Aug-Sept 2014 K.indd

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www.cosatu.org.za • AUG/SEPT 2014

The case for a National Minimum Wage Part II I n Part I of this article we argued, drawing on international experience, that the introduction of a national minimum wage (NMW) environment will neither bene fi t workers, employers, nor the economy as a whole. • Even

deeper into poverty;

collective bargaining arrangements do not guarantee a fl oor which protects minimum living levels. Unions in certain low paid industries (particularly crisis-hit ones) are constantly under pressure to bargain wages downwards, via ‘concessional bargaining’, in an often futile attempt to protect jobs. • Large numbers of workers are not covered by any minimum wage determination. • There are huge, and increasing inequalities between different levels of the wage structure- top, middle and bottom; and between different sectors of the economy. These are ‘systemic’ challenges which therefore require a well thought out response. We have conducted detailed research on the evolution of our labour market over the last two decades. It shows that while the democratic labour relations framework is an advance on the previous dispensation, our wage setting mechanisms are still reproducing a fragmented and unequal labour market. Transformation of the public sector wage structure is a partial exception to this.

The challenge is how to move in a managed way from the current wage structure, to a far more equitable arrangement. This is precisely what the proposal for a national minimum wage, and a new wage policy, seeks to achieve. What are some of the indicators that the current wage structure is completely untenable? • The existence of numerous minimum wage determinations, with huge variations between them, set without any reference to objective criteria such as a Minimum Living Level. • The fact that millions of workers are covered by minimum wages on which they cannot afford basic necessities. The UCT economic research institute DPRU estimated in 2010, in a detailed study, that around two thirds of workers covered by sectoral determinations live in poverty. • The multi tier labour market not only depresses wages of vulnerable contract, temporary, labour broking etc. workers, but also denies them basic bene fi ts, such as retirement, health, leave and other elements of the broader wage package, plunging them

in South Africa could play an extremely positive role in the countries economic development, if combined with other economic instruments. At the level of the labour market, we clari fi ed that the relationship of a statutory national minimum wage to collective bargaining was a complementary one: a NMW would set a fl oor, and sectoral bargaining would negotiate wages, working conditions and other sectoral frameworks appropriate to the different sectors. But, by law, no one could earn below this national wage fl oor. This is how the national minimum wage operates in many countries (see ILO Global Wage Reports). The introduction of a national minimum wage, as part of a comprehensive wage policy, will allow for an organised way to transform the current wage structure. We realise that such a development will be strongly resisted by certain vested interests. However the alternative is to continue to live with high levels of poverty and inequality in the labour market, which threaten to implode our labour relations framework, built to allow for structured engagement. A chaotic process of con fl ict outside a regulated

ECONOMY

This is why we have proposed the need for a coherent national wage