Introductory Remarks
The Congress of South African Trade Unions welcomes the 2026 increase of inflation plus 1.5% (5% in total or R1.44) for the National Minimum Wage. This progressive above inflation increase raises the NMW from R28,79 per hour to R30.23, a new milestone.
Whilst COSATU had tabled a slightly higher proposal, we are pleased that our demand for a positive above inflation increase secured the support of the Commission and the Minister for Employment and Labour, Ms. Nomakhozana Meth.
Welcome Increases
The NMW Act mandates the Commission to ensure the NMW is not eroded by inflation, as this would plunge workers deeper into debt, poverty and despair. This positive increase helps protect the value of the NMW and workers’ ability to care for their families.
Many workers have received zero or below inflation increases since 2020, with indications that this trend will continue. Millions of workers have seen their wages and benefits slashed.
Most workers support relatives who have lost jobs and wages.
It will inject badly needed stimulus into the economy, spurring growth, sustaining and creating jobs. It will provide relief to nearly 6 million workers earning within the NMW range in particular farm, domestic, construction, retail, transport, hospitality, security, and cleaning workers.
COSATU is pleased with the progress we have made with the NMW since it came into effect in 2019 at R20 per hour, with domestic workers then pegged at R15 and farmworkers R18, a 50%, 100% and 66% increase, respectively.
They have both since been equalised with the NMW. The NMW is a far cry from the poverty wages farm and domestic workers were paid a few years ago, at times as little as R6 an hour. It is one of government led by President Cyril Ramaphosa and the African National Congress’ most important and transformational achievements.
EPWP and CWP Workers
Engagements need to be accelerated with the Presidency, Treasury and the Departments of Cooperative Governance, Public Works and Infrastructure on a road map to ensure Community and Expanded Public Works Programmes’ workers are raised from the incoming amount of R16,62 to the full NMW.
It is unacceptable that these workers remain pegged at just under 55% of the NMW. This must now end. A road map will be developed with government and labour for those sectors in the EPWP and CWP to incrementally narrow the gap and then equalize with the NMW over the medium-term expenditure framework, e.g. over the next 3 years.
Rounding Off Adjustments
The Reserve Bank is moving away from minting cents, with many coins having been phased out, e.g. 1, 2, 5 and 10 cents. This trend will continue.
Adjusting the NMW by hard-to-remember odd cents makes it complicated for employers and workers to remember the NMW level or make calculations. It makes it difficult for workers to ensure they are paid in line with the NMW Act. Most workers paid the NMW are paid in cash. It is not practical to pay amounts ending in cents.
Implementation Dates
The NMW should ensure that increases to the NMW are implemented timeously and effected from the 1st of January each year. This is in line with the original anniversary of the NMW of 1 January 2019.
BCEA Annual Income Threshold
COSATU remains deeply frustrated, disappointed and angered that the former Employment Conditions Commission and now the NMW Commission have failed to adjust the BCEA income threshold to recover the massive erosion it has suffered from repeated failures over 6 years to adjust it for CPI from 2014 to 2020.
This has led to millions of workers no longer being afforded many critical labour rights protections based upon this annual income threshold. It has exposed them to exploitation and seen their protections and rights eroded and denied overtime payments due to them.
It has seen the protection provided by the Unemployment Insurance Fund reduced. This meant the 5.5 million workers receiving the UIF Covid-19 TERS during the pandemic received more or less than they would have received if the income threshold had consistently been increased to protect it from inflationary erosion.
The BCEA income threshold needs to be protected from inflation and erosion. It also needs to protect workers, as intended when the initial threshold was determined.
COSATU Proposals:
- There are 2 options for determining the new threshold. Firstly, when the threshold was initially set, it was pegged at the salary of a deputy director in government. If this ‘peg’ is still applied, the threshold should be increased to R744 255.
- The second option is to adjust for inflation from the introduction of the threshold to date, which would increase the current threshold to R500 000
- These adjustments will commence from 2026.
Medium Term Target
A key part of the NMW Agreement at Nedlac was for the NMW Commission to set a medium term target for the NMW once it came into effect. Research needs to begin on this. The NMW was set at the initial low level of R20 and pegged for farm, domestic, EPWP and CWP workers to prevent retrenchments.
We need to set a progressive medium-term target linked to a living wage and a reasonable road map to achieve it.
COSATU Proposals:
- Research begins on setting a medium-term target for the NMW.
- The medium-term target for the NMW should be linked to a living wage, e.g. R9 500 per month.
- A reasonable road map should be set to increase the NMW to a living wage over the medium term.
Enforcement
Whilst we have made progress, it is critical that the Department of Employment and Labour intensify its crackdown on defaulting employers. Unions must expose such workplaces.
Organised Business must play its part too. This is a criminal offence and should be treated as such. Such employers cannot be allowed to defy the law and treat their employees little better than slaves.
Minister Meth’s bold commitment to employ an additional 10 000 permanent and 20 000 intern inspectors will be a welcome boost to ensuring the abhorrent defiance of the law by some employers is dealt with.
Concluding Remarks
Right-wing critics of the NMW said it would lead to a job’s bloodbath. Independent research by leading academics has proven this not to be the case. It has had a positive impact on reducing poverty and inequality whilst boosting economic growth. Other countries that have introduced an NMW, e.g. the United States, Germany and Brazil, have had similar positive experiences.
Beyond the NMW, the government needs to expedite measures to tackle the network and other obstacles to growing the economy and reinforce the social wage, e.g. subsidised public transport, education, housing, municipal services and social security.
These are critical to fixing the state, unlocking the economy, reducing poverty, creating decent jobs, as well as ensuring workers earn a living wage.