Neasa’s submission to the National Minimum Wage Commission

On 10 September 2021, the National Minimum Wage Commission (‘the Commission’) published an invitation for written representations by the public, regarding the review of the National Minimum Wage (NMW) for 2022, and possible adjustments thereto. These representations are considered by the Commission, prior to the drafting of its annual recommendation report to the Minister of Employment and Labour.

NEASA has, after publication of this invitation, conducted a survey among employers, in order to determine what the effect of any possible adjustments to the NMW will be on their businesses, and the extent of their ability and capacity to absorb or withstand an increase. The results of this survey were processed and included in NEASA’s submission to the Commission on 1 October 2021.

In NEASA’s submission, it clearly indicated to the Commission that, in view of the current economic climate in South Africa, the effects of the Covid-19 lockdown, as well as the recent losses due to violent lootings of mid-2021, an increase to the NMW will be catastrophic to South African businesses and the economy in general.

The various factors of South Africa’s current frail and recovering economy were discussed and utilised to substantiate the arguments from NEASA against any increases to the NMW. NEASA implored the Commission to realise the gravity of the effect an increased NMW will have on SMMEs and the soaring unemployment rate in the country.

As aptly stated in their submission, NEASA said:

“The effect of any adjustments to the NMW should not, and cannot be considered lightly. In a country such as South Africa, which is already struggling with unprecedented rates of unemployment, extreme poverty, over-burdened employers and business owners, and a veneer-thin trust in Government and its ability to care for its most vulnerable citizens, an unaffordable NMW will completely maim the already crippled economy, leaving employers, business owners, their employees and their dependents destitute.”

NEASA also undertook to perform another survey among employers upon the publication of the Commission’s recommendation report to the Minister, to evaluate the response from the business community, based on any adjustments recommended.

If these employers, as they confirmed in their initial survey answers, cannot afford an increase, they will have no other choice but to reduce working hours or retrench their employees.

“What Government seems to fail to understand, is that when one employee is retrenched, it is not only that employee who suffers. In South Africa, we live in a dispensation where one worker is generally the only income generator in a family of 4 or 5 people. This means that they would all suffer the consequences of that one employee’s retrenchment.

The fact that an employer may not appoint a person at a rate below the minimum wage, even with the consent of such a person, robs a potential employee from earning at least some sort of living and condemns him to a life of abject poverty. This most certainly denies him his opportunity to work and obtain a skill and impacts his constitutional right to human dignity and sentences him to a life of dependence on an already overburdened social welfare system.”

The cost in terms of lives lost as a result of the Covid-19 health issue will fade into absolute insignificance, compared to the eventual dramatic impact of the cancer of unemployment, which not only kills people but destroys the very fabric of society.

NEASA concluded its submission, by stating:

“It would behove Government to reconsider its future stance on increasing minimum wages and take heed of the employers’ objections to increases. Their focus should be the avoidance of catastrophic future economic implications for the country and the rise of unemployment.

It is time for Government to take a critical view on all the legislative measures, of which the NMW is only one, and determine which deters employment.”

NEASA strongly believes that South Africa requires a dispensation that fosters a conducive environment for economic and business growth, as well as one which welcomes the implementation of laws that encourage employment.

To access NEASA’s submission, please click here.

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