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South Africa – Five years to investigate a minimum wage

22 January 2014

The South African Department of Labour will devise proposals over the next five years for the introduction of a national minimum wage. They will also look into the provision of retirement savings for workers, as outlined in the National Development Plan and the election manifesto of the African National Congress (ANC), reports bdlive.co.za.

The issue of a national minimum wage was raised by President Jacob Zuma in his annual speech to the ANC on the 8 January 2014, stating his commitment to: “Investigating the modality for the introduction of national minimum wage, as a key component of reducing inequality.”

Mildred Oliphant, Labour Minister, commented yesterday: “The department is of the view that minimum wages should increase to a level that addresses the challenge of poverty and that supports economic expansion. Our legislative framework for minimum wage regulation is the Basic Conditions of Employment Act (BCEA).”

"The BCEA adopts a sectoral approach to minimum wage regulation through the mechanism of sectoral determinations. An amendment to section 55 of the BCEA does make provision for the issuing of an ‘umbrella’ sectoral determination covering employees not covered by other sectoral determination or by a bargaining council collective agreement.”

"So, there may be ways in which a new minimum wage that has wide application could be introduced. The more difficult challenge will, of course, be to determine the level of a new minimum wage," she concluded.

Ms Oliphant said the department believed all sectoral determinations should include provision for retirement savings and would investigate what mechanisms were appropriate to give more low-income workers access to retirement savings.

Ms Oliphant stressed that the government was committed to a policy and legislative approach of regulated flexibility of the labour market that balanced the necessity for regulation with the need for flexibility and dismissed criticism by international bodies; such as credit rating agencies and the International Monetary Fund, that the labour market in South Africa was inflexible.

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