The minimum wage is the lowest pay rate an employer can give an employee. It is important in workplace bureaucracy to protect the labor force from exploitation by job givers. It aims to protect those at the highest risk of exploitation in the labor market. In South Africa, the minimum wage has several stakeholders empowered, mandated, and controlled by legal frameworks. These stakeholders ensure that the minimum wage requirements are adopted and adhered to. The minimum wage sets the stage for the National Minimum Wage. They are discussed in this article.
To understand this topic, you first need to know who the stakeholders are and the role they play in setting the minimum wage.
Department of Employment and Labour
The Department of Employment and Labour is under the charge of the Minister of Employment and Labour, Mr. Thembelani Thulas Nxesi. The department is responsible for employment-related matters, including minimum wage. The department has the highest charge among all other stakeholders of the minimum wage in South Africa. Ultimately, all the other stakeholders report to or abide by stipulations set out by the ministry in accordance with The Constitution of the Republic of South Africa.
National Minimum Wage Commission
The National Minimum Wage Commission has the following functions under the National Minimum Wages Act of 2018 are to:
- Review the national minimum wage and recommend adjustments;
- Investigate and report annually to the Minister on the impact of the national minimum wage on the economy, collective bargaining, and the reduction in income differentials and make such information available to the public;
- Investigate income differentials and recommend benchmarks for proportionate income differentials;
- Set medium-term targets for the national minimum wage within three years of the commencement of this Act; and
- Advise the Minister on measures to reduce income differentials or any other matter on which the Minister requests the Commission’s advice;
- Advise the Minister on sectoral determinations;
- Advise the Minister on any matter concerning basic conditions of employment; and
- Perform any such function as may be required of the Commission in terms of any other employment law.”
Commission for Employers Equity (CEE)
The Commission for Employers Equity (CCE) is mandated by the Employment Equity act of 1998. Concerning minimum wage, the Act states that CCE is supposed to research and report to the Minister on any matter relating to the Act, including appropriate and well-researched norms and benchmarks for setting numerical goals in various sectors. In addition, they ensure that the Minister is aware of the nuances of the minimum wage in South Africa.
There is an allowance in law for collective bargaining aside from the Department of Employment & Labour and its supporting commissions. Collective bargaining is a process that leads to an agreement between employers and employees on employment conditions and status. Bargaining systems contribute to the department’s informed decision-making. In sectors where trade unions are absent, collective bargaining is used to mitigate problems facing employees at high risk of exploitation in the labor market. A bargaining system informs the Commission for Employers Equity (CCE) about the ideal minimum wage for workers in their various sectors. The Commission then informs the Minister, who then uses it as a consideration when deciding on the National Minimum Wage (NMW).
In order to function as a government policy, the National Minimum Wage is founded upon various legal frameworks. The most important ones are:
The National Minimum Wage Act of 2018
The National Minimum Wage Act of 2018 was assented to law to mitigate the income gap in the country. It’s the main legal framework forming the National Minimum Wage (NMW) foundation. Schedule 1, Section 6 of the Act stipulates that the National Minimum Wage be R 20 for every hour of work. However, the Act had three unique minimum wages for farm workers, domestic workers, and employees on expanded public works programs who received minimum wages of R 18 per hour, R 15 per hour, and R 11 per hour, respectively.
If an employer cannot meet this standard for any reason, the Act has a provision that allows for an exemption. An exemption is obtained through an application available to employers and employers unions. To qualify for an exemption, the employer has to fail the affordability test based on its liquidity, profitability, and solvency.
1st March 2021 Update
On 1st March 2021, the Minister for Employment and Labour updated the position of the National Minimum wage Act. In the revision:
- The National Minimum Wage was to be R 21.69 for every hour.
- Farm workers were to be given minimum wages of R 21.69 per hour as well,
- Domestic workers were to get an R 19.09 per hour minimum wage.
- Workers employed on expanded public works programs were also to get an R 19.09 per hour minimum wage.
However, the Minister later revised these figures for 2022.
Labour Relations Act of 1995
According to the Western Cape Government, the Labour Relations Act of 1995 regulates the organizational rights of trade unions. It also promotes and facilitates collective bargaining at the workplace and the sectoral level.
Employment Act of 1997
The Employment Act of 1997 stipulates the basic conditions of employment and, among them, the minimum wage. It establishes and makes provisions that regulate these basic conditions.
Employment Equity Act of 1998
The purpose of the Employment Equity Act of 1998 is to achieve equity in the workplace by:
- Promoting equal opportunity and fair treatment in employment through the elimination of unfair discrimination; and
- Implementing affirmative action measures to redress the disadvantages in employment experienced by designated groups to ensure their equitable representation in all occupational categories and levels in the workforce.
The National Minimum Wage (NMW) for 2022 became R 23.19 an hour effective 1st March 2022, following an announcement by Minister Nxesi earlier in the year. This was an increase from the previous year’s (2021’s) NMW, which was R 23.19. Unlike in 2018, when the National Minimum Wage was assented to, and in 2021 when newly revised numbers were adopted, this year, the National Minimum Wage also applies to farm workers, domestic workers, and workers employed on expanded public works programs.