Ina Opperman
Business Journalist
5 minute read
19 Feb 2021
3:09 pm

Agri SA warns of job losses in wake of new minimum wage

Ina Opperman

Less work will have a high price for workers, as the level of poverty, hopelessness and social decay will increase due to large scale unemployment, says Christo van der Rheede, CEO of Agri SA.

Almost all farmers who participated in a desktop survey run by Agri SA indicated that they would exceed their wage budget in the 2021 financial year due to the new increased minimum wage, while the majority of participants indicated that they expected to retrench workers for the same reason.

According to the Agri SA Centre of Excellence on Labour survey on the impact of the new national minimum wage in the agricultural sector, 549 out of the 577 participants indicated that they will exceed their allocated budget of R1.7 billion for 2020, with a 24% increase in wage costs over turnover for 2021. In addition, 456 of the participants expect to retrench workers, with 4384 jobs that can potentially be lost.

This means that about 9.6 workers, who are mostly seasonal or casual workers, per participant run the risk of losing their jobs. The survey also indicated that labour intensive sub-sectors will consider mechanising to reduce staff numbers and shorten working hours.

ALSO READ: Farmer organisations explain opposition to new minimum wage

Some of the participants also mentioned that they would consider reducing staff for three months and halt job-creating initiatives, such as casual employment for planting vegetables and doing general maintenance.

The price of less work

Less work will have a high price for workers, as the level of poverty, hopelessness and social decay will increase due to large scale unemployment and high levels of despair amongst unemployed youth in need of employment, Christo van der Rheede, CEO of Agri SA, said at the presentation of the report in Pretoria on Friday.

Participants said an average of four people per day asks for jobs on farms and this number is increasing after numerous people lost their employment in tourism and game farming.

ALSO READ: Farmworkers are not slaves, Cosatu tells ‘hysterical’ farmers union

The importance of jobs

Van der Rheede said it is important to get as many people as possible into jobs. Referring to the extension of the Special Covid-19 Grant of R350 by a further three months and the Covid-19 Ters benefit until 15 March 2021 for sectors that have been unable to open and operate, he asked what will happen after this extension?

According to the expanded definition of the unemployment rate, which includes discouraged work seekers continues to increase, unemployment increased from 42,0% in the second quarter (Q2) to 43.1% in Q3, while the latest Quarterly Labour Force Survey released by Stats SA showed that 11,1 million working-age people are unemployed. SASSA paid 18,369,977 social grants to 11,412,303 beneficiaries in July 2020.

Stats SA data also shows that the overall number of companies that have been liquidated increased to 20,5% in Q4 of 2020, compared to the same period in 2019, mostly in the financing, insurance, real estate and business services sectors, followed by the trade, catering and accommodation and manufacturing sectors.

ALSO READ: National Minimum Wage: unhappiness about increase for farm workers

Call on government to free up economy

Van der Rheede said Agri SA is therefore calling on the government to free up the economy immediately by relaxing the strict procedural requirements in the Labour Relations, Basic Conditions of Employment and Employment Equity Acts, as well as the National Minimum Wage legislation, because the procedural requirements are too onerous.

“Unemployment is the biggest driver of poverty, but the state’s ability to continue supporting the poorest of the poor with grants is not sustainable.”

Social unity compact

He said Agri SA and its affiliates publicly committed themselves to the implementation of a Social Unity Compact, with these guiding principles:

  • Respect for human rights in farming communities
  • Opportunities for constructive dialogue between farmers and all stakeholders
  • Compliance with all legislation and particularly labour and land reform legislation
  • Promotion of compliance with best practice codes
  • Promotion of community involvement within rural areas to address poverty, joblessness and inequality
  • Identification of deficiencies in service delivery, infrastructure, healthcare, education, business profit margins and related issues and arable land

“Few farmers wake up one morning and deliberately give staff a raw deal in healthcare, education, housing or security of tenure,” he pointed out. Farmers have to budget for electricity tariffs, meeting the national minimum wage, fuel prices, water tariffs and a stronger rand diminishing their income.

ALSO READ: New wage for domestic workers: decent pay for decent work?

Focus on job creation

Van der Rheede said it is important to focus on job creation and conducive policies in the future to meet their commitment. “Job creation and inclusive economic growth remain vital pillars to achieve the country’s long-term objectives to improving the lives of all South Africans, especially those who are severely affected by poverty and inequality.”

He warned that a national minimum wage will be rendered ineffective in the absence of a holistic approach aimed at improving the lives of the most vulnerable households in society. “Furthermore, there is a need for rural development to improve the livelihoods of farmworkers as such initiatives thus far have proved to bring limited change.

“Development will enable seasonal workers to benefit from a diverse pool of work opportunities and a better and more consistent income.” He said this could include:

  • implementation of housing programmes by rural municipalities
  • improving infrastructure of rural towns
  • improving water and sewerage provision
  • improving public transport in rural areas
  • improving service delivery

Van der Rheede also emphasised that the provision of quality education remains the biggest challenge, while it could enable people to develop all their attributes and skills to achieve their potential as human beings and as members of society.

“Government cannot remain ignorant to the need of the poorest households to have access to employment. The alleviation of poverty does not solely rely on an increase in wages and it is aggravated by a lack of employment opportunities. Everything must be done to free up the economy, such as:

  • removing policy constraints
  • implementing economic recovery strategies
  • implementing a holistic rural development strategy
  • focusing on infrastructure development, service delivery and quality education in particular
  • creating a conducive environment for businesses to operate profitably and create more jobs.

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