South Africa raises minimum hourly wage

By 6.9%.
Image: Shutterstock

South Africa’s minimum hourly wage will increase by 6.9% to R23.19 from next month.

The increase outstrips the central bank’s inflation forecast of 4.9% for the year. The announcement by Labour Minister Thulas Nxesi comes two days before President Cyril Ramaphosa will give his state-of-the-nation address in which he may give more clarity on the possible introduction of a basic income grant or additional income support.

Under Ramaphosa South Africa officially introduced a national minimum wage in January 2019 to protect workers from “unreasonably low wages.” While it’s aimed at reducing the pay gap in one of the world’s most unequal societies, it’s unlikely to have an impact on the living standards of a large part of the population where 35% of the people in the labor market is unemployed.

© 2022 Bloomberg L.P.

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And Boom – Another 500 000 jobs disappear !!
WELL DONE !!!!

When circumstances cause an increase in the cost of one specific input, entrepreneurs are forced to find a way to use less of that input in the production process, unless their clients are willing to compensate them for the increase.

This implies that consumers, and not socialist politicians, determine the size of the jobs market and the size of salaries. This tells us that consumers use the unemployment rate to punish politicians for their stupidity. Consumers hit populist politicians over the head with unemployed people.

If you can’t justify a job at R3,800 a month then something is wrong with your business.

Say lowest skill is a busy-body only cleaning external spaces such as gardens and grounds. R180 per day. Really? You have problem with R180 per day caring for gardens and common areas?

Try and do it yourself for a month and get back to us

Johan – Your comments are very valid but have you noticed the plethora of bakkie and trailer garden services lately??
They thrive because they cost R1200 per month, without any labour hassles and admin and have taken away the casual labour jobs that most households and businesses used to have.
Sensei’s comments are spot on !!!

Sure, I was referring to a business and employee.

The bakkie garden guys are contractors to home owners that don’t want to do their own garden and don’t want the shlep of a deemed employee old style weekly gardener. when they have enough clients these bakkie guys pay themselves well better than minimum wage.

The same is happening with contract domestic cleaning. Van arrives with 4 ladies, 2h later house is sorted. No fuss about transport, UIF, drunk uncles, sick family, etc. The ladies earn more too

That depends on what percentage of your income you are spending on the wage bill. If your income does not increase by the same percentage, you may be forced to compensate for the increase in the minimum wage by laying off people. Businesses that operate on paper-thin margins, especially charity organizations like frail care centers and orphanages, will be forced to lay off 7% of employees because they are unable to transfer the increase in costs to their clients. This creates a direct link between a rise in the minimum wage and a rise in unemployment figures.

That being said, the current minimum wage is less than 50% of the cost of keeping a slave during times of slavery. Keep in mind that the capital value of a slave was about R700 000 in today’s money. Owners provided slaves with housing, clothes, and food to protect their valuable assets. Slaves served as collateral for loans and formed the basis of the financial system at the time.

The minimum wage is not too high. Economic growth and profitability of economic activity are too low. The minimum wage is simply another tax and maybe this is the tax that breaks the camel’s back.

True Johan, I would love to have the brilliant people that work for me earning R10k per month and afford transport, decent housing etc etc. I pay more than the minimum but am pretty sure that many, many people pay less; take it or leave it and there are always takers.

On a bigger scale I think the killer is production (often poor) and legislative compliance (we subcontract rather than employ). The red tape around business and employment is just crazy (I sit right now with some silly vendor registration issue – Central Treasury compliant but not with the local municipality who use the same information! Maddening.

End of comments.

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