Fin24 reports that the 2024 increase in the national minimum wage (NMW), which was the biggest increase since the measure’s introduction in 2019, did not cause significant job losses or reduced working hours. But, only 20% of the 5.4 million eligible workers benefitted from increased pay. In 2024, the NMW increased by 8.5%, namely 3.2 percentage points above inflation, bringing hourly pay to R27.58 and pay for a 40-hour week to R4,744 for This raised fears of a negative economic impact. A research paper published last month by UCT’s Development Policy Research Unit for the NMW commission found that the negative impact of the rise was small but underlined that employer compliance was very low. According to Stats SA, 5.4 million people earned below the minimum wage and were entitled to a wage hike. However, the study says only 19% benefitted from the full increase.
Due to the spillover effect, a larger group of low-paid workers also experienced pay rises when the minimum wage rose, taking the proportion of those who benefitted from higher wages to 27%. The study found that the negative economic impact of the hike was minimal. Employment in this cohort reduced slightly – by 3.4% – and working hours reduced by around 3%, suggesting that some employers cut working hours to deal with the increase. Zwelinzima Vavi of the SA Federation of Trade Unions called on the Department of Employment and Labour (DEL) to strengthen compliance. The NMW commission has proposed to the DEL that the increase for 2025 should be December CPI (not yet published) plus 1.5%. The proposal was published last month for comment.
Read the full original of the report in the above regard by Carol Paton at Fin24 (subscription or trial registration required)