The Department of Employment and Labour published the annual adjustment to the national minimum wage in the Government Gazette on 8 February. The adjustment increases the general national minimum wage from R20,76 to R21,69 per hour.

The special dispensation for farmworkers has been done away with and the minimum wage for farmworkers will now be equalised, increasing from the current R18,69 to R21,69 per hour. The new minimum wage will come into effect from 1 March 2021.

Several agricultural organisations have since made comments about this adjustment, which they say is unsustainable for the agricultural sector. In a press release, Agri SA stated that “the immediate equalisation and increase will place many jobs in serious jeopardy, which could have been avoided.”

Agri Western Cape also stated in a press release that it is “disappointed that the minimum wage commission hasn’t taken our recommendation into account to increase the minimum wage sustainably, in accordance with the consumer price index (CPI), and to keep the current 10% dispensation in place for an additional two years, whereafter it can be phased out over another two years”.

Free State Agriculture (FSA) also expressed its shock and disappointment with the national minimum wage increase. “The government’s decision to increase the national minimum wage by 16% comes at a time when it is extremely challenging to produce food, and it seems as if the government is out of touch with the realities,” says Francois Wilken, president of FSA.

Job losses a tangible threat

“Despite FSA and other institutions’ objections to the proposed increase, substantial adjustments continued, regardless of the economic challenges the country is currently experiencing,” says Wilken. FSA also individually objected to the proposed adjustments and warned that the adjustments could lead to job losses.

Likewise, Agbiz submitted written representations to the minister, opposing an increase above the CPI and the equalisation of farmworkers’ pay-out, fearing that this may lead to further job losses. According to Agbiz CEO, Dr John Purchase, the increases are not aligned with economic realities.

“Agbiz has always supported a decent wage, but the timing of this amendment must be questioned. We must note our disappointment with the latest adjustment since it does not appear to take affordability or the current economic climate into full consideration,” said Dr Purchase.

“Last year saw the economy shrink in real terms and millions of jobs were lost across various sectors due to the Covid-19 disruptions. While agriculture has been a shining star in the economy, the labour-intensive sub-sectors such as the wine industry, have been hard hit by the recent ban on sales. Wine and table grape producers already face cash flow challenges, and the severe economic impact was illustrated by the respective 37 and 8% year-on-year decline in farm jobs in the Western and Northern Cape in the third quarter of 2020. We fear that the recent adjustment will add to already tough economic conditions for farming entities,” said Dr Purchase.

Agri Western Cape shared similar statistics. According to Statistics South Africa’s latest Quarterly Labour Force Survey, employment in all industries contracted in the third quarter of 2020, while the agricultural sector shed 72 000 (8,2%) jobs year-on-year.

Agri industry faces many challenges

Agri SA emphasised that sub-sectors such as the wine industry were severely affected by the Covid-19 pandemic and subsequent lockdown regulations. It highlighted the fact that the wine industry has endured two bans on sales, while tobacco, wool, and barley producers were not declared essential services during the hard lockdown and their activities were seriously hampered during the last months.

Producers in drought-stricken areas, such as the Northern, Eastern, and Western Cape, continue to face major financial challenges and with the Land Bank’s status being a growing concern, a 16% increase will undermine the economic growth and contribution of a sector that faces serious challenges amid the pandemic.

Agri Western Cape emphasised that the increase also comes amid a prolonged drought in the Little and Central Karoo and the West Coast’s Matzikama district. The drought has had a debilitating impact on the financial stability of agricultural enterprises in these regions, and many producers cannot afford the increase. – Ursula Human, AgriOrbit