19th February 2018
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11th May 2020

Minimum Wage Bill Postponed

Minister of Labour announced last night that the signing into law of the National Minimum Wage Bill would likely be delayed for a period of five to ten weeks shy of the intended May Day enactment pending the facilitation of public participation.

Large volumes of public submissions and commentary are being cited as the reason for the delay. Adequate facilitation of public participation whereby members of the public and interested parties can tender commentary for consideration by lawmakers is a requirement for the validity of any and all Acts of Parliament. Lawmakers are however not bound to the considerations posited, as such in all likelihood the bill will be promulgated and signed into law unchanged given the advanced stage of negotiations between political leadership and Nedlac barring some firm and unforeseen argument for amendment.

Under the new law, companies under-capacity to pay the stipulated minimum by the determination of the Department of Labour may be exempted — the Department is in the process of developing a platform for the submission of these particulars online. It is very likely the case that entities misrepresenting data will draw hefty sanction.

Private equity and investors are likely to heave at the eventual enactment of the law mindful of the prospect of an artificial inflation of the costs of production, where South African firms face the challenges on an uncompetitive market position against other industrialising economies.

While as a protective measure the allowance for exemptions bodes well for jobs numbers, small businesses and rural employers; large domestic companies looking to export and interests — both public and private — eyeing South African attractiveness for foreign direct investment, are likely to be less enthused.
However optimists would see pay scale standardisation in the lowest tier of the labour market and entry-level work as an important initial step in the direction of enhanced fiscal planning capacities and the consolidation of more progressive measures of incentives and welfare reform — like a negative income tax incorporating private entities, as a workaround for traditional welfare traps — could stand to alleviate some apprehensiveness for long-term stakeholders.
According to the National Minimum Wage Bill, employers may not pay wages that are below the minimum wage and the national minimum wage cannot be varied by contract, collective agreement or law.

The national minimum wage is set for implementation from 1 May 2018, with the national minimum wage pegged at an aspirational R20 an hour for major sectors, with an eventual inclusion of exempted sectors such as farm workers, domestic workers, and Expanded Public Works Programme workers.