Minimum wage review set for South Africa

South Africa’s national minimum wage is due to its annual review by the National Minimum Wage Commission.

In a recent government gazette (9 September), stakeholders were invited to make recommendations to the commission, which it will evaluate before drafting a report that will play a significant role in determining the annual adjustment of the national minimum wage.

The government recently updated South Africa’s minimum wage set on March 1, 2022, with the amount set at R23.19 per ordinary hour worked, which represents a 6.9% increase from the minimum wage set in 2021.

The next adjustment is expected to take place in March 2023. The previous increase was above inflationary levels; however, inflation has skyrocketed since then, significantly changing market conditions.

According to Cliffe Dekker Hofmeyr, the commission is likely to take the following factors into account when recommending its new minimum wage:

  • Inflation, the cost of living and the need to maintain the value of the minimum wage;
  • wage levels and collective bargaining results;
  • gross domestic product;
  • productivity;
  • the ability of employers to successfully run their businesses;
  • The functioning of small, medium or micro enterprises and new enterprises;
  • The likely impact of the recommended adjustment on employment or job creation; Other
  • Any other relevant factor.

This invitation is, among other things, an opportunity for South African businesses to provide input in a decision that has far-reaching impact, said Cliffe Dekker Hofmeyr.

“It is widely known that most South Africans suffer from poor socio-economic conditions, a concern that will certainly be prevalent in the commission’s recommendations.”

“An increase in the national minimum wage that is above the inflation rate will provide South Africans with more spending power that will be redirected to the economy.”

Since wages are usually the largest expense on a company’s books, a substantial increase will have a ripple effect that could create the need for restructuring and downsizing, said Cliffe Dekker Hofmeyr.

This is particularly important at a time when businesses are still feeling the effects of Covid-19 and have yet to enter a recovery phase.

Once the Commission report has been published with its publicly visible recommendations, interested parties will have another opportunity to submit further written statements, which will be reviewed by the Minister of Employment and Labor together with the Commission report. stated Cliffe Dekker Hofmeyr.

Reading: Perfect storm preparation for South Africa as load shedding intensifies