts

6 January 2022 by by Rafieka Williams

Cape Town – Economists say a proposed national minimum wage (NMW) increase will most likely have a more negative impact on the economy than good.

Minister of Employment and Labour Thulas Nxesi confirmed he is yet to make a decision on a proposed minimum wage increase for 2022.

The NMW commission suggested the wage of R21.69 per hour be increased by +1% of the CPI inflation which is at 5% which means that the new proposed wage will be 23.10 per hour.

The commission proposed that domestic workers be entitled to receive the same amount as the NMW.

Previously this was at 88% of the NMW, bringing the adjustment on domestic workers wages to more than 20%, from R19.09 to R23.10.

Economist Daniel Silke said: “South Africa is facing rising inflation, we’ve seen huge input costs for individuals be it electricity, utility or transportation charges so this kind of increase does compensate in part for the rising expenses South Africans must endure”.

“It’s an essential increase for those on basic wages but I don’t think it’s going to have any overall effect on poverty alleviation. I would say it makes people just marginally more able to cope with the price increases that they face but ultimately those who are earning at minimum wage level are really in a difficult position whether they get a 10% or 20% increase, I don’t think it’s going to make a big difference,” Silke said.

Domestic workers’ activist Pinky Mashiane said compliance with the new prescripts was not guaranteed.

“Those domestic workers who are underpaid, it will make a difference if their employers are complying.

“My concern is about the compliance and the enforcement from the DEL and whether the employer will comply with the minimum wage and give domestic workers R23.10 an hour because that is what they are supposed to get in 2022.

“The DEL is not doing enough to reinforce the law when it comes to employers,” Mashiane said.

Labour expert Heineke Brand said: “bringing the minimum wage for domestic workers up to the same level as the NMW will achieve the act’s objective of reducing the inequality in income in the South African labour market, as farmworkers are already on par with the NMW since 2021”.

“It is however questionable whether an increase of more than 20% in the minimum wage of domestic workers will achieve the act’s second objective of eradicating poverty, as the income of many employers certainly did increase since 2020 and in fact decreased due to the impact of Covid19 on the economy and they may have no option but to reduce the hours of domestic workers or let them go.”

Source: IOL  at