/ 16 September 2012

National minimum wage a moot point at Cosatu conference

Cosatu President Sdumo Dlamini
Cosatu President Sdumo Dlamini

Congress of South African Trade Union (Cosatu) will discuss implementing a national minimum wage in all sectors, at its congress starting on Monday.

"An initial national minimum wage set at say R2 800, while still low, would have an immediate positive impact on millions of workers," the Cosatu said in its organisational report.

"This national minimum would be a legislated basic wage floor, below which no worker could fall," it said.

Cosatu said there were two ways to calculate a possible minimum wage.

It could be based on a minimum living level, although South Africa does not have an agreed standard.

The Labour Research Service has suggested a level of R4 105 for a family of five, while the University of South Africa (Unisa) has put forward a supplementary living level of R4 000 and the University of Pretoria's household effective level is R5 500.

These figures are based on the cost of a basket of goods that each institution defines as necessary for basic living.

The second way of calculating a minimum wage is to look at the proportion of the average minimum wage to the national average wage.

The International Labour Organisation (ILO) argues that a national minimum wage should not be less than 40% to 50% of the average wage, or about two-thirds of the median wage. The median wage is the point at which the same number of workers earn below and above the median.

"Our current ratio is around 22% of the national average wage.

"If we took a ratio of 40%, we would be looking at a minimum wage of between R4 800 and R6 000, or below that is if we use the median wage calculation," Cosatu said.

"If we were to use these international yardsticks, we would arrive at a national minimum wage of around R5 000."

Cosatu said this was double the current average minimum wages of the sectoral determinations, which control the terms and conditions of employment for workers in particular sectors.

"It might be difficult to achieve this in one bite, even with the strongest of campaigns."

Cosatu suggested looking at a first step of around R2 800. This figure lies between the average minimum in sectoral determinations (R2 118) and the average minimum wage of existing collective bargaining agreements (R3 405) in 2011.

"This figure is purely raised for discussion purposes, and is not intended as a firm proposal," Cosatu said.

The introduction of a national minimum wage in Brazil did not lead to massive job losses, Cosatu said.

However, Adcorp labour economist Loane Sharp said the introduction of a national minimum wage would definitely lead to job losses.

"It's definitely feasible, but there's a trade-off involved; the higher the minimum wage, the lower the employment," Sharp said.

If a monthly national minimum wage of R5 000 was set, anyone earning below that would probably lose their job, he said.

According to the Statistics South Africa Household Survey, 8.9% of the national workforce – or 1.21-million people – earn below R5 000 a month.

"What it means is that people who are not worth R5 000 to their employers will lose their jobs.

"Cosatu hopes that everyone who earns less will suddenly be pushed up to the minimum wage, but that is naive. Most people will simply lose their jobs," Sharp said. "It would be disastrous."

He said the average monthly wage in South Africa was R13 284 in the formal sector, outside farming. If the informal and farming sectors were included, the average monthly wage was R2 852.

Cosatu's 11th-national congress takes place from Monday to Thursday in Midrand. – Sapa.