Home News Increase in minimum wage ‘will cost jobs, drive mechanisation’

Increase in minimum wage ‘will cost jobs, drive mechanisation’

An above-inflation minimum wage increase for agri workers could make labour unaffordable to many farmers, warns Agri SA

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The current proposal by the National Wage Commission to increase the national minimum wage by 1,5% above inflation will lead to the job losses of farm workers and potentially drive more farmers into poverty, warns Christo van der Rheede, Agri SA executive director.

Van der Rheede’s sentiments were shared following the announcement on 23 November 2020 by the National Minimum Wage Commission of a planned increase in the national minimum wage of 1,5% over and above inflation as measured by the consumer price index (CPI) in 2021.

The inflation rate measured by consumer price index (CPI) as of September 2020 was 3 percent, so the adjustment should be on the order of 4,5 percent, proposes the Commission. The Commission feels that the adjustment of the national minimum wage by 1,5 percent above inflation was not out of line with collective bargaining outcomes in 1999/20.

The National Minimum Wage Commission also endorsed that the minimum wage for farmworkers be aligned with the national minimum wage in 2021.

Christo van der Rheede, the executive director at Agri SA. Photo: Supplied
Christo van der Rheede, the executive director at Agri SA. Photo: Supplied

According to Agri SA the current minimum wage of farm workers is R18,68 and the proposed wage increase for 2021 will drive it to R21,68. Van der Rheede warned that many people are already unemployed and increasing the national minimum wage will put farmworkers out of work.

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“We are of the opinion that unemployment is an extremely serious challenge in this country. Unemployment is the biggest driver of poverty and you have seen rising levels of hunger and poverty in this country.

“We are appealing to the National Wage Commission to really take into account that if they increase the monthly wages of farm workers, that might lead to bigger mechanisation in the agricultural sector and that for us is a big concern,” he warns.

He says that agriculture is one of the sectors that can absorb unskilled people in the country and that increasing the national minimum wage will prohibit this from happening.

“We have got millions of unskilled people. If you are unskilled then you are destined to live in object poverty. It is critical for us that we deal with the issue of poverty and you can only deal with the issue of poverty if you get people into jobs.”

Van der Rheede says people in the farming sector don’t earn a lot of money and if the new national minimum wage comes into effect jobs will be lost in the sector. He says the bulk of farmers are still trapped in poverty.

“We are very concerned for those farmers who are going to be pushed into a position where they can no longer afford to pay wages to farm workers. You will see an increase in job losses in the farming sector as well, and we cannot afford that. So, we are just appealing to the national minimum wage commission to phase in the equalisation of wages over a period of three years,” he says.

In a press release Agri SA appealed to the minister to consider the current economic circumstances.

“Rather shift the focus to job creation and take steps to minimise the further shedding of jobs in all sectors. The economy is struggling under the weight of many factors such as covid-19, sovereign credit downgrades and poor growth outlook. It will take a collective effort to recover.”

The organisation also mentioned that a lot of farmers in the sector are still trapped in a five-to-seven-year drought and many farmers have also been severely affected by the lockdown and economic downturn, so lifting the national minimum wage will come as another blow.

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Sinesipho Tom
Sinesipho Tom
Sinesipho Tom is an audience engagement journalist at Food for Mzansi. Before joining the team, she worked in financial and business news at Media24. She has an appetite for news reporting and has written articles for Business Insider, Fin24 and Parent 24. If you could describe Sinesipho in a sentence you would say that she is a small-town girl with big, big dreams.
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