KAW OPPOSES NMW PROPOSED INCREASES FOR FARM WORKERS OF 16.1%

Dear Professor van der Walt

INTRODUCTION

The Cape Agri Employers’ Organisation is an apolitical, non-profit organisation founded in 1998 by agricultural producers for producers and registered with the Department of Employment and Labour in terms of the Labour Relations Act of 1995. (Reg. No. LR 2/6/3/849)

Our +- 500 members employ more than 10% of the agricultural employees in South Africa as most of our members are in the labour intensive fruit-  and wine industries. (+_ 100 000 employees)

We believe in fair labour practices and sound workplace relationships and our members sign an agreement to this effect .

 

CURRENT WAGES

Although we acknowledge the relative low wages paid in Agriculture, we must take into consideration that we still employ many employees, who would find it very difficult to find alternative employment outside of Agriculture.

If these individuals loose their jobs, they will not easily be employed elsewhere with an unnecessary burden on Government as a result.

We are labour intensive and therefore labour is about 40% of our production costs.

We saw a major reduction in employment with the introduction of the national minimum wage and consequent increases, especially a change from a majority permanent labour force to a majority temporary workforce.

The reason for this was not only the increase in employment costs, but the timing of increases. 1 March is in most of our members’ season and therefore after their budgets were finalised.

 

PROPOSED INCREASE

A 16.1% increase in wages will have a devastating effect on not only employment, but also on the sustainability of our members and Agriculture in general.

A factor often overlooked is the domino-effect an increase in the minimum wage has on all levels in an organisation. Most of our lower level employees are already being paid more than the minimum wage, but the effect on all the higher levels will lead to an increase in the  already high unemployment rate and will make farming in our sector unsustainable. You also need to take into account the free and subsidised benefits enjoyed by most agri-workers as well as the practice of awarding employees with performance bonusses for productivity. The latter will almost certainly not be an option anymore and the free and subsidised benefits will also no longer form part of the total cost of employment.

Our contribution to the AgriSeta (with very few claims due to the low percentage that can be claimed), UIF, COIDA, etc, should also be calculated to see the real total costs of employment.

Taking all factors in consideration, as well as the current economic situation, Covid-19 and the political uncertainty, makes the proposed increase a major concern.

 

OUR PROPOSAL

We believe an increase of the CPI plus 1.5% on the current minimum wage of R18.68 per hour to be a win-win situation for both Employer and Employee.

We further propose that the increase be communicated before the end of the year so that Employers can budget (and plan) well in advance for 1 March 2021.

We thank you for the opportunity to contribute to your final recommendations in accordance with section 6(2) of the National Minimum Wage Act.