Despite Gains in Employment Stats, Employers Face Pressure As National Minimum Wage Hikes Loom

SANDTON, South Africa - Aug. 22, 2023 - PRLog -- A youth development agency specialising in corporate transformation by connecting skilled black youths into the workplace calls for labour and political leaders to focus on balancing minimum wage increases with their potential impact on unemployment.

This comes as South Africa's (SA's) official unemployment rate has decreased by 0,3 of a percentage point compared to the previous quarter, now at 32.6%. Approximately 200 000 jobs were lost.

Meanwhile, the yearly discussion around raising the National Minimum Wage (NMW) has intensified as the National Minimum Wage Commission has called for public submissions for 2024. Employers are under pressure to hike their wage bills as inflation pushes workers beyond the minimum wage bracket to negotiate better pay to match the rising cost of living.

"As the possibility of raising the NMW to match the rising cost of living, SA must prioritise the objective of growing its employment rate or risk further economic vulnerabilities," says Onyi Nwaneri, CEO of Afrika Tikkun Services (https://afrikatikkunservices.com/).

Whilst Afrika Tikkun Services applauds SA labour regulations which seek to protect workers' rights, it calls for a policy framework that ends the cycle of unproductive, unskilled labour and unemployment in the country.

While the blanket minimum wage has historically been a net positive in developed countries, it could have unintended consequences in countries with high youth unemployment rates. "It is essential to consider all perspectives when discussing policy changes that affect the economy," adds Nwaneri.

Industries that have seen the most contribution to employment rates are construction (104 000), trade (92 000), as well as Community and Social Services (63 000).

At the same time, employment losses were recorded in manufacturing (96 000), finance (68 000), transport (7 000) and utilities (6 000).

Increasing the NMW can contribute to higher labour costs which can have a significant impact on small to medium businesses, says Nwaneri.

The current NMW for SA increased from R23,19 per hour in 2022 to R25,42 per hour in 2023, an increase of approximately 9,6%.

Finding a balance between fair wages and employment opportunities is complex. "Raising minimum wage should be a balancing act that takes into account the need to reduce poverty and inequality in the light of high inflation rates, but prevent a situation where small businesses, which are the backbone of the economy, can no longer afford labour costs," concludes Nwaneri.