Farming sector warns of job losses due to minimum wage hike

Farming sector warns of job losses due to minimum wage hike
The national minimum wage increase of 16% for farmworkers, which will increase farmworker wages to R21,69/hour, will come into effect from 1 March 2021. Photo: FW Archive
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Minister of Employment and Labour Thembelani Nxesi recently announced that the minimum wage for farmworkers has increased by 16% to bring it in line with the national minimum wage.

This increase, which was published in the Government Gazette, will come into effect from 1 March 2021 and see the minimum wage of farmworkers increase to R21,69/hour.

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Following the announcement, Christo van der Rheede, CEO of Agri SA, said that this drastic increase could result in a crisis for farmers that would have a far-reaching impact on the agriculture sector.

He said the wine, fruit and barley sectors expected to be particularly hard hit by the increase due to the COVID-19 lockdown bans on alcohol sales.

“Not to mention the impact the [COVID-19] trade bans [had] on wool and related sectors and the ban on tobacco products. The 16% increment is bound to have a serious knock-on effect and will unavoidably result in job losses,” Van der Rheede said.

Van der Rheede added that serious introspection was needed as it pertained to the National Minimum Wage Commission’s role and mandate.

“The question is whether the commission wants to stimulate job creation or whether it has become instrumental in the worsening of the unemployment crisis in the country. The pandemic continues to erode the economy and the decision to increase the minimum wage by 16% does not make sense.”

Willem Bestbier, CEO of the South African Table Grape Industry (SATI), said the announcement came as a shock. He added that it was “unthinkable that the one industry in the South African economy that still shows some signs of life and job creation is subjected to such an irrational wage increase”.

This would put an unfair burden on the industry and job losses in the industry would follow as a matter of course, he said.

“The agriculture sector in general and the table grape industry, in particular, stimulates exports, generates foreign exchange and is a major role player in the stabilisation of rural economies. SATI is probably the biggest job creator per hectare of all production sectors, [providing] 14 000 permanent jobs and 66 000 seasonal jobs. Increased mechanisation is bound to follow. We are committed to a fair living wage for workers but this huge increment is unjust,” he said.

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According to Francois Wilken, Free State Agriculture president, it was extremely worrying that all the motivations and warnings from organised agriculture about net effect of such a high increment in the farmworker wage were simply ignored by the National Minimum Wage Commission.

“This decision will have a long-lasting effect on the economy and rural economies,” Wilken said.

Henry Geldenhuys, president of TAU SA, also criticised the National Minimum Wage Commission for ignoring input from the agriculture sector on the likely impact of the double-digit increase to the farmworker wage rate.

“The ability of employers to absorb these levels of remuneration is impossible,” Geldenhuys said.

These sentiments were echoed by other farmer organisations. Following the announcement, the Kwazulu-Natal Agricultural Union (Kwanalu) released a statement saying that the 16% increase would “compromise the role of the agriculture sector in contributing towards social stability in our country.

“If farmers cannot produce food affordably and employ agricultural workers on a large scale, this will result in a food crisis and large-scale social upheaval as food insecurity and unemployment start to take root,” according to Kwanalu.

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