Is a Minimum Wage a Living Wage?

6 Oct 2024 - In early March of 2024, the minimum wage in South Africa was revised from R25,42 per hour to R27,58 per hour, representing an 8.5% increase. South Africa’s national minimum wage is the floor level above which a worker should be paid, and is the same per hour for all workers except those employed in Expanded Public Works Programmes, and a few other categories.

Mametlwe Sebei, the president of The General Industries Workers Union of South Africa (GIWUSA), is proposing a revised minimum wage of R15,000 per month. However, even this is not enough, when compared to living wages, which are calculated according to cost of living in a specific country or region.

Prof. Ines Meyer, from the University of Cape Town, says that the legally prescribed national minimum wage in South Africa comes to only one-third of the calculated living wage, and even R15,000 is not enough to make ends meet, yet many earn significantly less.

Calculating the minimum wage in South Africa

Minimum wage in South Africa is calculated as 4.33 times the standard hours per week if an hourly wage is given. However, the minimum wage cannot be enforced on firms in financial difficulty. 

Opposing views

The National Minimum Wage Committee invited comments and suggestions on adjustments to the minimum wage for 2025, leading to two very different kinds of responses. On one hand, GIWUSA and other workers’ unions and academics are pushing for an increased minimum wage in line with a higher cost of living. On the other hand, the Democratic Alliance (DA) opposes an increase in the minimum wage for the next financial year, submitting written comments to the National Minimum Wage Committee. They argue that an increased minimum wage will worsen the current unemployment crisis in the country. As of August 2024, South Africa’s rate of unemployment is at a high 33.5%, and has risen since the last quarter. The DA explains that in response to a higher minimum wage, employers could begin to hire fewer people in order to cover their costs, creating more unemployment. They also argue that the gap between the employed and unemployed will get higher.

Sebei instead argues the opposite. “We say implement a minimum wage of R15,000. We reject the argument that people are going to lose jobs. In fact, when you increase wages by 10%, it contributes 2.5% to economic growth,” said Sebei. He also spoke of cheap migrant labour being used by companies, and linked low minimum wages to a history of black labour working for “poverty wages”. 

The DA instead proposes “freezing” the current minimum wage, and enforcing labour reforms to “expand job opportunities”. They propose a “Youth Employment Opportunity Certificate" and to amend “existing collective bargaining structures to benefit small businesses”. 

Living Wage

There has been significant conversation around implementing a living or livable wage in South Africa. On 11 September 2024, the South African Government rejected a demand from public-sector workers to increase their wages by 12%, instead only increasing it by 3%. However, the increased cost of living across the country is simply too high, and workers are struggling to make ends meet with the current national minimum wage. Learn more about Minimum and Living Wages in South Africa.