PRESENTATION OF THE ADVISORY PANEL REPORT ON THE NATIONAL MINIMUM WAGE
Terms of reference Approach Recommendations Evidence Implementation Architecture Summary 1
T E R M S O F R E F E R E N C E Consider proposals by Nedlac constituencies Recommend level or range for first NMW Recommend medium term target and mechanisms to achieve this Design of NMW to maximise impact on poverty, unemployment and inequality Exclusions, tiers, exemptions or phase-ins Consider Potential impact on employment Impact on bargaining council agreements, collective bargaining and sectoral determinations Recommend Actions to minimise negative and maximise positive effects Social and economic benchmarks to review NMW (including GDP, CPI, average wage, median wage, minimum living level and collectively bargained wages) Review period Institutional and legal framework Any further measures for consideration 2
Terms of reference Approach Recommendations Evidence Implementation Architecture Summary 3
A P P ROAC H Importance of this policy intervention Evidence-based o Micro evidence accepted by all parties o International evidence o Economic projections on impact Level vs range Unanimous agreement by Panel Specific considerations o Small business o Informal sector o Care-work sector o Collective bargaining 4
Terms of reference Approach Recommendations Evidence Implementation Architecture Summary 5
R E C OMMENDATI ONS The number R20 per hour (minimum 4 hours work per day) R3500 per month Domestic Workers 75% Agriculture Workers 90% Institutional arrangement Decent Work Commission 2 year Implementation phase Legal set up 2017 Implementation and monitoring 2018-2019 Review 2019 Small Business extra year 6
R E C OMMENDATI ONS Why no adjustment of NMW over 2-year phase in? This will reduce the real-value Any adjustment should be evidence-based Introduce Observe and monitor, and assess impact Then adjust the level in 2019 If benign then adjust to catch up for loss in the real value If disemployment effects high then adjust accordingly Allow enterprises time to adjust Enforcement by persuasion during phase in NOTE: ECC processes will continue 6
Terms of reference Approach Recommendations Evidence Implementation Architecture Summary 7
E V I DENCE Minimum wage coverage Uncovered (2 355 142) 9.9% 22.3% Bargaining Council Private (799 827) Public Sector (1 508 423) 7.6% SD (4 870 884) 46.0% Trade Union Private (1 049 784) 14.3% Source: DPRU (2016) 8
E V I DENCE Sectoral wage distribution Source: Finn (2016) calculations from LMDSA 2014 dataset. August 2016 prices. 8
E V I DENCE Mean and median wages under various assumptions Assumptions Mean Median All earners including zero earners R8 773 R3 442 Zero earners removed R8 810 R3 476 Hourly average *45*4.3 (all workers) R9 690 R3 784 F&I ex. agri. and domestic *45*4.3 (full-time) R10 634 R4 485 Source: Finn (2016) calculations from LMDSA 2014 dataset 10
E V I DENCE Minimum wages in selected emerging economies 1.2 1 0.98 1.05 0.8 0.68 0.72 0.78 0.78 0.82 0.77 0.69 0.6 0.4 0.41 0.42 0.37 0.33 0.28 0.48 0.51 0.39 0.33 0.48 0.58 0.2 0 Vietnam (2011) Mexico (2010) Mali (2010) Peru (2010) India (2010) South Africa (2017) Brazil (2009) Costa Rica (2011) Phillipines (2009) Indonesia (2009) Mininum to Mean Minimum to Median Source: Rani, Belser, Oelz, and Ranjbar, Minimum wage coverage and compliance in developing countries, International Labour Review, Vol. 152 (2013), No.3-4. 12
E V I DENCE Wage distribution by firm size Source: Rankin 2016 11
E V I DENCE Distribution of wages 13
Terms of reference Approach Recommendations Evidence Implementation Architecture Summary 14
I M P L E M E N TATI ON 2017 set up of legal and institutional arrangements 2 year monitoring process 2019 first review of level Small business = 1 year extra Efficient information campaign around exemptions 15
I M P L E M E N TATI ON EXEMPTIONS Exemption process to apply On an economic or business case Sector or enterprise Assessment on a documentary proof basis Efficient 15
I M P L E M E N TATI ON EXCLUSIONS Own account workers Family labour EPWP 15
Terms of reference Approach Recommendations Evidence Implementation Architecture Summary 16
A RC H I T E C T URE 17
EXPERT PANEL A RC H I T E C T URE Decent Work Commission Full-time Commissioner (CEO) EXPERT PANEL Employment Equity EXPERT PANEL Employment Conditions EXPERT PANEL National Minimum Wage 3 Organised Business 3 Organised Labour 4 External experts Appointed by Minister of Labour Appointed by Presidency 18
A RC H I T E C T URE EXPERT PANEL NMW Mandate Annually review level and recommend any changes timeously Establish strong datagathering and research capacity to inform deliberations Publish annual report Engage Nedlac on the NMW Deliberate on broader wage policy 19
A RC H I T E C T URE Review role of ECC and EEC Develop dispute resolution processes and enforcement instruments Mechanisms to support NMW Capacitate DoL and labour inspectorate Extend jurisdiction of CCMA, Labour Court and Labour Appeal Court 20
Terms of reference Approach Recommendations Evidence Implementation Architecture Further policy considerations Summary 23
S UMMARY LEVEL R20/hour; R3500/month TWO-YEAR PHASE IN set up 2017 Adjustment for 2 years Review and recommend change in 2019 One more year for enterprises with less than 10 workers EXEMPTIONS AND EXCLUSIONS Exemption process to apply On an economic or business case Process on a documentary proof basis Efficient Exclusions: EPWP, Own-account workers 24