Ramaphosa’s minimum wage remarks stir up maximum debate

Karabo Tsoaledi* wakes up at 3.30am to get ready for her 6am shift. She fills her kettle from the tap outside and then pours the water into her washing dish. In winter, she lights the coal stove to warm up the four-roomed house she shares with her daughter, her older sister, three nephews and her father.

“Do you know how cold it gets in Bethlehem? Sometimes it feels like minus 10, and the taps are always frozen. It even snows sometimes,” she said.

Tsoaledi never finished matric and is now employed as a security guard at the Bethlehem magistrate’s court. She shakes her head and her dreadlocks brush against her face: “Yah, neh, I haven’t been paid in three months. Look at my slips [payslips].”

She works a 12-hour shift, Mondays to Saturdays, and on Sundays she starts her evening shift at 6pm. Tsoaledi’s salary has ranged between R439 and R857 in the past three months. “How am I supposed to live on this? I can’t afford to buy food. Sometimes I have to walk to work and I almost never carry food.”

Deputy President Cyril Ramaphosa revisited the question of a national minimum wage at the National Economic Development and Labour Council’s 19th annual ­summit on September 5. He said a social partners’ dialogue needed to be convened to address the related challenges of prolonged violent strikes and wage inequalities.

Ramaphosa said the issue surrounding the national minimum wage was not a question of “if” but “when” and “how” it will be implemented.

“[We must] examine the role of a national minimum wage in dealing with poverty and inequality,” he said. “[I will] take forward deliberations on key issues facing the labour market, especially the state of labour relations.”

Divided issue
According to Ben Stanwix, development policy researcher at the University of Cape Town, the minimum wage policy in post-1994 South Africa has been pursued with the aim of ensuring that workers in low-paid and vulnerable occupations are guaranteed a basic subsistence income.

The idea was to increase the wage “floor” so as to lift a portion of the working poor from extreme poverty and facilitate the redistribution of income in an extremely unequal society.

But the implementation of a national minimum wage has left trade unions, business and government divided.

For Herman Mashaba, founder of Black Like Me and former chair of the Free Market Foundation, Ramaphosa’s comments were “irresponsible”.

“We’ve got some serious reservations and concerns over the irresponsible statement the deputy president made,” Mashaba told the Mail & Guardian. “We should be looking at developing the economy and not implementing the [national] minimum wage. How can you talk about this when South Africa is a country with [one of] the highest unemployment rate[s] and people go hungry every night?” he said.

Mashaba said companies and small enterprises are in the business of making a profit, not overpaying workers. “If you force companies to pay high salaries, they will just choose to not hire people.”

Rethink Africa, a nongovernmental organisation dedicated to improving the living conditions of Africans to break the cycle of poverty, released a report this year that said South Africa is one of the most unequal economies in the world at present, with 10% of the country’s richest owning 68% of the total income.

South Africa has an official unemployment rate of 25.5% (the expanded definition puts the rate at 36.1%) and 40% of its population is experiencing a food crisis.

Jacklyn Cock, a professor of sociology at the University of the Witwatersrand, said food prices have soared in recent years and increased by 10.6% overall last year. Basic food items saw the highest spikes, with maize, white maize and brown bread increasing by 30%, 73% and 13% respectively.

Cock said: “At the same time, household incomes are falling. So food insecurity is at the centre of two realities – low incomes and high food prices.”

Mashaba said the problem of inequality, poverty and unemployment cannot be solved by such legislation because “bringing in the [national] minimum wage will just kill small businesses.

“The implementation of minimum wages make people dependent on the system. Who is going to employ them? Who is going to pay that amount? I have some family members [who are] in their mid-thirties and have a matric but haven’t worked in 10 years because of the minimum wage,” he said.

A desperate situation
Cosatu general secretary Zwelinzima Vavi told the M&G that Mashaba is “opportunistically using the plight of the unemployed to shield the responsibility of the employers”.

Vavi said there is no evidence that a national minimum wage leads to unemployment. “We don’t have a national minimum wage as we speak, but the unemployment rate is as high as 36%. But these figures don’t correctly reflect the seriousness of the youth unemployment problem because it excludes young people that have not been looking for employment.

“We must shield South Africa from poverty wages. The Mashabas say nothing about high executive salaries, but they say people should earn poverty wages to create jobs,” he said.

According to Stats SA, about 60% of people in the formal sector earn below R3 000 a month and 16% of working people get below R500 a month. “This is ridiculous. Working people are regarded as the working poor. They are enslaved by mashonisas [loan sharks]. This is the story behind the Marikana uprising. We want the growth and [company] profits to be shared,” said Vavi.

Tsoaledi told the M&G that she has had to take out a loan from her employer and from a mashonisa just to make ends meet. “I need to buy food for the kids and my father is very ill. The money I ­borrow generally goes towards those expenses,” she said.

Cosatu’s view is that the national minimum wage is necessary for a developing country. Vavi said South Africa should follow the model used in Brazil.

According to a G20 policy brief, Brazil’s national minimum wage was increased by 81% in real terms between 2003 and 2010. This resulted in 17-million jobs being created between 2002 and 2011.

The Brazilian economy saw a dramatic increase in formal employment, which outpaced informal jobs by three to one and led to a reduction in poverty levels and unemployment. “We must pay higher wages that will stimulate the demand for locally produced goods. That’s why the manufacturing sector lost all those jobs, because workers can’t afford [the goods] because of the low pay,” said Vavi.

Vavi added that the economy is stagnant because most workers are not able to actively participate in it, leading to low countrywide production.

But Mashaba maintains that the private sector will be worse off if the national minimum wage is implemented. He said that because the private sector – especially small business – is the main driver of the economy, forcing these businesses to pay higher wages would increase their input costs and ultimately lead to more job cuts.

“Tell me, who is exploiting who? Are we saying that they [unemployed South Africans] are exploited by not being allowed to work? Allow people to decide for themselves. Politicians are sitting with an annual salary of R3-million plus, but they want to say people need decent work and not work [for lower wages]. What about the unemployment of unskilled South Africans?” said Mashaba.

He added that South Africa is the worst performing economy in sub-Saharan Africa because of its draconian labour legislation.

Time to talk
The acting deputy director general for labour policy and industrial relations in the department of labour, Thembinkosi Mkalipi, said: “We disagree with them [business] as government. Our responsibility is to ensure working people take a decent salary home. Are you saying R1 800 is too much money?”

Mkalipi said what Ramaphosa did was open up a debate. “If they [business] say ‘no minimum wage’, it will be better for them to open their business elsewhere.”

In addition, he said, business cannot make sweeping statements about the adverse effects of the national minimum wage because it has not been implemented. “Why are they pre-empting that it will be devastating? They can argue that it is too high once implemented or when discussions are happening, but they can’t say ‘no minimum wage’,” he said.

Mkalipi said Ramaphosa has called for a labour relations indaba for November 4, which will discuss issues of equity, labour violence and strikes and the implementation of the minimum wage.

“The biggest democracy [the United States] is talking about implementing a minimum wage. [Barack] Obama is talking about this. Why is minimum wage a sin in SA? All the deputy president said was ‘let’s talk about it’.”

Vavi said the national minimum wage is not intended for people belonging to unions. “We have fought those battles and won them. This is for the most marginalised: domestic workers, security guards and farm workers, for example.” The likes of Tsoaledi.

* Not her real name.

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