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Numsa, Vavi slam new minimum wage

The new minimum wage bill was signed into law last week – setting the absolute least you can earn to R20 per hour according to BusinessTech.

According to TimesLIVE,  National Union of Metalworkers of SA (Numsa) has slammed the new minimum wage, due to the fact that it is not a living wage.

“CEOs in South Africa are paid obscene amounts of money, whilst the workers, who create the wealth, earn peanuts. Workers will earn R20 per hour, whilst CEOs will be earning an average of R8,625,” said Numsa spokesperson Phakamile Hlubi-Majola.

Zwelinzima Vavi has also slammed the bill, stating in a piece published at Politicsweb, “Even the President admits that R20 an hour is not a living wage! A Wits University study in 2015 calculated a poverty line that takes the costs-of-basic-needs of South Africans into account in order to link individual wages to household poverty, and derived a threshold definition for the “working poor” of R4 125 in 2015 prices.

“At 2018 prices that figure must be nearer R5000 a month, R1500 more than anyone working for a full month on the R20 an hour NMW.”

The Free Market Foundation has also criticised the new minimum wage, claiming that it will increase unemployment amongst young and unskilled workers in a piece published by City Press.

According to BizCommunity‘s #RectruitmentFocus page, companies that cannot afford to pay the minimum wage can apply for an exemption with the consent of all of the unions that represent their staff.

My Take

A chartered accountant I know came up with something I hadn’t really considered with regards to minimum wages: We don’t allow businesses to pay lower rents, or less in the way of cost of sales because they’re small.

If you can’t pay your rent or your suppliers, you go broke and nobody else is crying for you.

It is only the worker who is expected to supply their “goods” in the form of their labour at a lower cost in order to help small business operate.

The fact of the matter is that a business going under is part of the capitalist system, the deal is supposed to be that the owner of a business is the one taking the risk and thus getting the bulk of the reward.

The risk is that you go broke, without that risk you don’t have capitalism, you’ve got socialism.

However when it comes to labour all too often free market advocates such as the Free Market Foundation seem to believe in socialism for business owners, and brute capitalism for the rest of us.

And on that point about unemployment, according to CNN Money the 10 countries with the highest minimum wage are:

  • Australia
  • Luxembourg
  • Belgium
  • Ireland
  • France
  • The Netherlands
  • New Zealand
  • Germany
  • Canada
  • United Kingdom

Now are these the countries with the world’s highest unemployment? No, they are not.

And if you look at that list of highest unemployment rates in the world from Statista – we were already on it without this minimum wage.

Now you can argue that these nations are highly educated first world powerhouses, but nobody started off as being that and those high minimum wages don’t particularly seem to have hurt their ability to make money.

We tend to say with the countries that have the ten highest minimum wages that they’re so different to us – while we’re adopting economic policies straight out of American thinktanks that have never worked anywhere and are based on assumptions founded in the American economy, which is no more similar to ours than any of these top ten nations.

We only seem to accept international models – when they’re to the detriment of the worker, which is not good for our economy because who is supposed to be buying the stuff we make?

It is the same issue with “fiscal responsibility” that buzz term that has ensured no real recovery for Greece’s economy after its crash. If you don’t have an export market, local demand is depressed because it doesn’t have money, government is engaging in cost cutting, and business isn’t investing, where is the growth supposed to come from?

We do not live in a supernatural universe, God isn’t going to come down and swipe his credit card, if we want higher employment, there needs to be demand for the goods and services those employees produce, which means you need people to have the money to pay for stuff.

I am largely in agreement with the unions on this one, the minimum wage is way too low. To have people complaining that they cannot afford to pay it – honestly those people shouldn’t be in business.

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