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Agri SA’s submission to Parliament’s Portfolio Committee on Labour

Explore the impact, challenges, and potential consequences of implementing a higher national minimum wage in South Africa's diverse agricultural sector. Gain insights into productivity, job dynamics, and structural adjustments necessary for sustainability.

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Agri SA’s submission to Parliament’s Portfolio Committee on Labour

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  1. Agri SA’s submission to Parliament’s Portfolio Committee on Labour WorkshopregardingaNational Minimum Wage Cape Town, 17 September 2014

  2. Introduction • Agri SA welcomesopportunity • Employer of largelyun-unionisedlabour force • Important role of farmworkers • Close relationship: farmers and workers • Higher national minimum wage – various challenges

  3. Background of the organisation • Agri SA federation of agriculturalorganisations • Established 1904 • 9 Provincialand 24 commodityorganisations • Represents a diverse grouping of farmers • Agri SA’spolicyadvocacy • Member of BUSA, NEDLAC, WFO, SACAU, Cairns, etc.

  4. Government policy objectives • NDP goal = 1 millionjobs in agriculture in 2030 • NDP referstoexpandingirrigationagriculture • Potential of horticulturalproducts, tablegrapes, citrus, subtropicalfruitsandvegetables • Conducivelabourmarketpractices • NPC assumptionsbasedon lower minimum wage (R67/day)

  5. NDP’s illustration of their proposal with regards to job creation

  6. Backgroundonthesector • SA agriculture diverse sectorwithintensiveandlessintensivelabourpractices • Trend – fewerworkersbuthigherskilled • Farmingunits: 1993 = 57 980; 2002 = 45 848 and 2007 = 39 982 • Employment: 1993 = 1 093 265 and 2007 = 796 806 • 20% of commercialfarms are responsible for 80% of SA’s totalproduction

  7. Backgroundonthesector (continues) • Largerfarmshaveabilitytomechanise • Wagesrise – mechanisation more attractive • Trend of increase in largerfarmsandhigherlevels of mechanisationwillcontinue • Result = lower number of jobsbutincreasedemploymentforstaffwithhigher skilllevels (higherremuneration)

  8. Background on the sector (continues)

  9. Effect of the structural adjustment in the minimum wage • Sectoraldeterminationgovernsthewagesandconditions of work • Agriculture’swagebill ±R14.5 billion in 2013/14 (13.3% of totalcost) • Socialwage • Statutoryprovidentfundforfarmworkers • Sector – pricetakernotaprice maker

  10. Effect of the structural adjustment in the minimum wage (continues) • ProfBhoratstudy – minimum wagehasnegativeimpactonemployment (17% decline) • 2013 – 52% increase in minimum wages had major impact • 1996 producersappliedforrelief • Take timeto bring aboutstructuraladjustments (73 000 joblosses) • A national minimum wagehigherthancurrent minimum wage – even more joblosses

  11. Effect of the structural adjustment in the minimum wage (continues)

  12. Social and competitive challenges of a higher national minimum wage • High wage – attractivetoforeignworkers • Attractivefor RSA andotherfarmerstoinvest in neighbouringcountries

  13. Affordability of higher wages by the sector • BFAP analysis – negative net farmincomeifwagesriseto more than R105/day • More that R105/day – mechanisation; more skilledlabourandconsolidation of enterprises • Sectorcannotabsorb more significantwageincreases • BFAP report – R150/daynotenoughto affordbalanceddailyfoodfor a household of twoadultsandtwokids

  14. National Minimum Wage: Factors for consideration • Productivitysetslevel of prosperity • Productivitydeterminescompetitiveness, returnoninvestmenteconomicgrowth • WorldCompetitivenessReport of 2014/2015 • SA ranked 56th out of 148 countries in terms of worldcompetitiveness

  15. National Minimum Wage: Factors for consideration (continues) • “Labourcontext” - problematic • Sectoralconsideration (ruralvsurbanlabour; skillsavailability; socialwages; differing minimum wages) • Minimum wage in agriculture is R2 420/monthvsthat of a wholesaleandretailshop assistent is R3 063/month

  16. Conclusion • Higherwage – more structuraladjustments - Shedding of jobs - Increasedmechanisation - Consolidation of farmingunits • Collectiveeffect/riskfactorsshouldbecarefullyconsidered • NPC objective – 1 millionadditionaljobs in 2030

  17. Thank You

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