The National Minimum Wage Commission is expected to release its recommendations on what South Africa’s threshold for wages in 2023 should be any day now. While thousands of agricultural workers do not earn enough to secure their own food, role players are calling on the government to implement a “sustainable increase” and not an inflation-related increase.
According to Agri SA’s executive director, Christo van der Rheede, government should sign off on an increase that improves workers’ lives and protects Mzansi’s farming sector.
“The sector has faced significant headwinds in recent years which threaten the viability of many farms,” said Van der Rheede.
“Agri SA also recognises the cost pressures on all consumers in South Africa. And therefore, while the need for an increase is clear, it needs to be sustainable for the country’s farming operations to ensure food security for consumers.”
The organisation proposes an increase of consumer price inflation (CPI) minus 2%. According to Agri SA, this represents a substantial increase while also accounting for the especially difficult economic context in which the agricultural sector finds itself.
Not keeping up with rising costs
As it stands, Mzansi’s agricultural sector employs around 874 000 workers. And according to data from the Bureau for Food and Agricultural Policy (BFAP), the average annual inflation on farm labour has risen by 11,6% since 2012, while the general CPI was around 5% over the same period.
Van der Rheede said until now, the sector has been largely able to absorb these increases, however, only due to the boom experienced by labour-intensive horticultural industries in the pre-pandemic years.
These industries now face significant pressures too, with BFAP projecting price decreases over the next decade.
Agri SA is of the view that above-inflation increases in the national minimum wage will only usher in unwelcome consequences. These ramifications are both short- and long-term, the organisation said.
“In the short-term, an above-inflation increase in the national minimum wage in an already difficult economic climate would threaten the financial viability of many agricultural operations,” Van der Rheede said.
He added that farmers are unable to withstand an above-inflation increase in the national minimum wage (NMW).
Particularly under circumstances like rising input costs like fuel and fertiliser, and declining delivery of critical services like transport, logistics, and electricity.
Rise in labour costs vs productivity
According to Agri SA, a rapid rise in labour costs that is not accompanied by a rise in productivity will threaten South Africa’s global competitiveness in the long term.
“As it stands, many of our local markets are threatened by the dumping of cheap products,” Van der Rheede explained. “At the same time, our exporters face growing global competition from more productive countries with cheaper labour such as Chile and Peru, two rising South American fruit-producing countries.”
South Africa’s ability to compete globally, grow its export market share, and increase the agricultural sector’s contribution to GDP is at risk, some experts have repeatedly warned on several occasions.
Accomplishing these industry goals, said Van der Rheede, will depend on how well South Africa strikes a balance between wages, productivity and the ability to produce enough healthy food for local markets at affordable prices.
Barely enough to afford food
The big question is whether agri workers are able survive on current wages. According to the Pietermaritzburg Economic Justice and Dignity Group (PMBEJD), the answer is a hard no.
Mervyn Abrahams, the programme coordinator at the PMBEJD, said that in November the maximum NMW for a general worker was R4 081.44. This was for 22 days of work on an eight-hour shift.
This, while the November 2022 cost of a basic nutritional food basket for a family of four persons was R3 287.44.
“On our calculations, using Pietermaritzburg-based figures for electricity and transport, and the average figure for a minimum nutritional basket of food for a family of four, puts electricity and transport taking up 58,1% of a worker’s wage.”
This amounted to roughly R2 371.50 spent on electricity and transport alone.
Cost pressure cripples households
Meanwhile, food is bought after monies for transport and electricity have been paid for or set aside. This leaves only R1 709.94 for food and everything else.
“In November 2022, PMBEJD [calculated] that workers’ families [would have] underspend on food by a minimum of 48% (having R1 709.94 left after transport and electricity, and with food costing R3 287.44).”
Year-on-year inflation on the average Household Food Basket is now inching above 10% and is R400 more expensive than it was this time last year, Abrahams pointed out.
“Millions of workers in South Africa do not earn enough even to secure their own and their family’s wholly insufficient food intake. It is nearly half the food poverty line and further below even the monthly cost to feed a small child. Imagine.”
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