Annual review of National Minimum Wage
Annual review of National Minimum Wage
The national minimum wage is once again due for its annual review by the National Minimum Wage Commission (the Commission). Section 6(1) of the National Minimum Wage Act 9 of 2018, (NMWA) requires the Commission to review the national minimum wage annually and make recommendations. These recommendations and the report compiled by the Commission play a significant role in determining the annual adjustment to the national minimum wage, which is currently R23.19 per hour.
At a glance
- The National Minimum Wage Commission is conducting its annual review of the national minimum wage in South Africa, as required by the National Minimum Wage Act.
- Interested parties have been invited to submit written representations to the Commission, which will consider factors such as inflation, wage levels, productivity, and the impact on employment.
- The review provides an opportunity for businesses and employees to provide input, considering the potential impact of a wage increase on the economy and the need for balance, especially in light of the ongoing COVID-19 effects. Further opportunities for written representations will be available after the Commission's report is published.
On 9 September 2022, an invitation for written representations was published in the Government Gazette, calling for interested parties to make recommendations to the Commission, which it shall consider before publishing its report. Section 7 of the NMWA requires the Commission to consider the following factors, which should be borne in mind by any interested party making written submissions:
- inflation, the cost of living and the need to retain the value of the minimum wage;
- wage levels and collective bargaining outcomes;
- gross domestic product;
- ability of employers to carry on their businesses successfully;
- the operation of small, medium or micro-enterprises and new enterprises;
- the likely impact of the recommended adjustment on employment or the creation of employment; and
- any other relevant factor.
This invitation is inter alia a chance for South African businesses to provide input into a decision that has a far-reaching impact. It is widely known that the majority of South Africans are suffering from poor socio-economic conditions, a concern which shall certainly be prevalent in the Commission's recommendations. An increase in the national minimum wage, that is above the rate of inflation, will provide South Africans with more spending power which will be redirected into the economy. However, given the fact that salaries are usually the largest expenses on a business's books, a substantial increase will have a ripple effect that may create the need for restructuring and retrenchments. This is particularly important at a time when businesses are still feeling the effects of COVID-19 and have yet to enter into a recovery phase.
The above concerns highlight the importance of input by both employers and employees for the Commission's consideration, to enable it to arrive at a decision that balances all interests. The Chairperson of the Commission has called for written submissions to be made by 1 October 2022. These can be sent to either the directorate; Employment Standards, Department of Employment and Labour, Private Bag X117, or emailed to firstname.lastname@example.org.
Once the Commission's report has been published with its recommendations visible to the public, interested parties shall receive another opportunity to make further written representations, which willl be considered by the Minister of Employment and Labour together with the Commission's report.
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