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Ingrid Woolard Chair: Employment Conditions Commission Assisted by Gabriella Elte

Ingrid Woolard Chair: Employment Conditions Commission Assisted by Gabriella Elte. Farm workers’ in context Structural adjustments Employment implications Food security. The Effects of the Minimum Wage Increase. Of the 13.6 million employed

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Ingrid Woolard Chair: Employment Conditions Commission Assisted by Gabriella Elte

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  1. Ingrid Woolard Chair: Employment Conditions Commission Assisted by Gabriella Elte

  2. Farm workers’ in context • Structural adjustments • Employment implications • Food security The Effects of the Minimum Wage Increase

  3. Of the 13.6 million employed • 2.2 million are in the informal sector and assumed to be unregulated • Bargaining Councils cover about 2.4 million workers (of whom more than half are in the public sector) • Sectoral Determinations cover about 3.5 million workers Wage Setting - overview

  4. Minimum Monthly Wages by Sector (2012) Source: LRS, 2013

  5. Minimum Wage by Bargaining Level (2012) Source: LRS Awards Database, 2013

  6. Average monthly wage for workers in elementary occupations (2010) Source: LRS Award website, 2012 & Stats SA, 2010

  7. ECC Criteria in Setting Wages • Cost of living • Alleviation of poverty • Wage differentials and inequality • Impact on employment creation/retention • Impact on SMME’s • Ability to conduct business successfully

  8. The Case of Farm Workers • Sectoral Determination introduced in 2002 • Other legislative changes (e.g. Extension of Security of Tenure Act) had already occurred • Had already been a move away from permanent “on-farm” labour to more temporary labour • Increased use of labour brokers

  9. The Case of Farmworkers • SA is third largest agricultural producer in Africa (after Nigeria and Egypt) • Value-added per worker is 4x global average • Agricultural sector has always relied on cheap labour – in 1997 the median wage was 17% lower than the median domestic worker wage • From 1983 to 2004 output per worker on grape farms doubled.

  10. Sector had been Shedding Jobs for a Long Time Source: Liebenberg, 2011

  11. Literature on Farmworkers • Bhorat, Kanbur & Stanwix (2012) find that the agricultural SD (introduced in 2002): • Increased wages by 17% • Decreased employment by 13% • Since then, wages have increased gradually and employment continued to decline

  12. The Employers’ Take • Employers suggest the new wage level be set considering the CPI plus 1%, provided it doesn’t exceed 6%. • Many employers pay wages above stipulated minimum wage, employers could be discouraged from doing so if it is pushed further upwards. • If the R150 originally demanded was met, 10 largest agricultural firms would increase costs by R3.5 billion

  13. Monthly Food Price Inflation in South Africa January 2008 to October 2012 Source: BFAP, 2012

  14. Employees’ Requests • Most employees proposed a minimum wage of between R2500 and R3500 and claimed that employers are unwilling to pay above minimum level. • Cannot buy basics, support many family members – high dependence on farmers. • Experience of the farmworker not considered in wage.

  15. Present Position • On 4 February 2013, the minimum wage was raised by 52% • Surprisingly, agricultural employment rose by 7.9% in the first quarter of 2013 (and by 12.9% year on year)… but we will need to wait for more data to really know the impact • The Department of Labour has received more than 900 requests for exemptions • Too early to tell what will happen in the sector • The politicization of the wage-setting process has resulted in demands from other sectors for a reconsideration of minimum wages • Loss of trust

  16. Concluding Remarks • Agriculture can help with the food security of seasonal labourer households, but cannot solve rural poverty and unemployment on its own. • The gap between what farmers can pay and what consumers require for a basic living is large • Requires innovative policy framework to ease the structural adjustments that will continue to occur in the sector.

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