Can farming businesses afford a wage increase in 2022? Can farmworkers afford basic living on R1.31 more per hour? The annual minimum wage increase in Mzansi has once again sparked a hot conversation within the agricultural sector.
The National Minimum Wage Commission has proposed that the minimum wage in Mzansi increase from R21.69 to R23.00 per hour come March 2022.
Their recommendation is based on the Consumer Price Index (CPI) plus 1%, considering the economy and the impact of the Covid-19 pandemic on both employers and employees. The actual amount will, however, depend on CPI (the average cost increase of basic needs such as food, transport and medical care) when the adjustment takes effect.
Although the increase in the farming sector will be lower than this year’s 16% increase, which levelled the farmworker wage with that the rest of the country’s workers, organised agriculture is still worried about affordability in the context of the current economy.
Agri SA’s Lebogang Sethusha tells Food For Mzansi that while they have noted the proposed hike, their members had not had it easy since the inception of the R21.69 per hour minimum wage in March 2021.
“It’s the context in which the increase is proposed which grows the risk it poses to farmers. With the rise of input costs seen in 2021, we place farmers at the risk of their production costs rising at a higher rate than the income coming in.”
This is coupled with an economy recovering from the effects of lockdown restrictions and farmers still recovering from losses suffered during the eight years of drought, she explains.
“With all the factors of rising costs, sub-sectors recovering, the economic climate and the double-digit increase absorb within the last few months, it would be presumptuous of us to presume farmers are immune to all these cost burdens.”
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Drop in seasonal workers
The wage commission says that its recent research did not establish that the introduction of the national minimum wage had any influence on the running of businesses in South Africa, other than the concern raised by some agricultural employers (of possible mechanisation). “More research must be conducted in this area”, it stated.
But Sethusha says adaptation to the double-digit wage increase of 2021 has led to the employment of fewer unskilled workers. A survey conducted amongst their affiliates showed that employers had become conservative in the number of employed workers with a reduction of up to 24% in seasonal workers amongst participants.
“[Also] the consideration of adopting less labour-intensive commodities, loans or alternative financing to keep businesses afloat and the reduction of working hours, which impedes productivity,” she explains.
Farmers have furthermore not filled vacancies when workers went on retirement or left employment.
“This creates a barrier in accessing employment in our rural communities and further aggravates labour migration into urban areas, leaving our rural communities and efforts to boost their economies behind,” Sethusa tells Food For Mzansi.
For the industry to absorb wage increases, she says enterprises may either accept a reduction in profit, raise the price of their products, reorganise their staff complement, invest in mechanisation or leave the sector entirely, and she highlights the need for a more enabling farming environment in South Africa.
‘I cannot afford it’
North West poultry farmer Kobedi Pilane says that his monthly production costs run up to R62 000, of which 80% goes to feed cost. “I can’t afford this! I wish I could pay my workers more than what I am doing now. [But since Covid-19] I have thrown the legalities out with wages and working hours. I have developed an understanding with my workers,” he tells Food For Mzansi.
“[Government] told me they can’t give me any relief funding since they are not prioritising farmers who are not youth or female. So, we were left out in the cold and we know that even ‘deserving’ farmers were not given the necessary relief funding,” Pilane explains.
He is also not sure whether increasing the minimum wage is a wise move by the state. “The sad part is that there were a lot of youth we had to lay off because of this. All things considered, if this is enforced, more workers will be without jobs.”
Sethusha says non-financial benefits are also given to workers, such as free accommodation, medical assistance, child schooling, land grazing and the like. This, she says, is a clear demonstration of farmers’ providing for their workers. “Our farmers are playing a significant social role in rural communities and in our view, this is the essence of holistic poverty reduction and social living.”
Union pleased with increase
The Congress of South African Trade Unions (Cosatu) have welcomed the proposed increase, saying that Covid-19 had caused instability in the lives of domestic and farmworkers. Where farmworker wages were adjusted to be equal to the national minimum this year, domestic worker wages are set to be corrected in 2022. The increase, Cosatu believes, will go a long way in ensuring that ordinary workers are able to care for themselves and their families.
Spokesperson Sizwe Pamla says they are happy that the commission revealed limited job losses due to minimum wage prescriptions.
“Cosatu is pleased that the extensive research undertaken by the wage commission shows that few job losses have occurred because of the introduction of the minimum wage and that it has helped to reduce poverty and inequality levels [while also stimulating] local economic growth.
“These increases will make a positive difference in the lives of over 6 million workers currently paid at the national minimum wage level. It will mean a significant increase for the 892 000 domestic workers who are overwhelmingly women,” Pamla reckons.
According to Pamla, workers simply could not afford delays when they are having to support large numbers of relatives who have lost wages and jobs and are often highly indebted.
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It remains a poverty wage
The commission has conceded that even an increase of CPI plus 1% will be below inflation for low-income households. This is as inflation is disproportionately high (about 6.5% and above the CPI average) for poorer households who spend a larger proportion of their income on the essential items measured.
Bettie Fortuin, a former agri worker and representative of the Women on Farms project, agrees and tells Food For Mzansi that the extra money will make no difference in the lives of farmworkers.
“If you look at how the prices of food have gone up and how the inflation rises every day, then the R1.31 is a drop in the bucket.
“With the money [farmworkers earn per day] you can hardly put together a decent meal for you family. Then house rent also increases, and electricity and water as well.”
Fortuin feels that farmworkers earn the least but work the hardest, Adding that the situation is much worse for households where there is only one income. “What happens when the breadwinner gets sick and misses a day or two of work? They lose that money. On top of that, there’s still the medical expenses and here the doctor is almost R400 for one visit,” she says.
Fortuin feels that government does not take into consideration all their expenses. “They do not look at people’s circumstances then they call us essential workers.”
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