Minimum wage law comes into effect on January 1st 2019

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Good news for the 6-million workers that currently earn below R3 700 a month but a challenge to the businesses out there struggling to retain staff in an economic environment of rising costs, the new Minimum Wage Act signed by President Cyril Ramaphosa last week will see the minimum hourly rate for workers set at R20 – effective on 1 January 2019.

The new law allows for the annual adjustment of the minimum wage by a still-to-be-appointed commission, which will be required to conduct a review of the said wage within 18 months of the commencement of the act. It has also been factored in that those employers who are unable to pay the minimum wage due to business constraints may apply for an exemption.

Economists, whilst welcoming the move are concerned that the law may lead to more job cuts as businesses find they are not able to meet the increased labour costs which will only add to the already high unemployment rate of more than twenty seven percent (27%). Treasury, in its initial response to the proposed law, which was first proposed by Nedlac and in the works since 2015, warned that if the move was implemented recklessly, could not only affect jobs but the economy in the long term

Three other bills were also signed into law: the Labour Laws Amendment Bill, amendments to the Basic Conditions of Employment Act, and the Labour Relations Amendment Bill.