In response to the outcry on the newly adjusted National Minimum Wage rates, Employment and Labour Minister Thulas Nxesi would like to reiterate that the adjustment comes after a consideration of many factors including submissions from all sectors.

The minimum wage is a tool to ensure that vulnerable workers do not fall below the poverty line and it is designed to reduce inequality and huge disparities in income in the national labour market.

"As we have pointed out before, the minimum wage is really what it says it is. But it is not based on thumb suck but a well thought out process that allows all the interested parties to have a voice. I have noted with concern the objections from some stakeholders on the adjustment of the NMW and recognise the reality that the Covid-19 pandemic has had a harsh impact on most employers.

"The NMW Act however accordingly permits employers that are genuinely unable to pay the proposed adjustment to utilise the exemptions procedures in order to be exempted from the NMW," said Minister Thulas Nxesi

In amending the national minimum wage this year, the Minister has considered all the factors as required by the law, the report of the commission as well as the different submissions received from the stakeholders and based on those and the results of the initial research undertaken on the impact of the introduction of the national minimum wage, which found that the NMW did not place an undue burden on employers or led to job losses in its first year of implementation, reached the decision to accept the proposal of the Commission and increase wages accordingly.

With regards to the inputs received in response to the notice published by the Commission on its recommendations, stakeholders from around the country were divided in their recommendations with some supporting the recommended adjustments and arguing for an above inflation increase as well as immediate equalisation of the domestic and worker sectors.

"Indeed some stakeholders were against the recommended adjustment based on impact that it will have on employment/ unemployment, low economic growth, the impact that Covid-19 has had on the operations of businesses as well as the high production costs for farmers who will have to bear the brunt of the increase," said Minister Nxesi.

Research was conducted by the Development Policy Research Unit (DPRU) at the University of Cape Town and the Centre for Social Development in Africa (CSDA) at the University of Johannesburg regarding the impact of the introduction of the national minimum wage. This was at the instigation of the National Minimum Wage Commission.

Research has found that there has been no negative impact on employment as a result of the introduction of the national minimum wage but they added a caveat that the reason for that might be due to the fact that employers began adjusting almost two years prior to its eventual implementation or perhaps the timeframe analysed is too short.

Also, research found that the introduction of the national minimum wage led to a statistically significant increase but smaller than expected improvement in wages for the workers it covers and generally there was broad compliance in agriculture, with slightly lower levels in domestic work.

Unfortunately, employees considered that the minimum wage for farm and domestic workers was too low.

The increase this year was decided by the rate of inflation (3%) plus 1.5% from R20,76 to R21,69 for the year 2021. While this should be applicable to all vulnerable employees, the Act on its promulgation established lower minimums for the farm and domestic sectors, with a process of gradual equalisation to the national minimum wage over time.

The majority of the Commissioners further recommended that the minimum wage for the farm worker sector be equalised with the NMW rate of R21,69 per hour as of 1 March 2021. This was also supported by the belief that the agricultural sector was not as severely affected by the Covid-19 lockdown, as the food value chain constituted an essential service at the time of the lockdown.

"The domestic worker sector on the other hand, judging by the findings of the Quarterly Labour Force Survey was severely impacted by the initial levels of lockdown and therefore the recommendation was to increase the minimum wage to 88% of the national minimum wage which translates to R19,09 per hour as of 1 March 2021," said the Minister.

He added that a minority submission however was also received from the three business representatives on the Commission wherein they recommended a 3% increase instead.