Director General of Labour, Thobile Lamati responds to Press Release by the National Minimum Wage Research Initiative (NMW-RI) of the University of Witwatersrand
17 May 2018
Dr Gilad Isaacs of the NMW-RI has issued a Press Release in which he alleges that the Department of Labour has ignored the letter or spirit of decisions of the Portfolio Committee of Labour in its consideration of the National Minimum Wage Bill, the Basic Conditions of Employment Amendment Bill and the Labour Relations Amendment Bill.
The Department is also accused of “sidelining” aspects of the February 2017 agreement between the social partners on labour stability and the national minimum wage. The Press Release outlines a number of issues that will be responded to in the following.
1. Sectoral Determinations
The comment made is that the retention of Sectoral Determinations in amendments to the BCEA and NMW Bill is done in “the weakest possible form.” Examples provided to substantiate this include the reference to there being no requirement for regular reviews and that SD wages must increase proportionally to adjustment to the NMW.
The NMW-RI misunderstands the legal provisions for Sectoral Determinations and the added functions now given to the NMW Commission. The amendments ensures that Sectoral Determinations can still be made in accordance with the provisions of the BCEA. One of these provisions is to determine a period of operation of a sectoral determination. Thereafter a new investigation is initiated and the provisions of a sectoral determination are changed. Changes to sectoral determinations are not done on the basis of an annual review as applies to the NMW and it is not appropriate to equate the two. Moreover, amendments to the NMW Bill give the Commission the power to advise the Minister on Sectoral Determinations and on any matter concerning basic conditions of employment. There is nothing ‘weak’ about the retention of sectoral determinations nor in the way in which the NMW Commission is empowered to engage with the process of making sectoral determinations.
In the discussions of the Portfolio Committee it was never envisaged that the Commission would take over the power of the Minister to promulgate sectoral determinations. The Minister retains the power to make sectoral determinations as contemplated in the BCEA and the NMW Commission recommend adjustments to the national minimum wage to the Minister.
The proportionate increases to wages in SD’s only applies to those SD’s that already prescribe wages that are higher than the NMW and therefore provide for an automatic adjustment to those wage rates. This was agreed in NEDLAC and has nothing to do with the continued life of SD’s now provided for through subsequent amendments.
2. Phasing out lower tiers
While there is agreement that the lower tiers should be brought up to the level of the NMW within a defined time period of two years, it was also agreed that this would be subject to research by the NMW Commission on the time line. There was no agreement to reflect this in the NMW Bill, as the law cannot reflect this agreement and the time line. This matter was discussed with the Portfolio Committee, the State Law Advisers and the Parliamentary Legal Adviser.
3. The independence of the NMW Commission
The comments by the NMW-RI on the ‘independence’ of the NMW Commission ignores the reality of how Commissions work within government as opposed to public entities that are funded by government that are subject to their own governance arrangements and operate at a distance from government. The social partners and the Portfolio Committee have been in agreement with the arrangement contained in the NMW Bill whereby the NMW Commission will operate within the Department, supported by a Secretariat. The budget of the Commission is to be defrayed from the budget vote of the Department.
The Department understands that it is only the Chairperson of the Commission who is ‘independent’. The other members are nominated by the NEDLAC constituencies and appointed by the Minister. This is how the Employment Equity Commission and the Employment Conditions Commission operate.
4. Annual increase
The issue raised by the NMW-RI is attempting to further a particular interest, namely; a guaranteed annual increase to the national minimum wage. The understanding, including in the deliberations of the Portfolio Committee, is that the annual review and any adjustment to the NMW must be evidence based and must take account of a number of factors as listed in the Bill. The purpose of the NMW Bill is to protect the value of the NMW and it was agreed to in the PC that the Bill adequately takes account of the issue.
5. Medium-term target
The Bill adequately reflects the NEDLAC agreement and the view of the Portfolio Committee, with which the Department agrees, being that legislation need not be prescriptive with regard to benchmarks and other operational or methodological matters that can be dealt with adequately once the Commission is established.
The NMW-RI notes that the R11 per hour for the EPWP’s is low. This is acknowledged but it is the figure that was agreed to on the understanding that it would ensure that the EPWP’s will continue to be able to provide for as many work opportunities as possible.
The provision for an employer organisation to apply for an exemption on behalf of its members is deliberate and intended to allow for assistance to be provided to small and emerging entrepreneurs who may find it difficult to complete exemption applications. The exemption system that is being designed is based on the consideration of information from an individual employer and the system is therefore not open to abuse. The objection by the NMW-RI is misplaced.
The timeframes in the NMW Bill are not entirely removed but re-drafting was necessary in light of the passing of the 1 May deadline. The new provision for the dates to be set by Proclamation provides sufficient flexibility, including for discussion of the date of coming into effect of the NMW with the NEDLAC social partners.
9. Guaranteed minimum hours of work
The consideration of an increase to the minimum hours of work can be done in terms of the NMW Bill as the Commission is able to advise the Minister on any matter concerning basic conditions of employment. There was no reference to increasing the minimum hours in earlier drafts as this provision is contained in the BCEA amendments and not the NMW Bill.
10. Employer contributions
It was agreed that the provision for excluding “any other prescribed category of payment” provides flexibility to include other categories of deductions at a later stage once there has been due consideration given to these issues.
The view of the NMW-RI towards the NMW is informed by a particular interest in maximising the benefit of the NMW for workers. This is commendable but does not take account of the competing interests that surround the issue and that must be taken into account by government. The Department is of the view that it has worked fairly and effectively with the social partners, with the Portfolio Committee and with the State Law Advisers to craft a Bill and further amendments to the Bill that are in line with the NEDLAC agreement and consistent with the principles of legal drafting. It seems to us that Dr Gilad Isaacs, though was afforded space by Portfolio Committee to observe the process as it was unfolding, he did not fully grasp the process. As a matter of fact, the Committee never handed the Bills back to the Department for redrafting. Redrafting of the Bills is the responsibility of legal officers of parliament which they have undertaken with distinction, of course in consultation with the Department of Labour as the originators of the Bills. Dr Gilad Isaacs’ comments are not only undermining the intelligence of the Committee by suggesting that the Department did not effect the amendments that the Committee instructed us to effect, but also implying that the Department acted insolently. We dismiss this as pure fabrication and bordering on delusion. As the Department, we don’t know what is the driving force behind the lies that are being peddled by Dr Gilad Isaacs. Having read and listened to what Dr Isaacs says, I am convinced that he needs to be schooled on how legislation is developed and written.
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