‘No logic in minimum wage’


Just as affirmative action (RA) and black economic empowerment (SEB) only benefited a handful of cadres at the expense of the masses, so too will the increased minimum wage benefit a small group at best at the expense of millions of unemployed.

So says Heloïse Denner, FF Plus MP and chief spokesperson on employment and labour.

RNews reported earlier that the national minimum wage was in the government Gazette adjusted upwards by 8.5%.

“For the ANC government, it’s just another cheap way to score political points before the election with no consideration of its harmful consequences,” Denner believes.

The FF Plus is strongly opposed to a minimum wage, as it goes against the sound principles of a free market system.

“Remuneration must be fair and must result from a negotiation process between employer and employee subject to experience and productivity. The exploitation of workers through starvation wages is wrong and unacceptable.”

According to Denner, the reality of the 8.5% increase in the national minimum wage to R27.58 per hour is simply that many people will lose their jobs and the country’s unemployment rate will increase further.

The National Reserve Bank’s forecast average inflation rate for 2024 is 5%. “This makes it clear that an increase of 8.5% is totally excessive. People with a basic monthly income such as pensioners will not be able to afford the increased minimum wage.”

Salary earners with an average income are struggling more and more to survive and will increasingly have to roll up their sleeves themselves to do their home and garden work. The result is that workers such as domestic helpers and garden workers will be laid off and will no longer find work.

“The same will necessarily happen with farm workers whose wages are standardized with the general minimum wage and no longer happen on a sectoral basis. Farmers will have to mechanize more and more. The truth is that thousands of salary earners cut money for a domestic helper or gardener because they realize the people are unemployed and sympathize with them.”

According to her, this is totally different from the ANC, which shows a total lack of insight and humanity with ill-considered and harmful decisions like this.

New minimum wage will lead to layoffs

Bennie van Zyl, general manager of TLU SA, agrees about the possible layoffs.

“It is an election year and we realize that rational decisions are not being made, but rather populist and emotional decisions. The announcement of the new minimum wage that will come into force on 1 March 2024 is proof of this. Rather than focusing on job creation, the ANC is using an increased minimum wage to buy votes.”

Van Zyl says his organization questions whether the comments that have been submitted have been read at all and whether the logical, rational arguments about the establishment of a minimum wage have been taken into account and takes a position against the decision.

“Entrepreneurs strive for profitability in extremely difficult circumstances, which are largely due to the government’s incompetence. Now legislation requires that an hourly wage of R27.58 must be paid. Yet the government itself pays only R15.16 per hour to those who work on government projects – an amount that is almost a starvation wage if current living costs are taken into account. It seems easy for them to make demands on others that they themselves cannot meet. This while South Africans’ taxes are being used to compensate government project workers.

“So the question is, how are we expected to obey legislation if the government itself doesn’t even do it?”

Van Zyl says entrepreneurs constantly focus on profitability – this is after all when a business is considered successful. They must manage factors of production, such as natural resources, entrepreneurship, labor and capital, to achieve success.

Traditionally, only the above four factors of production applied, but today technology is the fifth factor. It is increasingly becoming a consideration for entrepreneurs to replace workers with machines.

“The 8.5% increase in the minimum wage will bring about further redundancies.”

Who speaks for the unemployed?

“TLU SA continuously wanted to know from the government who speaks on behalf of the unemployed,” adds Van Zyl. “With the unemployment rate climbing ever higher, the responsible decision on minimum wages would have been to allow market forces to regulate employment.”

The recent announcement will force entrepreneurs to make urgent decisions about their workforce in order to continue to be successful. The question then is whether the government really helps employees with a minimum wage if it can lead to the loss of jobs.

“Each entrepreneur must decide on their own sustainability. Labor can be replaced with technology.”

Erika Helm, chairman of TLU SA’s local government committee, says it is discriminatory for the government to set a minimum wage for employees who are already employed.

“The lower category of worker will be sacrificed, as it were, as mechanization is now the only way out for productive progress. It is regretted that the government’s short-sightedness could lead to further layoffs.”

This will also mean that adjustments must be made in agriculture. To improve productivity, farmers will have to consider more and more mechanization.

If the government does not focus on stimulating business growth and curbing corruption, South Africa is headed for disaster. The private sector must be allowed to conduct business without excessive restrictions, according to market-oriented economic principles.

Van Zyl says TLU SA is putting it to the government that their approach to handling labor is not in the interest of sustainable business. “Workers who accept their responsibility and fulfill their duty do not need minimum wage. They will earn a wage that is far above minimum wage. Instead, the focus should be on skills development and training so that skilled laborers can play a positive role.”

  • Read more about the submission made by TLU SA, Saptu, NEASA and Saai here: https://www.tlu.co.za/landbou-neem-n-standpunt-in-teen-die-minimumloonbeleid-in-suid -Africa/