Varied parties are concerned about the 8,5% increase in the National Minimum Wage (NMW) which comes into effect next month. The South African Chamber of Commerce and Industry (SACCI) is of the view that government did not consult small business on the issue, preferring to engage big business instead. SACCI CEO, Alan Mukoki, tells the OFM Business Hour, that small business like family-owned establishments in varying corners of the country cannot absorb the increase whereas big business can. This discussion forms part of the show's weekly chamber update. 

“The government’s decision is unwelcome, negligent and reckless and will encourage business to rapidly explore and deploy an uptake of available and nascent technologies and Artificial Intelligence applications to reduce reliance on labour in an effort to survive. Furthermore, adding domestic workers to this same National Minimum Wage category, further complicates the situation. Many households are straining under the pressure of high interest rates and paying out of their own income, for public goods such as transportation, quality education, security and health care, due to the government’s failure to provide these public goods at an acceptable cost, quality service, availability and reliability” - Alan Mukoki, SACCI CEO.

ALSO READ: Increase in minimum wage may result in more unemployment

Free State Agriculture on the other end has expressed shock at the NMW increase. The President of the body Francois Wilken says they made submissions to the National Minimum Wage Commission, indicating farmers cannot afford the burden on their bottom line.

The 8.5% adjustment of the National #MinimumWage, is completely out of touch with the economic realities experienced by businesses and indicates the lack of understanding about the economic conditions in the country”, means Free State Agriculture (FSA). https://t.co/X67ydldZgb

— Vrystaat Landbou (@vslandbou) February 5, 2024

Don’t disregard the hike, rather explore the exemption process 

Last year, the National Manager at the Consolidated Employers Organisation (CEO) Jaundré Kruger advised struggling business owners to not disregard hikes in the NMW, advising instead that they explore the exemption process that is available legally. 

He told the OFM Business Hour at the time that Section 15 of the National Minimum Wage Act allows for employers who can show that they cannot afford to pay the national minimum wage to workers, be exempt from it. The CEO National Manager said history shows that this exemption is often times capped at 10% of the minimum wage. Now, this may seem ineligible, however, when you do the mathematics and factor in a large number of employees – it can make a substantive difference.

ALSO READ: Is your business feeling the pinch of the minimum wage?

Who constitutes the National Minimum Wage Commission?

For context’s sake, the National Minimum Wage Commission was set along with the aforementioned Act in late 2018. The Commission is made up of the Chairperson, appointed by the incumbent Labour Minister; three members of organised business; three members of organised labour; three delegates from the community; and three experts. The Commission collectively looks at fundamental macroeconomic developments in the country and take recommendations from the public in suggesting a national minimum wage hike. Their final recommendation from the Commission is sent to the Labour Minister, who will decree it and have it published in the government gazette. Recently new members were appointed to the commission. 

[Audio] Employment and Labour Minister @NxesiThulas appoints the second NMW Commission to advice on setting of minimum wages. #NationalMinimumWage@TebohoThejane1 pic.twitter.com/vY2j36SBp3

— Department of Employment and Labour (@deptoflabour) February 8, 2024

OFM Business Hour