South Africa to Protect Businesses from New Wage Impact

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South African’s Deputy President Cyril Ramaphosa has said government has measures in place to ensure that the recently announced National Minimum Wage does not have a negative impact on businesses and jobs.

The Deputy President said this when he fielded oral questions from MPs in the National Assembly on Wednesday.

This was the Deputy President’s first question and answer session since the opening of Parliament last month.

“Businesses that are unable to afford the National Minimum Wage may apply for an exemption for up to 12 months.

“Any fragile sectors that are having difficulty in complying with the national minimum wage will be considered for assistance within the available means, including through incentives,” he said.

His remarks come after he announced a new National Minimum Wage of R20 per hour, to be implemented on 1 May 2018, after social partners at the National Economic Development and Labour Council (Nedlac) signed agreements following two years of deliberations.

He said the amount of R20 an hour translates to a monthly wage of about R3 500 for those working 40-hour a week and about R3 900 for those who work for 45 hour a week.

The Deputy President said a National Minimum Wage Commission will be established to recommend annual adjustments to the level of the national minimum wage.

The wage, the Deputy President said, will also be regularly reviewed by the Commission taking into account the impact of the level of the minimum wage on employment, poverty and inequality.

“In addition, as is the practice in the development of new legislation, government will conduct a socio-economic impact assessment ahead of the finalisation of a new National Minimum Wage Bill.

“The introduction of a National Minimum Wage in South Africa is historic. It has been described by some of the community representatives in Nedlac as a revolutionary development, which sets the stage for a far more concerted national effort to defeat poverty.

“Not only will it significantly improve the income of nearly 50 percent  of working South Africans, but it establishes a foundation for progress towards the realisation of a living wage for all.”

The Deputy President said, meanwhile, that Team South Africa was able to market the country and send coherent messages when government led a delegation of businesspeople to attend the recent World Economic Forum in Davos, Switzerland.

“Working together as Team South Africa, this group was extremely effective in communicating a coherent message around the progress South Africa is making in several areas,” he said.

The Deputy President said Team SA communicated messages on the ongoing work to implement economic transformation and the reform agenda; make progress towards achieving inclusive growth and employment; restore investor confidence; achieve a more supportive business environment, and refine government spending efficiency‎.

“In each of these areas, Team South Africa was able to provide practical examples of where progress has been achieved and to highlight where further work needed to take place.

“This message was well received by the many people with whom we interacted, collectively and individually,” he said.

The Deputy President said global leaders talked about several challenges facing a lot of countries, including of the increasing polarisation between the rich and the poor, exacerbated by the slowing down in the growth of the middle class as the mainstay of economic activity and prosperity.

“There was broad agreement among the various global economic leaders at WEF 2017 that there needs to be a concerted global effort to promote inclusive growth, which brings the millions of poor and unemployed into productive and beneficial economic activity.

“Among other things, this would include efforts to ensure countries are better prepared for the fourth industrial revolution, which is likely to have a profound impact on the workplace, employment and skills development,” he said.

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