Enforced minimum wage ‘will sink small businesses’
SMALL businesses are pressing the government to tread carefully over enforcing a national minimum wage, warning that additional expenses would sink companies in the current difficult economic times.
Representatives, and at least one small business owner, yesterday advised the portfolio committee on labour to take the high rate of small business liquidations into account along with the rising costs of doing business when considering a benchmark for workers’ income.
The desirability of a national minimum wage has previously polarised the African National Congress-led governing alliance.
The Congress of South African Trade Unions (Cosatu) sees the minimum wage as one of many measures necessary for a "living wage", including strengthened collective bargaining, basic income support and caps on executive pay. These encompass social considerations such as the support and responsibilities of the employed towards their dependants.
Following submissions made to Parliament by interest groups, the portfolio committee on labour began hearings into the issue at the end of last year. Among those are bodies in the agricultural sector, which have warned that a minimum wage could worsen an existing trend of mechanisation.
The National Economic Development and Labour Council (Nedlac) was conducting more discussions on the minimum wage, following which the committee would listen to inputs and consider all those who participated in the dialogues.
Afrikaansehandel Instituut CE Christo van der Rheede said on Tuesday while regulating minimum wages was necessary in SA, a national minimum wage would result in struggling small businesses shelving their expansion plans as well as reducing labour requirements, thereby worsening the triple challenges of unemployment, poverty and inequality.
"In SA we are currently confronted with those three ills. We do not want to exacerbate that with the wrong policy choice. If we do not address these issues, we are going to have serious upheaval in this country. We need a private sector that creates jobs to make people want to invest and employ more people," Mr van der Rheede said.
Caroline Mtwana, a small-business owner based in Gugulethu, pleaded with the committee to consider exceptional provisions for small businesses should a national minimum wage be determined.
"I know at the end of the day, this is going to affect small businesses… But I wish you could also go down to the small businesses such as mine. If there is small room that you can make for exceptions for this minimum wage because when you decide it is going to be final," Ms Mtwana said.
However, proponents of a national minimum wage present lamented the high inequality in living standards between low and high income earners, saying sectoral determinations did not address it.
General secretary of the Confederation of SA Allied Workers Union Rene Govender said a national minimum wage was crucial for low income earners, given its potential multiplier effect and low wage earners’ proximity to social grant beneficiaries.
"When we set a minimum wage we must take into account the span of state-sponsored social security. This complements earnings of many income earners in the country. Wage regulation in a number of sectors vastly reduces exploitation of workers. We might not agree with the standards set, the policy would give workers the means to enforce a minimum wage," Ms Govender said.
Myrtle Witbooi of the SA Domestic Service and Allied Workers Union said domestic workers were subjected to low wages as well as an increase in transport and food costs over the past two decades. Domestic workers remain amongst if not the lowest paid employees in the South African economy.
"A minimum of no less than R5,000 or even more should begin to make a difference in the quality of our people’s lives. If we have a national minimum wage for domestic workers it is important to establish what stages we take it through to make employers understand its importance," Ms Witbooi said. - Khulekani Magubane, BDlive
