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Minimum wage will not address income inequality gap

It is ironic that the proposed minimum wage announcement by Deputy President Ramaphosa came a few weeks after Shoprite CEO, Whitey Basson pocketed a “cool” R50 million bonus and when a Bloomberg report revealed that CEOs in South Africa earn amongst the best in the world relative to average worker income.

Depending on which side of the political and socio-economic food chain you sit on, the announcement could be a welcome relief, an insult or a threat to current jobs.

As we voice our opinions on the topic, it is worth briefly mentioning that the announcement has implications at two levels, the political and the operational or technical level.

At a political level, the proposed minimum could increase government support from the lowest income worker level but unions and other interested civil society organisations might feel the wage is still not decent or the appropriate living wage. COSATU at some point proposed a wage of between R4 500 – R5 000.

At an operational level, the biggest challenge the proposed wage faces is “enforcement”- we all know the policy implementation challenges that the country faces. Will the Department of Labour, which faces huge challenges in rooting out many unfair labour practises particularly against the most vulnerable workers, be ready to enforce this proposal once finalised? In fact the department is struggling to enforce equity in the workplace even for middle to senior management levels. Will they then be able to inspect and monitor compliance across all the various sectors of the economy?

Technically, questions have to asked about what the proposed wage means for small business and current sectoral determinations such as retail, domestic, agriculture and hospitality. As an example, the current monthly sectoral wage in wholesale or retail sector for a cashier who works an average of between 27- 45 hours a week is around R3 500 in any case, therefore there is actually no change for this category of employees despite their outgoing CEO of Shoprite earning 14 000 times more than the average worker in that sector. We should also ask ourselves whether current cashier wages are sufficient for maintaining daily living expenses such as those in consumer prices basket (CPI) like food, transport, electricity accommodation and school fees.

In 2014, the median income for the workers in South Africa was estimated at R3 000 per month, the same as the median income for the African household in 2012. This means that wages for the average worker in the country have remained relatively speaking, constant despite increasing food and transport prices.

So while any announcement on proposals to address the income and inequality gap is welcome, it is quite concerning that we make a spectacle about a wage that will not systemically address the socio-economic challenges faced by the poorest households and workers in the country. The fact that literature on the impact of minimum wages on employment and growth is mixed, there is a bigger moral question on the country to rise above “bottom lines” and start building a more equal society.

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