Agriculture: New minimum wage will lead to job losses

Due to the manner in way agriculture is structured in South Africa, the R105 minimum wage will lead to large scale job losses and an inevitable reconstruction of agriculture.

Everybody is welcome to a minimum wage. Unfortunately the choice in South Africa is often between minimum wages or no work at all. It should be expected that South Africa's agriculture will in the next couple of years undergo a total restructuring where farmers will be changing to less labour-intensive products or will mechanise in an effort to balance their books.

Due to South Africa's high unemployment figure, we are forced to emphasise labour-intensive labour practices in agriculture. South Africa, with this minimum wage determination, is inevitably starting to move away from this with urbanisation as the logical result. Where permanent workers will not be affected so much by the new wage determination, it will lead to the dismissal of tens of thousands of seasonal and temporary workers. The decision will also directly work against the governments' intention to create more jobs in rural areas. It will also very negatively affect emerging farmers.

With regards to the implementation date of 1 March, farmers will be forced to recalculate their financial situation in the middle of the agricultural season. The increase from R69 to R105 is an increase of 52%. Every farmer will have to recalculate his wage bill while agricultural products' prices will not be increasing by nearly the same figure at all.

A possible solution for this agriculture dilemma is to investigate a government wage subsidy for farmers who create jobs. If a youth wage subsidy is possible, such a wage subsidy would help curb job losses in rural areas.

Statement issued by Dr. Pieter Mulder, FF Plus Leader, February 4 2013

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