Report of the employment conditions commission on the investigation into a sectoral determination for the forestry sector

Minimum wages

The current minimum wages in the sector are as follows:
TABLE 1:

Table 1: Minimum wages for employers with 10 or less employees
Minimum rate for the period			Minimum rate for the period			Minimum rate for the period
1 July 2007 to 30 June 2008			1 July 2008 to 30 June 2009			1 July 2009 to 30 June 2010
Monthly	Weekly	Hourly	Monthly	Weekly	Hourly	Monthly	Weekly	Hourly
R1480-00	R341-60	R7-59	R1659-08	R382-93	R8-51	R1843-23	R425-43	R9-45

TABLE 2:

Table 2: Minimum wages for employers with more than 10 employees
Minimum rate for the period			Minimum rate for the period			Minimum rate for the period
1 July 2007 to 30 June 2008			1 July 2008 to 30 June 2009			1 July 2009 to 30 June 2010
Monthly	Weekly	Hourly	Monthly	Weekly	Hourly	Monthly	Weekly	Hourly
R1650-00	R380-80	R8-46	R1849-65	R426-88	R9-48	R2054-96	R474-26	R10-53

Views of the employers
Some employers complained that the hospitality industry was becoming less economically viable. They emphasized that profitability in rural areas was less than in that in metropolitan areas. The Southern Midlands Tourism indicated that establishments in rural areas were only profitable during holiday peaks. They proposed that demarcation into various areas should be included in the determination. Most employers proposed that new wages should be determined by using the CPI as the economic indicator.

FEDHASA proposed that an annualized average CPI should be considered. They also urged that the average income of the hospitality sector should be considered to determine the level of the wage increase which the sector could absorb without any negative effect on employment levels. They indicated that in 2009 the number of visitors had declined by almost 20% and the sector has been battling to continue to pay their employees the prescribed minimum wages.

Some Durban employers indicated that economic growth had declined and therefore this should be taken into consideration by the Minister when dealing with wage increases. They indicated that due to the economic situation their clients had no or little money to spend on vacations and restaurants. Therefore, they argued, if wages were substantially increased small businesses could be forced to shut down. They mentioned that the Minister was supposed to review wages during the time the country felt the effects of recession. In addition, they argued that the economic climate of the country should to be taken into consideration and mentioned that the sectoral determination had resulted in jobs losses since some employers could not afford to pay the prescribed minimum wages and huge increases.
In addition, FEDHASA pointed out that their members were concerned that the determination did not provide a minimum wage for trainees, who currently receive the same wage as permanent and experienced employees. They recommended that the determination should make provision for a reduction on the prescribed minimum wage of between 10% and 15% for all trainees employed in the hospitality industry whilst registered with THETA-approved service provider. They reasoned that this would not only encourage employment, but would benefit trainees in their career growth.

In the Northern Cape, employers were reluctant to specify a quantum for the new minimum wage levels. This reluctance was based on the economic recession, with most employers calling for a wage freeze to assist the sector to recover from the devastating effects of the global recession. They argued that inflicting a substantial minimum wage hike would lead to employers retrenching workers as this would result in a lot of businesses becoming unsustainable. They argued that the inflationary effect of the proposed 35% hike on electricity tariffs by Eskom, if granted, would further undermine business sustainability.

Views of employees

In line with the call for job categories to be included in the sectoral determination, SACCAWU proposed the following wages for different job categories and also wage increases for the subsequent years:

Category	2010/2011	2011/2012	2012/2013
Chef	R4 000-00	CPIX + 3.50%	CPIX + 3.50%
Manager Assistant manager Supervisor Trainee manager	R4 500-00 R4 200-00 R3 800-00 R3 800-00	CPIX + 3.50%	CPIX + 3.50%
Conference Co-ordinator	R3 900-00	CPIX + 3.50%	CPIX + 3.50%
Bartender Assistant Bartender	R3 500-00 R3 000-00	CPIX + 3.50%	CPIX + 3.50%
Cashier Assistant Cashier	R3 000-00 R2 800-00	CPIX + 3.50%	CPIX + 3.50%
Head Cook	R3 500-00	CPIX + 3.50%	CPIX + 3.50%
Head Waiter	R3 500-00	CPIX + 3.50%	CPIX + 3.50%
Head Wine Steward	R3 500-00	CPIX + 3.50%	CPIX + 3.50%
Receptionist	R3 500-00	CPIX + 3.50%	CPIX + 3.50%
Kitchen Supervisor	R4 000-00	CPIX + 3.50%	CPIX + 3.50%
Counter Assistant	R3 000-00	CPIX + 3.50%	CPIX + 3.50%
Waiter	R3 000-00	CPIX + 3.50%	CPIX + 3.50%
Motor Vehicle Drivers Extra Heavy Heavy Light Part-time Driver	R3 900-00 R3 700-00 R3 500-00 R3 300-00	CPIX + 3.50%	CPIX + 3.50%
House-keeping	R3 000-00	CPIX + 3.50%	CPIX + 3.50%
Baker	R3 800-00	CPIX + 3.50%	CPIX + 3.50%
Cook	R3 800-00	CPIX + 3.50%	CPIX + 3.50%
Catering Assistant	R3 000-00	CPIX + 3.50%	CPIX + 3.50%
Delivery Employee	R3 000-00	CPIX + 3.50%	CPIX + 3.50%
General Assistant	R3 000-00	CPIX + 3.50%	CPIX + 3.50%
Security	R3 000-00	CPIX + 3.50%	CPIX + 3.50%

