Statement by Deputy President Cyril Ramaphosa on the finalisation of agreements on labour stability and a national minimum wage

8 February 2017

Good afternoon,

Following a meeting of social partners in Cape Town yesterday, representatives of government, business, the community sector and two of the three labour federations represented at Nedlac signed agreements on measures to strengthen labour stability and collective bargaining and on modalities for the introduction of a national minimum wage.

The third federation represented in Nedlac, the Congress of South African Trade Unions (Cosatu), was not present to sign the agreements, having asked to be given time to provide a full report to its Central Executive Committee.

The agreements signed yesterday represent a significant advance in our efforts to address the challenges of wage inequality and labour instability.

They provide further momentum to our national effort to tackle poverty, unemployment and inequality.

They respond to the constitutional injunction for the restoration of the dignity of our people.

We have set a firm foundation towards the realisation of the living wage, a principle now adopted by all at Nedlac.

These agreements are the outcome of nearly two years of deliberations under the auspices of Nedlac.

They are a response to the call made by President Zuma in the State of the Nation Address on 17 June 2014 for social partners to deliberate on how to address low wages, wage inequality and violent and protracted strikes.

In the Declaration on Wage Inequality and Labour Stability, the social partners confirm the principles that have underpinned their deliberations and which form the basis for the agreements reached.

They assert that the most immediate national priorities are the creation of jobs on a massive scale, a reduction in inequality and the alleviation of poverty.

Extreme levels of wage inequality, in particular, contribute in significant measure to the persistence of widespread poverty and serve to constrain economic growth and social development.

They also assert that accelerated economic growth, higher rates of investment, improved productivity and faster job creation require a stable labour market environment, in which the rights and responsibilities of all stakeholders are respected and promoted.

In pursuit of these objectives, the social partners have reached agreement on modalities for the introduction of a national minimum wage of R20 an hour to be implemented from no later than 1 May 2018.

This translates to about R3,500 for those working 40 hours per week and about R3,900 for those who work for 45 hours per week.

The national minimum wage, which is a floor below which no worker may be paid, will significantly improve the lives of millions of low paid workers and begin to address the challenge of wage inequality.

At its introduction next year, South Africa will join several countries around the world that have implemented a national minimum wage as an instrument of economic and social development.

The social partners have resolved to set the national minimum wage at a level that has a meaningful impact on the wages of the lowest paid workers while minimising any negative impact on employment.

A National Minimum Wage Commission will be established to recommend annual adjustments to the level of the national minimum wage.

The national minimum wage will also be regularly reviewed to take into account the impact of the level on employment, poverty and inequality.

Businesses that are unable to afford the national minimum wage may apply for an exemption for up to 12 months.

Any fragile sectors that are having difficulty in complying with the NMW will be considered for assistance within the available means, including through incentives.

The social partners will finalise discussions over the next few weeks on issues such as the NMW Commission’s institutional arrangements, minimum daily working hours and the status of Expanded Public Works Programme participants.

Significantly, parties have agreed on a need for an evaluation on the quality of training and working conditions of people engaged in public employment programmes with a view to maximise the impact of the programmes on the lives of participating South Africans.

The social partners will be undertaking extensive public consultation on the introduction of the national minimum wage ahead of the finalisation of the necessary legislation.

As part of a comprehensive set of measures to improve labour stability, the social partners also signed an Accord on Collective Bargaining and Industrial Action in which all social partners commit to take all steps necessary to prevent violence, intimidation and damage to property and improve the capacity of the social partners and other agencies to resolve disputes peacefully and expeditiously.

They have also adopted a Code of Good Practice on Collective Bargaining, Industrial Action and Picketing that provides practical guidance on collective bargaining, the resolution of disputes of mutual interest, the resort to peaceful industrial action and picketing processes.

The deliberations have resulted in agreement on a number of proposed amendments to the Labour Relations Act to strengthen provisions on the extension of bargaining council agreements, picketing rules, strike balloting and the resolution of industrial disputes through mechanisms like advisory arbitration.

When implemented, these proposed amendments will provide employers and employees with mechanisms to resolve disputes more effectively and expeditiously and minimise the potential for protracted or violent industrial action.

The agreements signed yesterday underline our conviction that working together as government, business, labour and communities we can achieve more.

These agreements give us hope that there is no challenge that we cannot overcome.

In conclusion, I wish to extend my gratitude to all the members of the Committee of Principals, who guided this process, for their contribution and commitment to ensure the success of this process.

I wish to thank the Advisory Panel on the National Minimum Wage whose hard work, insight and wise counsel laid the foundation for the signing of the agreements.

Our deliberations in the course of two years show that social dialogue in our country remains necessary, relevant, vibrant and concentrated on the best interests of all sections of our society.

Finally, may I convey my sincere gratitude to President Jacob Zuma for his leadership and guidance in the course of this mandate, and for leading our efforts to move South Africa forward.

I thank you.

Issued by the Presidency, 8 February 2017