The breakdown in wage negotiations in the metals and engineering sector between some employer associations and trade unions suggests that SA could be in for a bumpy ride once the new national minimum wage comes into effect next year.

Having shed 140,000 jobs in the past 10 years, employers in the sector adopted a radical new approach in this year’s wage negotiations in an effort to take back control of the wage bill.

Their initial proposal was that new hires be paid R20/hour at the entry level and that a wage increase of 5.3% (equivalent to about R1/hour) be levied off this new level for everyone. This meant that those earning R40/hour would receive a rise of 2.6%. R20/hour is equivalent to the new national minimum wage (NMW), which comes into effect in May 2018. However, the metal and engineering sector’s current minimum is R40/hour. So the plan would halve the sector’s minimum wage, but only for new, entry-level workers employed in the future. The NMW agreement struck between government, business and labour last year is unambiguous, according to Prof Imraan Valodia, who chaired the NMW panel: "R20 is the new floor, and any wage that is above it will stay above it." Roughly 2.3m workers are not covered by any existing bargaining council agreements or sectoral minimum wage determinations. Most are in manufacturing, construction and financial services. The NMW was designed primarily to protect th...

BL Premium

This article is reserved for our subscribers.

A subscription helps you enjoy the best of our business content every day along with benefits such as exclusive Financial Times articles, ProfileData financial data, and digital access to the Sunday Times and Sunday Times Daily.

Already subscribed? Simply sign in below.

Questions or problems? Email or call 0860 52 52 00. Got a subscription voucher? Redeem it now