Enforced wage hike for farmworkers: concern it may lead to job losses, food price increases

The increase in the national minimum wage, with effect from March 1, is likely to lead to further job losses as agricultural organisations wonder whether employers will be able to sustain the increases.
Image: Johnny Onverwacht

The increase in the national minimum wage, with effect from March 1, is likely to lead to further job losses in the agricultural sector.

Agricultural organisations said employers might not be able to absorb these increases, and if they did, this could mean an increase in food prices.

Employment and labour minister Thulas Nxesi announced on Tuesday that the national minimum wage for each ordinary hour worked had been increased from R20.76 to R21.69.

The special dispensation for farmworkers has now been done away with. The minimum wage for farmworkers will now be equalised with the other sectors, from R18.69 per hour to R21.69 per hour.

Agbiz warned that the sharp increase in the national minimum wage will negatively affect various labour-intensive subsectors of agriculture.

Agbiz CEO Dr John Purchase said the increases were not aligned to economic realities.

He said labour-intensive subsectors were under pressure. The wine industry, for example, had been hard hit by the recent ban on alcohol sales.

“We fear the recent adjustment will add to already tough economic conditions.”

Purchase said the equalisation of the wages for farmworkers amounted to an increase in farmworkers’ wages of 16.1% in a single financial year.

“Even the subsectors that performed well in 2020 will be affected, as no sector can be expected to absorb an increase of 16.1% in a single financial year.”

Another organisation, TLU SA, said in December last year, it commented against implementing an increased minimum wage and suggested the government should set it aside until the economy and employment rates picked up.

It said it seemed the National Minimum Wage Commission paid no heed to any of the comment from the agricultural sector.

“The ability of employers – farmers – to absorb these levels of remuneration, is impossible. We shudder when thinking of the consequences of unemployment in SA when the government implements the increased hourly rate,” TLU SA president Henry Geldenhuys said.

He warned consumers that the government’s more expensive labour wages would only lead to an increase in food prices.

The South African Parastatal and Tertiary Institutions Union (Saptu) said it welcomed a measure of fair remuneration for farmworkers, but said the ability of employers in this sector to sustain the increase must be considered.

“The affordability of labour will become a major consideration within those enterprises where profitability and sustainability is under pressure,” general secretary Ben van der Walt said.

The DA said the above-inflation minimum wage increases would lead to further job losses at a time when unemployment was already rampant and rising.

It said a double-digit increase in the minimum wage would in all likelihood lead to increased mechanisation, resulting in even greater job losses in the agricultural sector.

“We are now likely to see more retrenchments and further job losses. In a country with unemployment as high as SA’s, we should be pricing people into jobs, not out of them.”

by Ernest Mabuza

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