South Africa’s First Minimum Wage: Not Everyone Is Happy

Posted on 15 January 2019 by IRIS FMP

Dealing with employees outside of your home country continues to become more complex, with South Africa the latest country to introduce a minimum wage. The new law came into play at the start of January. According to the Department of Labour, all workers who are not in the farm/forestry, domestic sectors, extended public works programme, and learnerships should not be paid less than the new set R20 minimum wage per hour.

Supporters believe it will reduce inequality and stimulate economic growth, with their President, Cyril Ramaphosa stating that “Millions of South African workers will benefit. This is the result of many decades of tireless struggle and is a powerful demonstration of the shared resolve of all social partners to tackle poverty and inequality.” Cosatu Trade Union Federation said 6.4 million workers would benefit from this and stated it is “a major cash injection into workers’ pockets”.

However, it has come with some controversy as Trade Unions are unsure as to whether to support the new minimum which has been set at R20, which is just 1.39 an hour in American dollars, with the South African Federation of Trade Unions branding it a “slave wage”. Economic Freedom Fighters which is run by Julius Malema is also not a fan of this as he believes the minimum for 45 hours per week would result in R3,500 (US$243) a month and is far too low.

Not only is it considered far too low, the Democratic Alliance (DA), the main opposition party, voted against the bill saying it was rushed through parliament and would lead to 750,000 job losses, as employers will not be able to afford these sudden changes. However, employers are not permitted to unilaterally change working hours due to the implementation of the NMW, any reduction of hours will have to be negotiated.

Other important changes to labour legislation in South Africa, such as parental leave and unemployment benefits have been signed into law, but these implementation dates are not known yet. It is advised that if you are dealing with payroll in South Africa you take expert advice to ensure that due to these impending new laws that you are not making any errors that can cause your company further problems. Businesses that have employees in other countries tend to outsource their payroll to a provider that offers international services to combat these issues and ensure they are always compliant to that country’s laws. If you aren’t 100% certain all of the regulations that could be affecting payroll in South Africa then don’t panic, luckily there are providers out there that can help you with all your international payroll needs.

Guide To International Payroll

Understand some of the key things to consider surrounding international payroll.