In most areas employees supported the proposal by SACCAWU. They indicated that while employers complained about the effect of the recession on their businesses, it was worse in the employees’ case because they were faced with transport and food price increases. They also complained they could not afford to even pay school fees and buy proper clothing for their families. Although the country faced economic recession, the employees proposed a cost of living wage increase and CPI. A large number of employees in both Rustenburg and Nelspruit argued that wages should be increased by 10% - 15% based on increased food prices, school fees for children, transport costs, rent, water, electricity and accounts for furniture and clothing.

An example was given where an employee, who earns R2170.00, with 20 years of experience in a restaurant, has two children aged 11 and 14. The employee’s monthly budget is as follows:

School fees: R800 per month

Groceries: R1000 per month

Electricity: R200 per month

Transport: R350 per month
The salary that she earns every month does not meet her basic needs. Every month she borrows from family and friends to cover the other needs such as clothing.

Furthermore, some employees in bigger establishments felt that there should be job categories introduced due to the fact that different jobs have different levels of responsibility and skill while some jobs require a certain qualification to be employed in them. Some employees such as waiters have an advantage as they get a commission or tips to supplement their salaries. Other employees felt that wages should be categorized according to the experience a person had in the sector.

Although employees in general called for a higher wage increase, there were some employees who cautioned that if wages were set at a higher level which employers could not afford, job losses could result. They argued that it was better to give a reasonable increase in order to retain staff instead of having a few people working earning huge salaries.
Views of the Department

The Department acknowledges the impact of the economic downturn in the sector in that the sector is dependent on the clients. During the period of recession the number of visitors decreased due to the fact that people did not have extra money in order to spend on holidays. Stats SA also confirmed the decrease in their report released in February 2010. Although the recovery of the local and international economies and tourism industries remains uncertain, in South Africa the situation could improve with the hosting of the FIFA World Cup tournament which commences in June 2010. According to TBCSA, accommodation sector in South Africa has given an indication that its rates would be increased almost by 100% during the tournament and this indicates that employers would be able to afford an increased minimum wage. Considering the facts above, the Department is of the view that the new minimum wage which will become effective in July 2010 should be set at 7,5% higher than the current wage applicable throughout the sector for the first year. This represents an increase of CPI + 2.4%. The Table below represents the proposal by the Department on the new minimum wage levels:

Table 4: New minimum wage level proposal 10<

Table 1: Minimum wage for employers with 10 or less employees
Minimum rate for the period			Difference from the previous wage
1 July 2010 to 30 June 2011			1 July 2009 to 30 June 2010
Monthly	Weekly	Hourly	Monthly	Weekly	Hourly
R1981.48	R457.30	R10.17	R138.25	R31.87	R0,72

Table 5: New Minimum wage level proposal >10

Table 2: Minimum wage for employers with more than 10 employees
Minimum rate for the period			Difference from the previous wage
1 July 2010 to 30 June 2011			1 July 2009 to 30 June 2010
Monthly	Weekly	Hourly	Monthly	Weekly	Hourly
R 2209.09	R509.83	R11.33	R154.13	R35.57	R0,80

Views of the ECC
The ECC acknowledges the impact of the economic downturn on the sector and also the fact that employees are also affected by the economic conditions within the sector. The ECC further notes the number of jobs lost due to the economic crisis. While acknowledging that the country may be beginning to emerge from the economic crisis, the ECC is mindful that setting the minimum wage or increases too high may result in further job losses or non-compliance with the prescribed minimum wages, both of which scenarios are not acceptable. In the circumstances, the ECC recommends that the first year’s minimum wage should be set at 7.1% higher than the current wage. The ECC recognizes that the proposed figure is higher that the current level of CPI as reported by StatsSA, but this is justified in light of the fact that the sector will derive some benefit from the FIFA World Cup.