Hourly Minimum Wage Likely to Benefit Employees and Employers Featured

Tuesday, 24 April 2018 12:59 Imraan Valodia - Business Day
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Following the release of the report by the National Minimum Wage Advisory Panel, there has been much discussion about the level, and impact of the level, proposed by the panel. Surprisingly, there has been little, if any, debate on the panel’s proposal that the national minimum wage be based on an hourly, rather than a monthly, wage.


In SA, wages are generally benchmarked at a monthly or yearly rate. Indeed, very few waged workers and salaried professionals would be able to tell you their hourly wage. Why, then, did the panel depart from the general practice and propose a minimum hourly – rather than monthly – rate?


As the agreement reached at Nedlac was consistent with the panel’s proposal for the national minimum wage to be based on an hourly wage, it is important that the public understands the basis for the recommendation.


The panel proposed a minimum wage of R20 per hour (with a provision for a minimum number of hours worked at four hours). This equates to a monthly figure of R3,440 for those who work 40 hours per week, and R3,870 for those who work 45 hours a week. However, many people work nonstandard hours. Indeed, many part-time workers work a fraction of these hours, while others work longer hours. In addition, there are a range of provisions for hours of work in bargaining council agreements and sectoral determinations.


Although the Basic Conditions of Employment Act sets a maximum of 45 ordinary hours of work in any week, the act commits to a progressive reduction to 40 hours, but this is far from being realised.


While ordinary hours of work are variable across sectors and numerous provisions apply across sections of the economy, a national minimum wage applies across the entire economy, and should apply to everyone. It should also be easy to understand, and simple to calculate. Importantly, if all citizens understand it and it is easily discussed in the public discourse, the task of enforcing the national minimum wage is made much simpler and more effective. A level of R20 per hour fulfills these requirements.


According to the data in the 2015 Labour Market Dynamics report, the majority of workers who earn less than R3,500 per month work about 41 hours per week. For these workers a minimum wage of R20 per hour equates to about R3,500 per month, which is why this figure has been so visible in the press, and in discussions about the minimum wage.

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