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The New National Minimum Wage: What Are The Repercussions Involved For The Wine Industry? – Employee Benefits & Compensation

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The Employment and Labour Minister Thulas Nxesi has announced a
new minimum wage for the year 2022. The increase in minimum wages
initially took effect in 2002 and set a historic precedent in the
protection of vulnerable workers (defined as ‘low earning’
workers).

The New Minimum Wage (NMW), effective from the 1st of
March 2022, has been set at R23.19 placing the agricultural sector
on the same foot as other sectors. This means that the NMW is
applicable to both domestic and farm workers, aiming it at
minimising the gap between low-income and high-income workers. The
wage is the amount paid for an ordinary hour worked and does not
include compensation for overtime, transport, accommodation or
food.

Is the minimum wage beneficial to the labour market
relating to farmworkers?

Arguments in favour of the minimum wage range from stabilising
the wage offered per hour nationally as well as regulating the
relationship between the employer and employee. However, there have
been many arguments against the minimum wage since its
introduction. Recently farm owners have indicated that the NMW is
unattainable and called instead for a ‘minimum grape
price’. Low-earning workers are the most vulnerable when a new
minimum wage is set. Many workers fear losing their jobs, and in
the case of farmworkers, losing their homes as well.

Agri SA indicated their support for the NMW increase, however,
they stated that the government needs a more thorough consideration
of the economic policies accompanied by such an increase. Farm
owners did not receive the same support that their US counterparts
received during the hard lockdown and the wine industry is still
recovering from the lockdown. Agri SA also indicated that they
appreciate the objective of the NMW, which is to alleviate poverty,
however, they fear that this increase will see many workers
unemployed as the wine industry will simply not be able to afford
these yearly increases.

Many organisations in support of farmworkers spoke out against
Agri SA claiming that Agri SA speaks for farm owners and that the
precise increase amount is irrelevant and that Agri SA would
declare any amount unaffordable. Many workers are not able to
contribute to medical aid or pension fund, they should, at minimum,
be paid a decent salary. Many farm owners pay their workers more
than the minimum wage but have urged the government to intervene by
providing subsidies for workers residing on the farm. According to
them, workers would be in a better position if the government were
to provide a household, electricity or water subsidy.

The Covid-19 lockdown negatively impacted the wine industry.
Many farm owners were hit hard by the restrictions, and this
exacerbated the challenges they already faced on a regular basis.
The NMW is not in line with economic policies and has placed
immense pressure on farm owners –Not only are they faced with
the financial recovery of the global economy after severe
restrictions but are now expected to pay out additional funds in
wages to ensure that they comply with legislation.

Ensuring fair remuneration for low-income workers is of utmost
importance but one must consider the repercussions involved in
increasing the hourly rate. Many workers were exploited during the
lockdown period and many lost their main source of income. The
restrictions imposed by the lockdown had a direct impact on the
wine industry in particular and it seems that farm owners’
comments were not taken into consideration when making the decision
to increase the minimum wage. Should farmers not be in a position
to afford the minimum wage, they may instead choose to retrench
workers over non-compliance with the law, which would defeat the
very purpose of the minimum wage law.

The unemployment rate in South Africa has been described as a
crisis and many businesses are calling on the government to
consider all factors when making a decision which has direct
repercussions on the labour market. Contact SchoemanLaw Attorneys
to arrange a consultation today!

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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