Data from the Pietermaritzburg Economic Justice & Dignity (PMBEJD) Group indicates that the current minimum wage is insufficient to cover basic needs in 2024, suggesting that it should be at least R40 per hour just to achieve a break-even point.
Last year, the Minister of Employment and Labour announced an 8.5% annual increase in the National Minimum Wage, which came into effect on 1 March 2024.
This means that for a worker, the 8.5% increase translates to an additional R2.16 per hour, R17.28 per 8-hour day, and a monthly increase of R362.88 if they work the full month (which averages 21 days).
The National Minimum Wage is now set at R27.58 per hour, R220.64 for an 8-hour day, and R4,633.44 for an average 21-day working month.
As part of this, it was also concluded that domestic workers and farm workers would also be raised to the NMW.
According to the department’s latest statistics, approximately 3.8 million workers are covered by the minimum wage.
87% of workers work full-time, and 13% of workers work part-time.
Of these, Stats SA estimates that there are 869,000 domestic workers in the country.
A reasonable indicator of whether the NMW is improving the lives of workers is whether workers earning the NMW are able to secure the basic household expenses needed to live at a basic level of dignity and household functionality.
However, the PMBEJD argue that, when considering affordability, the NMW isn’t enough for the average household as of June 2024.
According to the group, affordability is relative to income levels and the cost of goods and services.
Workers work to support their families and expect their wages to cover the necessary expenses for a dignified and functional household.
In most South African households, only one family member is employed, and their wage must support an average of four people.
To illustrate the poor level of the NMW, the PMBEJD proposed three wage scenarios, including full-time and part-time, as seen in the infographic below.
The examples above demonstrate that workers earning the National Minimum Wage (NMW) are unable to cover their three essential household expenses with it.
“This highlights the inadequacy of low baseline wages.
“The NMW, being set at such a low level, does not provide workers and their families with the means to meet even their most basic needs.
“The data suggests that the NMW contributes to trapping workers and their families in deeper poverty.
“As a result, workers may have to further reduce their spending on food and rely more on borrowing to make up for the income shortfall,” said the PMBEJD.
It is even worse for domestic workers. Despite it now being law to pay them the NMW, median earnings data from Stats SA show that domestic workers have the lowest median salaries in the country, at around R2,350 a month.
This is less than half the national median of R5,417 a month and below the national minimum wage, which amounts to approximately R4,633.44 a month.
Sweepsouth’s sixth annual domestic worker survey for 2023 also showed that domestic workers in the country still earn, on average, much lower than the National Minimum Wage, with female domestic workers at R2,989 per month.
However, as shown in scenario one, if the minimum wage were increased to R40.10 per hour for a full-time worker, the worker would reach a break-even point to cover the necessary expenses—R6,094.65 per month, and this extends to domestic workers.
Whether South Africa can afford a living wage
the spokesperson of the Living Wage South Africa Network, Ines Meyer, said many employers in South Africa see even the current minimum wage as a financial burden, let alone a costlier adjustment.
“They argue it makes an ample workforce too expensive, resulting in higher unemployment, but I disagree,” she said.
“International living wage research shows that workers who can cope financially are more motivated, more productive and less prone to absenteeism,” she added.
“This benefits their employers, who offset their costs through greater output to meet market demand. So far, there is no evidence to suggest that providing decent incomes increases unemployment.”
Despite Meyer’s conviction, some employment experts noted that there is no evidence to suggest that providing decent income increases unemployment, which is exactly the issue.
Development economist Dieter von Fintel from Stellenbosch University noted that research suggests that in many sectors, minimum wage increases, as implemented in South Africa, did not destroy employment but reduced work hours.
However, he further explained that minimum wage increases have not adversely affected employment in South Africa because the hikes have been small.
“It is not certain that the larger hikes needed to accommodate higher wages will have the same benign impact. Much more research is required,” he said.
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