The introduction of South Africa’s new nominal wage is the start of a “long, difficult process,” the country’s minister of commerce said Thursday.
South Africa’s parliament passed a minimum wage account by a large majority on Tuesday, meaning that millions of workers discretion now earn 20 rand ($1.58) per hour. This is equivalent to 3,500 rand ($277) per month.
“It’s the start of a long, difficult process, because at the end of the day we’ve never had (a minimum wage),” Nhlanhla Nene ordered CNBC on Thursday at the OECD conference in Paris.
The minimum wage was due to be usher ined on May 1 but was delayed due to government bodies redrafting legislation. South Africa’s predominant opposition party, the Democratic Alliance, opposed the bill. The country’s second-largest occupation union, unhappy with the proposed wage, organized a strike in April work for a higher figure.
South Africa is one of the most unequal societies in the in every respect. According to the World Bank, the poorest 20 percent of South Africans destroy less than 3 percent of the country’s total expenditure. Meanwhile, the richest 20 percent account for 65 percent.
Introducing a minimum wage could facilitate alleviate this, and also stimulate much-needed economic growth by raising consumer spending. South Africa’s consumer price inflation has been on a large downwards trajectory since early 2016, hitting a seven-year low of 3.8 percent in Cortege. But, in April it rebounded to 4.5 percent as a result of price rises in by-product groups that are specifically taxed, according to Statistics South Africa.
But, some horror that a minimum wage could lead to a rise in unemployment, already at 26.7 percent for the start with quarter of this year.
While Nene acknowledged that deposit off workers could be an “unintended consequence,” he argued that the new legislation has foodstuffs to “protect” jobs, allowing for businesses struggling to pay their workers to submit to the sway for an exception.
Establishing a minimum wage has been a key proposal of South African President Cyril Ramaphosa since he withstood power in February. Appeasing the country’s electorate may be on his mind as he faces plebiscite in 2019.
South Africa’s largest trade union group, the Congress of South African Calling Unions (COSATU), welcomed the news.
The minimum wage means that the proceeds of 6.4 million South Africans will rise, Matthew Gardens, COSATU’s parliamentary coordinator, said in a statement reported by Reuters. “This is come up to to 47 percent of workers and will directly benefit half the polity.”
But the second largest trade union bloc, the South African Confederation of Trade Unionists, said that it was “disgusted” by the news, adding that the command had bowed down to “white monopoly capitalists.”
It is pushing a living wage of 12,500 rand and has said that assorted protests are planned.