By Solly Phetoe
The National Minimum Wage (NMW) has been a major victory for workers and a source of growth for the economy.
When the NMW came into effect in 2019, Cosatu, which had driven it over many years, was condemned by many.
Some employers and political parties claimed it would lead to retrenchments and collapse the economy. It hasn’t.
Others on the populist fringes, including some trade union leaders, claimed it was a sell-out slave wage, while they were quietly signing agreements for far lesser amounts.
Yet it has defied its short-sighted critics.
In South Africa, just like in other countries that embraced a NMW, such as Brazil, the US and Scandinavia, among others, it has proven to be a powerful tool to tackle poverty and inequality.
It has boosted the wages of six million farm, domestic, construction, hospitality, cleaning, security, transport and other vulnerable workers and stimulated the economy as extra money in workers’ pockets is spent buying goods and paying debts.
Cosatu and its predecessor, Sactu, fought for a NMW over many years. It was a key demand of the Freedom Charter adopted by the ANC in 1955.
An NMW is not a living wage – the two are very different concepts that complement each other. The NMW is the legal floor below which no one must be paid, while a living wage is a target that unions and society campaign for.
It is easy for the wealthy to mock the NMW, yet just over a decade ago, Cosatu was forced to intervene in De Doorns where farmworkers endured horrific living conditions fuelled by being paid as little as R6 an hour, not even enough for half a loaf of bread then.
With the NMW in effect, farmworkers are now entitled to at least R27.58 an hour, the equivalent of nearly two loaves of bread.
President Cyril Ramaphosa has laid great emphasis on building consensus between government, business and labour. This is precisely what he helped achieve over two years of tough negotiations at Nedlac, where agreement was won on a R20 an hour with farm and domestic workers pegged at 90% and 75% respectively for the first two years.
This agreement was supported by independent expert research on what various sectors of the economy could afford and pitched at an appropriate level that would avoid retrenchments, but be substantial enough to alleviate the worst poverty wages.
Farm and domestic workers, who combined nearly number two million, were deliberately pegged for two years to allow their sectors, which are prone to automation and retrenchments, to adjust and catch up.
Consideration was given to SMMEs who may struggle to afford an NMW. They can apply for limited exemptions to the Department of Employment and Labour on condition that they consult with their employees and unions and submit their financial statements confirming they genuinely cannot afford to pay the NMW.
Half of the companies applying for such exemptions have received them.
In 2023, the Employment Equity Amendment Act was passed, requiring companies doing business with the state to comply with the NMW Act, to reward companies who embrace our progressive labour laws and discourage those who don’t.
This past week, the department has called for public comments on the increase for the NMW for 2025. The government is required to adjust the NMW annually by law to protect its value from being eroded by inflation and to ensure it retains its poverty alleviation and inequality reduction impact.
Cosatu will be making its submission to ensure it is adjusted by a positive, above-inflation increase, to help the millions of workers depending on it cope with the rise in the cost of living.
We are proud that we have managed to ensure this since it was introduced in 2019.
It is important to remember that inflation hits the poor and workers the hardest not only because they have much less income, but also because the goods, e.g. transport, electricity and food, that consume most of their salaries increase at levels far above the CPI.
Painful examples are the rise in electricity tariffs of 18% in 2023, 12% in 2024 and a projected 33% in 2025.
While we celebrate this victory benefiting millions, we cannot remain complacent when many employers, especially for farm, domestic and construction workers, choose to flagrantly ignore the NMW and a host of other progressive labour laws.
This requires closer collaboration between the department and unions to inspect and tackle such delinquent employers and issue compliance orders. Workers must alert the department and unions when their employers deny them their legal right to the NMW.
While progress has been made in moving EPWP and CWP workers to the NMW across many of their streams and projects, it is long overdue that their 55% pegged rate to the NMW be ended and all be equalised. It is not justifiable for this to continue.
The NMW provides one platform to improve workers’ ability to take care of their families and improve their lives.
Another is the social wage, where the government invests billions to provide free housing, basic education with meals and tertiary education to the poor, health care for pregnant mothers and infants, social grants for 27 million citizens, and subsidised public transport.
These need to be reinforced, boosted and the next frontiers of National Health Insurance and a Basic Income Grant commenced.
Ramaphosa recently signed the Companies Amendment Act compelling employers in listed and state-owned companies to disclose their wage gaps, including what they pay their lowest earners.
This provides a foundation for a debate and the introduction of a limit in the wage gap between the highest and lowest earners in a workplace.
All of these are necessary if we are to overcome our apartheid legacies of inequality and poverty, grow an inclusive economy and slash unemployment. These are the bedrocks for a caring society that Cosatu will continue to unapologetically fight for.
Solly Phetoe is the General Secretary of Cosatu
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