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DECISION ON MINIMUM WAGES A DETERANT TO ADDRESSING UNEMPLOYMENT

Posted in: Press releases
Date Added: 2013/02/05

The National Employers Association of South Africa (NEASA) has taken note of the announcement by Labour Minister, Mildred Oliphant, of a R105 per day minimum wage for farmworkers, effective from March 1. This is a substantial increase from the current R69 a day. While NEASA is concerned about the effect that the increase will have on especially small and emerging farmers, we take in consideration that the Minister had to make a very difficult decision that would improve the lives of thousands of seasonal workers.

‘The Minister clearly had to perform a balancing act amid very difficult circumstances in which it was, from the onset, impossible to please everybody. It’s against this background that we express our views,’ says Gerhard Papenfus, NEASA  CEO. 

NEASA agrees with business and labour leaders that the raising of minimum wages by 50% will precipitate a huge restructuring of agriculture. It is understood that the Minister based the new minimum on a recommendation by the Employment Conditions Commission, a statutory body comprised of business, labour and two independent experts, with the task of recommending sectorial wage determinations. The commission, in turn, relied on research by the Bureau for Food and Agricultural Policy, a think-tank at the universities of Stellenbosch and Pretoria. 

‘Bigger farming units, which are more capital intensive, will have greater ability to accommodate the increases. Smaller operations, which are more labour intensive, will find it more difficult to deal with the increases. It’s specifically in these areas where the danger of more retrenchment lies,’ Papenfus said. 

NEASA has noted suggestions by the Minister that various avenues would be open to farmers who could not afford the new wage. This include applying for exemption; using the government’s training layoff fund; applying to the government’s Jobs Fund; and the possible use of the youth wage subsidy still under negotiation in the National Economic Development and Labour Council.

"These alternatives are merely theoretical options. If the entry level is too high, some employers simply will opt not to employ. Although there are certain severe social realities which need to be address such as poverty and inequality, perhaps the greatest challenge in this sector is unemployment. The new sectorial determination fails to address this crucial element", Papenfus said.  

NEASA is of the view that any form of a prescribed minimum wage is a deterrent to employment, especially with regard to small farming units and new entrees into the market. Without incorporating an effective structure into any wage model, through which struggling and prospective employers can quickly and effectively obtain relief, the impact on job creation and job retention will be negative.

Meanwhile, NEASA is also concerned over statements made by Cosatu in the Western Cape.  Secretary Tony Ehrenreich said that 'bad' farmers, who suggest that they would not be able to pay the increased wages, will lose their land. He said that those who cannot use their land must lose it. 

‘This statement by Tony Erenreich is insensitive and uncalled for. Even those farmers who cannot afford to pay the suggested wages form a crucial part of the Western Cape economy. Statements such as these illustrates ignorance towards agricultural realities and the specific challenges in this sector. Instead of creating understanding and hope, it will drive a wedge between workers and farmers. This is something that will not be beneficial to anybody,’ Papenfus said. 

For more information please contact:

Sya van der Walt

082 332 9512

sya@neasa.co.za 

www.neasa.co.za

 

NEASA – Established in 1996, the National Employers Association of South Africa is the country’s largest employers’ association registered in terms of the Labour Relations Act. NEASA focusses on collective bargaining, extensive IR services and specialized legal representation at all dispute resolution forums to even the most remote areas in South Africa.



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