I have been in the practice of labour law for over thirty years. I have for these past thirty years been involved with various wage negotiations for small and big businesses. I have sat on both sides of the table and to this day, I still represent some of the small independent unions in the Western Province. I believe that after much practice and after experiencing many strikes when the wage negotiations had failed I do have at least a small understanding of the dynamics of a minimum wage.
I can certainly understand and I can empathise with the fact that employees are unable to keep up with the rapid rises in the cost of living. Likewise, I know that for each worker they have at least four to six dependents. The situation in South Africa is one of the worst in the world. With all this in mind, it cannot be business as usual. On the other side of the coin, it needs to be understood that small business, which is effectively the engine room for job creation, cannot sustain prohibitive wage increases. There needs to be some encouragement for these small businesses to employ more people. Therefore everyone will understand that there is a fine line that must be followed. On the one hand the workers need more and on the other hand the businesses cannot afford to pay more than they can sustain.
In South Africa today we have one of the highest unemployment rates in the world, furthermore it has been predicted that this is going to be worse this year. The Ministry of Labour are hell bent on a national minimum wage which will override the Sectoral Determinations, the Bargaining Council Agreements and the Company Collective Bargaining. Obviously, these three areas of wage determination can bargain above the national minimum wage. No one wants to see a worker earning below the national poverty rate. However, this national poverty rate grows much bigger for each person a worker has to sustain. It would obviously be less onerous on each worker if they only have to sustain one or two people. This means that more employment would allow for each worker to live above the poverty rate.
So what comes first: do we try and create more jobs or do we give higher wages? The answer to this question would differ from person to person and I’m from the school of thought where we need more jobs and possibly a lesser wage. There is no correct answer and so obviously it would be fantastic if we could create an environment where we have more job creation and higher wages.
In order to reach a satisfactory response to the dilemma we cannot keep running our labour environment in the same manner that we’ve been doing for the last ten years. There has to be a drastic and urgent change. We need to rethink the labour environment and we need to create a less onerous regulatory labour environment. Any government in bed with the trade union movement would have its vision completely marred and they would be unable to take a step back to say what needs to be done.
We will be legislating in early course for a national minimum wage. We need an independent body of experts who can come in and have a look at the various sector specific wage setting systems so as to ensure that no one sector is destroyed by a wage which is set unreasonably high.
Finally, we will need a completely different type of governance when it comes to the regulatory environment for small business.