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What Effect Will the Minimum Wage Bill Have on the Youth of South Africa?

What Effect Will the Minimum Wage Bill Have

Introduction
In modern times, minimum wage earners comprise of large numbers of teenager’s or young people; who are still living with their parents or who decide to work as they cannot afford tertiary education after high school. When the minimum wage increases, Employers are most likely to hire less Employees such as teens who usually fill lower positions.

The Minimum Wage Bill (hereinafter “the Bill”) was enacted by Parliament and published in the Government Gazette on 17 November 20171. The Bill was officially passed by Parliament on 30 May 2018.

As stated in the preamble of the Bill, South Africa is one of the most unequal societies in the world. There are huge disparities in income in the national labour market. The Bill notes the need to eradicate poverty and inequality and acknowledges the need to promote fair and effective competition in the labour market and labour market stability. The Bill also further notes the Constitutional obligation on the State and Employers to promote and fulfil the right to fair labour practices.

The question is whether the Bill will have any impact on the Youth.

What provision does the Minimum Wage Bill provide?
The minimum Wage Bill was enacted by Parliament to provide for the following:
1) To provide for a national minimum wage;
2) To establish the National Minimum Wage Commission;
3) To provide for the composition and functions of the National Minimum Wage Commission;
4) To provide for the review and annual adjustment of the national minimum wage;
5) To provide for exemption from paying the national minimum wage;
6) To provide for transitional provisions in respect of farm workers and domestic workers; and 7) To provide for matters connected therewith.

Schedule 1 of the Bill
Schedule 1 of the Bill provides for the National Minimum Wage of R20 (previously R15.00) for each ordinary hour worked and also provides for temporary exceptions to the National Minimum Wage for the first year, from 1 May 2018.

Could this negatively affect the Youth?
Employment rate in South Africa, especially for the youth, remains exceedingly high by global standards, Employers are not always able to afford and hire more unskilled and inexperienced workers when the minimum wage increases as labour becomes more expensive, especially for small businesses.

According to Government Statistics, the South African working age population increased by 153 000 or 0,4% in the first quarter of 2018 compared to the fourth quarter of 2017. The rise in both employment (up by 206 000) and unemployment (up by 100 000) over the quarter led to the rise in the labour force participation rate now standing at 59,3%. The unemployment rate (26,7%) remained unchanged over the first quarter of 2018 compared to the fourth quarter of 2017.2

It was further stated that:
“The South African youth are still vulnerable in the labour market. Youth unemployment, however, is not unique to South Africa; it is a global phenomenon. According to the International Labour Organization, there are about 71 million unemployed youth, aged 15–24 years, globally in 2017, with many of them facing long-term unemployment. In South Africa those aged 15–34 years are considered as youth.

South Africa’s unemployment rate is high for both youth and adults; however, the unemployment rate among young people aged 15–34 was 38,2%, implying that more than one in every three young people in the labour force did not have a job in the first quarter of 2018.

Some of these young people have become discouraged with the labour market and they are also not building on their skills base through education and training – they are not in employment, education or training.” 3

Therefore, these statistics are more likely to remain the same or worsen with increases to the minimum wage.

Conclusion
It is important for the Youth of South Africa to be aware of the current changes in law and that this could affect employment in either a negative or positive way.

It is therefore important, that the youth work hard and try to obtain further education to improve statistics, though circumstances do not always permit.

© Shannon Vengadajellum - Schoemanlaw Inc. - 2018

1 Government Gazette No. 41257 of 17 November 2017
2 http://www.statssa.gov.za/?p=11129
3 http://www.statssa.gov.za/?p=11129

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Government Gazette No. 41257 of 17 November 2017