Unhappiness with proposed R3500 minimum wage understandable – COSATU

Federation says Advisory Panel decisively rejected arguments that NMW will result in massive job losses

COSATU Statement on the National Minimum Wage

23 November 2016

The COSATU CEC has noted and welcomes the release of the National Minimum Wage report by the Advisory panel of experts and its recommendation for the adoption of a legislated universal National Minimum Wage. In some respects, this report is a step forward for the country and a victory for the workers and their federation, COSATU, that has been relentless in its campaign for the adoption of a legislated national minimum wage.

The Advisory panel took its mandate seriously and applied sober research and analysis in its work to reach its conclusions. Its analysis, while sound however, is combined with a mixed bag of recommendations. We want to commend the Deputy President of South Africa, Cde Cyril Ramaphosa, for his leadership and tireless work in trying to break the deadlock between the social partners at Nedlac over this matter. We hope that he will continue to provide the necessary leadership so that we finalise this issue before the end of this year.

The federation shall go back to Nedlac and engage with the contents of the report and also push for a speedy resolution of these negotiations. While the proposed figure of R3 500 still falls short of the federation’s proposed figure of R4 500. 

We note that the proposals by the Panel are not a resolution taken at Nedlac, but are recommendations which still need to be deliberated on. We welcome the Report as an important contribution to the discussion, which has helped to break the deadlock.

We acknowledge that this proposed figure of R3 500 does not address the minimum living standards of an average South African household. The people’s legitimate frustrations and unhappiness with the proposed R3500 figure are understandable given the high cost of living for workers. Most scandalous is the fact that currently around half of all workers are earning below this figure. So anything above the figure of R3500, no matter how inadequate, will have a material impact on improving the wages of half of South African workers, or 6 million of our brutally exploited workers. This figure of R3 500, though, gives us a significant starting base and something to work with at Nedlac as we negotiate the way forward.

This country’s National Treasury seems to be either ignorant of or is deliberately ignoring the historical reality, which this administration is supposed to transform. Amongst others, this is underscored by their flawed and biased research and their provocative and misleading reaction to the Advisory panel’s report. This once again reinforces our perspective that unless the working class raises itself to a hegemonic position in key sites of power, and strengthens its capacity to mobilise and fight, the envisaged economic transformation will never happen.

The latest developments in the country reinforce the importance of expediting the implementation of a meaningful National Minimum Wage. The recently released Labour Market Dynamics, published by Stats SA, reveal that 50% of workers in South Africa earned below R3100 in 2015. This reinforces the findings of the Wits National Minimum Wage Research Initiative that over 50% of full time workers (or 5.5 million workers) earn wages, which are too low to bring them and their dependants out of poverty. A meaningful National Minimum Wage needs to be pitched at a level, which addresses this disgrace of working poverty, and the unacceptably high levels of wage inequality in our society.

A meaningful National Minimum Wage must be an important element of a new wage policy, which begins to recognise the dignity of every worker in our society, and overcomes the legacy of apartheid wage structures. 

COSATU rejects the narrow shortsightedness of those , who want this report rejected in its entirety on the grounds of one or two components we don't like. The federation is of the view that very little will be achieved in an environment ,where people are unable to offer coherent positions, which help to advance the cause of workers, which they claim to champion.

The Advisory Panel has decisively rejected the arguments of those, who have claimed that we cannot implement a NMW in our country, and those who have claimed that it will result in massive job losses. They have shown how a meaningful NMW will go a long way towards improving the plight of the working poor in SA, and combat the obscene inequalities. We totally agree with their view that a NMW is not a silver bullet by itself but needs to be combined with developmental labour market and economic policies, which tackle the cheap labour basis of our economy. We also appreciate their support for a universal NMW, and rejection of different rates for youth, small business, regions etc. 

The NMW is a product of workers living wage struggles since the 1980’s, and the product of continuous pressure for the adoption of a legislated NMW by workers and their federation COSATU. The struggle for a Living Wage is a long and difficult one, which includes the struggle for affordable basic services, transport and food, and decent wages and working conditions and will only be achieved through the collective power of workers

We totally reject the public statements and the fear mongering by those , who are predicting catastrophic job losses if the minimum wage is introduced. 

This fear mongering is what bogged down the negotiations for nearly two years, where government negotiators supported proposals for an ultra-low NMW put forward by business. We also warn business not to think of going back to their insulting proposals for R1800-2200 which they have been advancing over the last year.

We appeal to all unions and labour federations in the country, and progressive civil society, to close ranks to advance the achievement of a legislated NMW, work together to achieve the best possible deal for workers, and avoid snatching defeat from the jaws of victory.

We are going back to Nedlac to take the process forward and the mandate to our negotiators is based on the following key elements:

- The R3500 starting figure (or R3900 for 45 hours) for the NMW recommended by the expert panel is a significant improvement on what business and government negotiators were proposing, but is still inadequate. We mantain our position that the R4 500 figure is the correct starting level on which we must progressively improve. 

- The starting figure must be combined with a firmly agreed medium term target to achieve a decent NMW within a stipulated timeframe, and an agreement must be reached that there will be annual increases to progressively achieve this target. This is the only basis on, which we can move away from our demand for a first minimum wage of R4500.  We therefore don’t support proposals for a two year ‘transition period’ in which there are no increases, or for a review process which doesn’t guarantee annual increases. 

- Effective sanctions must be put in place to ensure proper implementation of the NMW, otherwise the NMW will become a voluntary and meaningless exercise. Notice should be given to the country at the end of this year of the agreed NMW, and this will give all employers time to prepare for its implementation. The principle of more limited sanctions for violating the NMW in the first six months could be considered, such as denying access to state tenders and other government incentives to those violating the NMW, but there must be meaningful sanctions.

- Any temporary exclusions of sectors, while not rejected in principle, must be the result of negotiated agreements, and must be agreed to upfront (as agreed in the Nedlac Wage Inequality Task Team), and must be contained in the NMW Act, as is the international practice. 

- We demand a minimum wage of all workers without any exclusions. We call for an inclusion of those Public Works workers in the EPWP and CWP. Government must lead by example.

- Agreement must be reached on how sectoral determinations and collective agreements will relate with the NMW, including but not limited to the fact that their minimum wages must all be brought to at least the level of the NMW, in instances where they were below that level. Further, that it will be illegal for the wages of any worker earning higher than the NMW at the time of its introduction, to be brought down to the level of the NMW, or to be reduced at all.

- Strong provisions are required to compensate workers working short hours, both in terms of provisions for payment of minimum hours, as well as a premium for short time, as currently contained in various sectoral determinations.

- We will scrutinise and engage further on the proposed institutional arrangements and legal amendments to ensure that the objectives of introducing a NMW are taken forward most effectively by these proposed arrangements.

- The introduction of the NMW must be linked to a plan to extend comprehensive social security, in particular to cover all unemployed adults.

- We support the Panel’s recommendations to address wage inequality including through introduction of a prescribed wage ratio between the top and bottom 5% in the Employment Equity Act.

We will report to our members, fraternal organisations, and the public at large to explain our positions on the NMW, and why we believe our proposed package constitutes the basis for making a historic advance for workers.

Issued by Sizwe Pamla, National Spokesperson, COSATU, 23 November 2016