PRESENTATION OF THE ADVISORY PANEL REPORT ON THE NATIONAL MINIMUM - PowerPoint PPT Presentation

Advisory Panel National Minimum Wage PRESENTATION OF THE ADVISORY PANEL REPORT ON THE NATIONAL MINIMUM WAGE

Advisory Panel National Minimum Wage • Terms of reference Approach • • Recommendations • Evidence • Implementation • Architecture • Summary 1

Advisory Panel TERMS OF REFERENCE National Minimum Wage Consider proposals by Nedlac constituencies   Recom omme mend nd  level or range for first NMW Recommend medium term target and mechanisms to achieve this   Design of NMW to maximise impact on poverty, unemployment and inequality  Exclusions, tiers, exemptions or phase-ins  Consider Potential impact on employment   Impact on bargaining council agreements, collective bargaining and sectoral determinations  Recom omme mend nd Actions to minimise negative and maximise positive effects   Social and economic benchmarks to review NMW (including GDP, CPI, average wage, median wage, minimum living level and collectively bargained wages)  Review period  Institutional and legal framework Any further measures for consideration  2

Advisory Panel National Minimum Wage • Terms of reference • Approach Recommendations • • Evidence • Implementation • Architecture • Summary 3

Advisory Panel APPROACH National Minimum Wage  Importance of this policy intervention  Evidence-based o Micro evidence accepted by all parties o International evidence o Economic projections on impact  Level vs range  Unanimous agreement by Panel  Specific considerations o Small business o Informal sector o Care-work sector o Collective bargaining 4

Advisory Panel National Minimum Wage • Terms of reference • Approach • Recommendations • Evidence • Implementation Architecture • • Summary 5

Advisory Panel RECOMMENDATIONS National Minimum Wage  The number • R20 per hour (minimum 4 hours work per day) • R3500 per month  Domestic Workers 75%  Agriculture Workers 90%  Institutional arrangement • Decent Work Commission  2 – year Implementation phase • Legal set up 2017 • Implementation and monitoring 2018-2019 • Review 2019 Small Business extra year • 6

Advisory Panel RECOMMENDATIONS National Minimum Wage  Why no adjustment of NMW over 2-year phase in ? • This will reduce the real-value • Any adjustment should be evidence-based Introduce • • Observe and monitor, and assess impact • Then adjust the level in 2019 • If benign then adjust to catch up for loss in the real value If disemployment effects high then • adjust accordingly • Allow enterprises time to adjust • Enforcement by persuasion during phase in NOTE: ECC processes will continue • 6

Advisory Panel National Minimum Wage • Terms of reference • Approach Recommendations • • Evidence • Implementation Architecture • • Summary 7

Advisory Panel EVIDENCE National Minimum Wage Minimum wage coverage Uncovered (2 355 142) 9.9% Bargaining Council Private (799 827) 22.3% Public Sector (1 508 423) SD (4 870 884) 7.6% Trade Union Private (1 049 784) 46.0% 14.3% Source: DPRU (2016) 8

Advisory Panel EVIDENCE National Minimum Wage Sectoral wage distribution Source: Finn (2016) calculations from LMDSA 2014 dataset. August 2016 prices. 8

Advisory Panel EVIDENCE National Minimum Wage Mean and median wages under various assumptions Assump mptions ns Mean Median an  All earne ners includ uding ng zero o earne ners R8 773 R3 442  Zero o earne ners remov oved R8 810 R3 476  Hourly average age *45*4.3 .3 (all workers) R9 690 R3 784  F&I ex. . agri. . and domestic *45*4.3 .3 (full-time me) R10 634 R4 485 Source: Finn (2016) calculations from LMDSA 2014 dataset 10

Advisory Panel EVIDENCE National Minimum Wage Minimum wages in selected emerging economies 1.2 1.05 0.98 1 0.82 0.78 0.78 0.77 0.8 0.72 0.69 0.68 0.58 0.6 0.51 0.48 0.48 0.42 0.41 0.39 0.37 0.4 0.33 0.33 0.28 0.2 0 Vietnam Mexico Mali Peru India South Brazil Costa Rica Phillipines Indonesia (2011) (2010) (2010) (2010) (2010) Africa (2009) (2011) (2009) (2009) (2017) Mininum to Mean Minimum to Median Source: Rani, Belser, Oelz, and Ranjbar, Minimum wage coverage and compliance in developing countries, International Labour Review, Vol. 152 (2013), No.3-4. 12

Advisory Panel EVIDENCE National Minimum Wage Wage distribution by firm size Source: Rankin 2016 11

Advisory Panel EVIDENCE National Minimum Wage Distribution of wages 13

Advisory Panel National Minimum Wage • Terms of reference • Approach Recommendations • • Evidence • Implementation Architecture • • Summary 14

Advisory Panel IMPLEMENTATION National Minimum Wage  2017 set up of legal and institutional arrangements  2 year monitoring process  2019 first review of level  Small business = 1 year extra  Efficient information campaign around exemptions 15

Advisory Panel IMPLEMENTATION National Minimum Wage EXEMPTIONS Exemption process to apply • On an economic or business case • Sector or enterprise Assessment on a documentary proof basis • • Efficient 15

Advisory Panel IMPLEMENTATION National Minimum Wage EXCLUSIONS • Own account workers • Family labour • EPWP 15

Advisory Panel National Minimum Wage • Terms of reference • Approach Recommendations • • Evidence • Implementation • Architecture • Summary 16

Advisory Panel ARCHITECTURE National Minimum Wage 17

Advisory Panel ARCHITECTURE National Minimum Wage Full-time Commissioner Decent Work (CEO ) Commission EXPERT PANEL EXPERT PANEL EXPERT PANEL Employment Employment National Equity Conditions Minimum Wage National Minimum Wage 3 Organised EXPERT PANEL Business Appointed by Minister of Labour 3 Organised Labour 4 External experts Appointed by Presidency 18

Advisory Panel ARCHITECTURE National Minimum Wage EXPERT PANEL NMW Mandate Establish Annually strong data- review level gathering Engage Deliberate on and Publish and research Nedlac on broader recommend annual report capacity to the NMW wage policy any changes inform timeously deliberations 19

Advisory Panel ARCHITECTURE National Minimum Wage Review role of ECC and EEC Develop Mechanisms dispute Capacitate DoL resolution to support and labour processes and inspectorate NMW enforcement instruments Extend jurisdiction of CCMA, Labour Court and Labour Appeal Court 20

Advisory Panel National Minimum Wage • Terms of reference Approach • • Recommendations • Evidence • Implementation • Architecture • Further policy considerations • Summary 23

Advisory Panel SUMMARY National Minimum Wage  LEVEL R20/hour; R3500/month  TWO-YE YEAR AR PHASE IN IN • set up 2017 • Adjustment for 2 years Review and recommend change in 2019 • • One more year for enterprises with less than 10 workers  EXEMPTIO IONS AND EXCLUSIO IONS • Exemption process to apply On an economic or business case • • Process on a documentary proof basis • Efficient • Exclusions: EPWP, Own-account workers 24