National Minimum Wage – Status Report

22 May 2017

Agri SA frequently receives questions around the national minimum wage and the status thereof. These are addressed below:

What is the status of the sectoral determination for agriculture?

The current minimum wage for the sector came into effect on 1 March 2016. The formula used to adjust the minimum wage was as follows: the previous wage, plus CPI (excluding owners’ equivalent rent) plus 1 percentage point. The current sectoral determination has been set for a three-year cycle, which means the same formula will be used to increase the minimum wage level in 2018. The current cycle could therefore be in force until 28 February 2019, provided that a national minimum wage does not come into operation before the time.

In which processes did Agri SA participate?

In September 2014, Agri SA participated in a workshop hosted by the deputy president of South Africa, Cyril Ramaphosa. At the event, various countries presented the processes and practices applicable to their respective national minimum wage trajectories.

Agri SA, on invitation, also made a presentation to the Portfolio Committee on Labour regarding the potential effect that a national minimum wage could have on the sector.

Agri SA, co-funded by the International Labour Organisation, contracted the Bureau for Food and Agricultural Policy to conduct research on different minimum wage scenarios and the effect thereof on the sector. The report was subsequently made available to the Portfolio Committee on Labour, the Employment Conditions Commission, Prof. Haroon Bharat and Natasha Mayet from the University of Cape Town, and the National Minimum Wage Panel.

In January 2015, a task team started meeting at the National Economic Development and Labour Council (Nedlac) to engage on measures to address wage inequality, including the modalities for introducing a national minimum wage. The task team reported to the Committee of Principals, consisting of senior leaders of each of the constituencies and chaired by the deputy president. Following bilateral meetings between the deputy president and the Nedlac constituencies, the Committee of Principals meeting of 25 June 2016 agreed to the establishment of a multi-disciplinary advisory panel of independent experts to advise on certain matters related to the national minimum wage and to make recommendations on the level at which the first national minimum wage should be set.

Four engagements between the task team and the National Minimum Wage Panel also posed an opportunity to provide information on peculiarities in the agricultural sector such as hours of work in both peak and off-peak seasons, which differ depending on the type of commodity; payment for minimum hours in instances of bad weather; and payment arrangements for services and in kind, amongst others. The realities of the sector as a price taker were also discussed at length.

In October 2016, a panel of experts appointed by deputy president Cyril Ramaphosa to provide advice and assistance on the formulation of policy on the introduction of a national minimum wage made its report and recommendations public. This came after almost two years of deliberations on the issue by social partners within Nedlac. On 8 February 2017, the Deputy President made a subsequent announcement on the implementation of a national minimum wage. The agreement concluded between social partners, excluding Cosatu (no confirmation was received that Cosatu had signed the agreement), was signed by leaders from Government, Organised Business, and the Community.

So, has Agri SA signed an agreement?

Agri SA has not signed any agreement. The agreement was signed by leaders from Government (Deputy President and Ministers), Organised Business and the Community.

What agreement has been reached on the national minimum wage?

The agreement reached amounted to a national minimum wage of R20 per hour. It was agreed that once introduced, agricultural workers would be paid 90% of the national minimum wage, which amounts to R18,00 per hour. It was also agreed that the minimum wage payable by the sector would be increased to 100% of the national minimum wage level within 2 years pending research by a National Minimum Wage Commission.

Will the national minimum wage be implemented on 1 May 2018?

Once the legislation has been drafted, it must be tabled for negotiation at Nedlac. Social partners will engage on the content. New legislation that requires extensive engagement and can take up to six months to be finalised as per the Nedlac protocol. The latter is only to finalise the Nedlac process. A draft National Minimum Wage Bill has not yet been tabled at Nedlac. Once the process of engaging on the proposed Bill has been finalised, a Nedlac report will be prepared and sent to the relevant Minister for tabling in Parliament. For any new legislation, a Social and Economic Impact Assessment (SEIA) must be conducted and public hearings must be held by the Portfolio Committee on Labour before such legislation is debated, considered, and voted on by the National Assembly and National Council of Provinces.

The probability of a national minimum wage being introduced on 1 May 2018 is very slim. A National Minimum Wage Act and related legislative framework must first be developed, negotiated, and then passed by Parliament, a process that could take more than a year for Parliament to finalise.

In what is Agri SA still involved?

Agri SA is still involved in various processes and discussions, such as:

- conducting research on the impact of the proposed hourly wage on sub-sectors in the agricultural sector;

- discussions on the practical application of minimum hours per day for which a worker must be paid;

- section 50 variations; and

- inclusion of the rest of the provisions of the sectoral determination as an addendum to the Basic Conditions of Employment Act.

How will Agri SA consult with its members?

A workshop was held on 14 February 2017 to discuss the agreement reached and the impact thereof on the sector.

A smaller task team has been established to look into the impact of the national minimum wage on the sector and to draft a proposal which must be submitted to various forums, for example the National Minimum Wage Commission, for inclusion in the SEIA. Members will be required to sign off on the proposal.

How will Agri SA engage in the legislative process?

Based on mandates received from our members, Agri SA will participate in all legislative process.

Issued by Elize van der Westhuizen, Policy Head: Labour and Training Directorate and Centre of Excellence, Agri SA, 22 May 2017