Busa on National Minimum Wage Bill and S&P Decision

The signing into law of the National Minimum Wage (NMW) Bill is a positive step towards stabilising South Africa’s labour relations environment and signals the country’s commitment both to social reform and social compacting.

This is against the backdrop of South Africa’s labour relations environment having been previously constantly flagged by the three major sovereign credit ratings agencies – Moody’s Investors Service, Fitch and S&P Global Ratings – as a potential credit negative because of its volatile and adversarial nature. However, the negotiations around and subsequent agreement upon the NMW Bill and associated regulations shifted this narrative, with the process being cited by the three agencies as a positive framework for social reform.

Although S&P this week kept South Africa’s foreign and local currency denominated debt ratings at non-investment grade, the country’s outlook remains stable. S&P has noted the government’s commitments to undertake economic, social and fiscal reforms. The NWM Bill falls within the ambit of much needed social reforms. The coming together of social partners – business, organised labour, community and the government – demonstrates what can be achieved when the collective works towards a common social framework.

Business Unity South Africa (BUSA) is particularly pleased about the introduction of the new labour relations stability provisions: the default picketing rules, the secret strike ballots, the provision for extended dispute resolution prior to strike action and advisory arbitration. The organisation also notes the exemption provisions in the NMW laws, particularly targeted at SMEs, that will provide some relief for those employers that cannot afford the National Minimum Wage. This will need a well-capacitated Department of Labour to ensure the efficacy and correct application of the exemption provisions.

The labour relations stability provisions strike a balance between ensuring accountability, while also guaranteeing the basic constitutional rights to strike, associate and pursue economic activity.

“The coming into fruition of the NMW Bill is a resounding nod to social compacting and reinforces its need in our country. Now, the hard work of ensuring that this framework will bring about meaningful change in the lives of millions of South African workers begins. We have travelled a long, hard road to get to this seminal juncture, and that is thanks to the goodwill shown by the social partners,” said BUSA President Sipho M Pityana.

“The new advisory arbitration provisions are a clear signal the Nedlac constituents agree that violent and protracted strike action is no longer regarded as acceptable. We are pleased that we were able to reach an agreed outcome on the National Minimum Wage and urge all businesses to put plans in place to ensure compliance or go about official channels to seek exemptions,” said BUSA CEO Tanya Cohen.