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Minimum Wage – Government’s understanding of economic realities questioned

A combine harvester working alongside a tractor on a crop in a field.
A combine harvester working alongside a tractor on a crop in a field.

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“The 8.5% adjustment of the National Minimum Wage, as it was published in the Government Gazette on February 2, 2024, is completely out of touch with the economic realities experienced by businesses and is indicative of the total lack of understanding about the economic conditions in the country”, says Francois Wilken, president of Free State Agriculture (FSA).

Wilken further notes that employers in the sector support reasonable and fair wages for employees. Farming is modelled on sound business practices which include financial considerations regarding, among other things, the availability of sufficient means to compensate employees. “This (repeated) drastic adjustment of the national minimum wage is not only out of touch with the economic realities, but will also place a substantial burden on the sector.”

“The agricultural sector has the ability to create jobs, something the country really needs at this stage. If the 32% unemployment rate is taken into account, however, it would seem as if economic realities have blown out the back door when looking at the actions of decision makers. Ideology and the realization that the election is likely to be more of a toss-up than in previous elections means that decisions are rather focused on survival at the ballot box as opposed to creating an environment in which business can flourish and issues such as unemployment and poverty can be effectively addressed.” says Wilken.

It is worrying that the National Minimum Wage Commission, in the report regarding proposed adjustments to the minimum wage, does not mention an important consideration such as productivity, something for which South Africa’s labour market is known for the wrong reasons. The effect of an indiscriminate minimum wage adjustment can have a further ripple effect on employment, while further job losses are not left out of account.