Aug-Sept 2014 K.indd

28

AUG/SEPT 2014 • www.cosatu.org.za

policy of signi fi cant real increases in the national minimum wage, has coincided with real increases re fl ected in collective bargaining in the bottom half of the wage structure, and greater moderation at the top. The Economist reported that in the UK, increases in the national minimum wage have boosted earnings further up the income scale- and thus reduced wage inequality. (As a result) wage gaps in the bottom half of Britain’s pay scale have shrunk sharply since the late 1990’s.’ (Economist 24/11/2012) Finally it is important to clarify the relationship of a national minimum wage to the broader system collective bargaining. Currently South Africa doesn’t have a national minimum, but various fragmented minimum wages set through statutory sectoral determinations (covering only 3.5 million of more than 10 million formal sector workers). Minimum wages negotiated at bargaining councils cover a further 2.3 million workers. Minimum wages in SA are characterised by: very low levels of many minimum wages, way below any accepted minimum living level; proliferation of multiple minimum wages; huge variation within and between sectors; and low levels of enforcement. The introduction of a legislated national minimum wage in South

automatically leads to job loss has been refuted. But it is not being argued that introducing a national minimum wage in itself would necessarily have the impact of increasing the number and quality of jobs. Rather the national minimum wage needs to be used in combination with other policy instruments to achieve these desired goals. Various economic factors, such as sectoral conditions, industrial strategy, trade dynamics and broader economic conditions (including domestic demand), together determine sectoral employment performance. Therefore wage policy has to be combined with appropriate economic policies to have the desired employment impact. in countries as diverse as Latin America and Scandinavia, shows that a national wage policy which recon fi gures the wage structure, can signi fi cantly raise the income of low paid workers, and reduce inequality, without causing a major economic shock. Countries experiencing extreme income inequality fi nd that introducing a national minimum wage not only brings the lowest paid out of working poverty, but helps compress the entire wage structure, by reducing wage differentials. In many countries, including Brazil, the International experience,

Africa would create an economy wide wage fl oor, below which no one could fall. The national minimum wage would be simple, high pro fi le, and all workers and employers aware of the legal obligation to pay this minimum. It wouldn’t replace collective bargaining or the role of unions, and employer organisations. Indeed, a national minimum wage lays the basis for strengthening sectoral and workplace collective bargaining, through which employers and unions negotiate wages and conditions throughout the wage structure. As happens internationally, collective bargaining would negotiate sectoral minima above this national fl oor, according to conditions in those sectors. This is the model strongly supported by the International Labour Organisation. This is the fi rst of a two part article. The second article will look at how to address some practical challenges faced in implementing a national minimum wage. Neil Coleman is the Strategies Co-ordinator in the COSATU Secretariat This article is based on a detailed paper published by the ILO, downloadable at http://www.ilo.org/ actrav/WCMS_231477/lang--en/ index.htm

ECONOMY