GAUTENG
COMMENT, by Pete Bower
MAGAZINE
HOW TO MAKE YOUR PLOT PROFITABLE
V18 No12/V19 No1
Dec 2017/Jan 2018
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FRONT COVER
Traditional Christmas Turkey: To all
our readers, advertisers and distributors,
we wish you a pleasant Festive Season.
Socialist claptrap
I
n the current political climate in South Africa it is not surprising that
a governmental action generates a lot of heat, and very little light.
For, the levels of ineptitude and kleptocracy are plain for all to see,
from the thievery of the Zupta project to the ineptitude of the Life Esidimeni tragedy,
to take but two of many examples.
And so it is with the announcement recently that the minimum wage for farm workers
will rise to R18 per hour from 1 May next year.
This immediately led to an outcry from farmers, well reported by the media, that the
wage at that level is unaffordable, would lead to job losses, and would further drive
farmers off the land. A lot of heat, but not much light.
So, let's paint the full picture.
K The R18 per hour minimum wage (and its equivalent for weekly and monthly-paid
workers) applies to all workers, regardless of their industry, and is the result of the
imposition of the much-discussed national minimum wage of R3 500 per month. It
looks like it applies only to farm workers because the agricultural sector is one of the
most lowly-paid, with considerable numbers being paid a cash wage below this level.
K There exists already (as is well-known) a sectoral determination wage for farm
workers, which increases annually according to an inflation-linked formula. At present
it seems that the formula will translate to an increased wage of R16,92 per hour from 1
March, an increase of R1,53 per hour over the current sectoral wage minimum.
K Thus, adding the sectoral determination increase to the national minimum wage
increase means that farmers paying their workers at the minimum level will be forced
to increase their wage bill by 16,32% next year in two phases, in March, and in May.
One of the problems associated with wages in the agricultural sector is that it is one of
the most complex industries in terms of total emoluments. Thus, while the cash wage
appears low, it is often accompanied by a host of non-cash benefits, such as free or
subsidised accommodation, schooling for the children, transport, foodstuffs and even
medical care.
None of these benefits, as diverse as they are, are taken into account in the minimum
wage structure, which relates purely to the cash received by the worker at the end of
the work cycle.
Can the farming industry afford a wage increase of 16-plus% in a year? On the face of
it, probably not in many cases. But, likewise, there are many farmers who already pay
their workers way above the minimum, both in terms of cash, and in non-cash
benefits. So it is by no means the case that all farmers, and all farm workers, will be
affected by the increase.
Nevertheless, for those farmers who are already struggling, not to mention the many
new smallholder farmers being established by the government, an increase in the wage
bill of more than double the inflation rate in one year may well be the straw that
breaks the camel's back. Hardly a good outcome, we suggest.
The problem is that the entire national minimum wage saga flies in the face of
established economic theory, and is being pushed through, we believe, by a govern-
ment desperate to endear itself to the electorate rather than with any thought to the
long-term damage it may cause or benefits that may accrue.
On the one hand, simple economics tells one that imposing a national minimum
wage, even one as low as R3 500 per month, may lead to job losses ~ not only in the
farming sector ~ and as a result is going to add to South Africa's already high unem-
ployment rate.
On the other, while a national minimum wage of R3 500 sounds grand, it is still below
the level at which a family of four can feed itself a nutritious diet (see previous articles
in our series #SAFoodCrisis, notably the article in our August edition). Thus, it's a vote-
getting chimera. In reality it will lead to job losses while still leaving poor people too
poor to be able to feed themselves.
Far better, therefore, for the government to tackle the real elephant in the room, which
is the rapacious greed for profit of the food processing, distribution and retailing sector.
Rather than introducing half-thought-through socialist vote-catching claptrap like a
national minimum wage, tackle the low prices paid to farmers for their produce on the
one hand and the high prices paid by consumers for foodstuffs on the other.
The problem with that is that such policies require real thought and application, and
will prove unpopular with the corporate sector. They require the reining in of greed,
which is not a vote getter, rather than the handing out of largesse, which is.
SAY YOU SAW IT IN THE GAUTENG SMALLHOLDER