IMPACT – MEDIUM

What is the change? The South African government has said it will impose a minimum wage of R3,500  (about US$257) a month. The wage would apply to both foreign and domestic workers and is expected to be implemented at some point in the next two years.

What does the change mean? Companies should take note of the announced wage increase. Once an implementation date is announced, companies should plan accordingly to ensure that no workers are paid less than the law requires.

  • Implementation time frame: The government has said it will implement the wage minimum within the next two years.
  • Who is affected: South African employers, whether employing South African or foreign workers.  
  • Business impact: The change will increase costs for some businesses, particularly those with large workforces with workers who are paid less than R3,500 a month.
  • Next steps: The government has said it will continue consulting on the issue, but that it plans to implement the wage minimum in the next couple of years.

Background: With approximately 47 percent of working people in South Africa currently earning less than R3,500 per month, the government’s minimum wage announcement was hailed by some, but also drew criticism both from those who believe that it is too low and those who believe the wage will be hard on business and lead to higher unemployment. In defending the introduction of a minimum wage in Parliamentary questioning, Deputy President Cyril Ramaphosa made it clear that the wage would apply to all workers, regardless of their nationality.

BAL Analysis: Concerns that foreign workers were being exploited played a role in the recent minimum wage debate, and the government has now made it clear that the wage, once introduced, will apply to all workers, no matter their nationality. Companies employing foreign workers should not only plan their budgets accordingly, but should also be aware that the government’s compliance and monitoring activity following the introduction of the minimum wage will likely focus on foreign national employees. BAL will continue to follow the rollout of the minimum wage, including any announcements of an implementation date.

This alert has been provided by the BAL Global Practice group. For additional information, please contact your BAL attorney.

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