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

Minimum wage increases for year 2 and 3

The current sectoral determination provided for an annual wage increase determined on the basis of CPI plus an additional 2%.
Views of employers

Employers in their submissions indicated that although in the current determination the 2% above CPI was appropriate, a number of things have changed in recent times, requiring a review of this approach. They indicated that the position of employers needed to be carefully considered particularly in the light of the global and local economic recession and also the fact that the inflation rate is now nearing the target range of between 3% and 6%. They argued that in such circumstances an increase of 2% above the CPI could be equal to as much as 33% to 66% increase above the prevailing inflation rate. They also pointed out that over a three year period, such increases in a low inflationary environment would deliver a real income improvement to employees but would also place a significantly increased burden on employers and the potential viability of their businesses. They therefore proposed that an increase of 1% above the CPI would be a less risky strategy while at the same time providing for some real and meaningful income growth for employees. In addition, they cautioned that the recovery of the local and international economies and tourism industries remains uncertain at this time and a more cautious approach should be adopted.

On the other hand, FEDHASA mentioned that as a result of the recent changes to the CPI calculations prepared and published by StatsSA, a majority of their members felt strongly that all future minimum wage increases for the Hospitality Sector should provide for the minimum wage plus CPI or, at the most CPI plus 1%. It is also important to note that they strongly emphasized that it should be based on CPI and not the CPIX (or the new version thereof which is currently also published by StatsSA).

They also suggested that the CPI be annualized as opposed to the “once off” reliance on the May CPI figure, which could be severely distorted on a month to month basis. FEDHASA also stated that the industry is currently under pressure as a direct result of the global downturn and the strong rand. The World Cup 2010 would create a boom for one to two months but would not provide answers to the industry after this event.

Views of employees

Apart from the submission received from SACCAWU, some employees proposed rand value increases of between 9% and 10% for years 2 and 3. They indicated that the wage increase should improve their living conditions. They also argued that the CPI related wage increase for them would not add any value since they were already paid low wages. SACCAWU, as indicated above in the table, proposed a CPI plus 3,5% for years 2 and 3.

Views of the Department

Considering the views and inputs received from the stakeholders the Department maintains that annual wage increases should be determined by using CPI (excluding owner’s equivalent rent) plus 2% for the two subsequent years.

Views of the ECC

With respect to the minimum wage increases for years 2 and 3, the ECC recommends that wages should be increased by CPI plus 1%.

Accommodation

The current sectoral determination does not regulate accommodation and does not stipulate the provision of accommodation.
Views of employers

Some employers proposed a deduction of 10% for accommodation and food. They indicated that due to the location of their establishments, they are compelled to provide for food and accommodation in order to ensure that employees are on the premises on time for them to service their clients. These employers indicated that, although they currently have arrangements for payment with their staff, it should be regulated to ensure uniformity in the sector.

Views of employees

Some employees indicated that employers should pay and provide accommodation free of charge since it is to their advantage that employees sleep at their workplaces. Other employees, especially those who reside far from their workplaces, indicated that the arrangement with their employers in providing accommodation should not be tampered with since it would be costly for them to travel home every day.

Views of the Department

Considering the current escalation in food prices, electricity, and the cost of living in general, the Department is of the view that if the proposal by the employers is included in the determination, employees’ wages have to be improved tremendously since at the moment employees’ wages are under severe pressure and cannot accommodate another deduction. The Department therefore recommends that the current status of the determination be retained.

Views of the ECC

The ECC supports the proposal by the Department that the current status in the determination be maintained in relation to accommodation.

Sunday Work

The sectoral determination currently stipulates that an employer must pay an employee who works on a Sunday at double the employee’s wage for each hour worked, unless the employee ordinarily works on a Sunday, in which case the employer must pay the employee at one and one-half times the employee’s wage for each hour worked or grant paid time off.
Views of employers

Employers indicated that the nature of the hospitality sector requires them to work 24 hours and 7 days a week. They indicated that prices paid by their clients during weekdays are similar to the price paid on Sunday. They argued that should they be forced to pay double the rate on a Sunday, they would be forced to stop their operations and this would have a negative impact on the hospitality or tourism sectors in South Africa. Employers also indicated that workers get weekly rest periods, which sometimes include a Sunday. Furthermore, they proposed that the current provision in the sectoral determination around Sunday work should be maintained. FEDHASA indicated that the restaurant, guest house and hotel industry differs from other industries, in that the nature of the sector is inherently based on the availability of guest services which they provide for 7 days per week and 365 days per year. They indicated that the hospitality industry, which is in a much more invidious position than the retail industry as far as the need to be open on Sundays is concerned, does not have the option of working a 40 hour week with no Sunday overtime, as in the retail sectoral determination, and therefore urge that this provision be included in the hospitality sectoral determination.

Views of employees
Some employees indicated that Sunday is meant to be a day to attend church service and also the time for family due to the fact that long hours are spent at work during the week and this day is an opportunity to be with their families. They therefore proposed that Sunday should be paid at a double rate irrespective of whether they ordinarily work on a Sunday or not. Employees indicated that there should be recognition for working on a Sunday and the current 1.5 is not sufficient. SACCAWU proposed that the current regulation is sufficient apart from the fact that employees should be rotated to avoid consecutive Sundays being worked.
Views of the Department

The Department recognizes the operational requirements in relation to the fact that establishments within the hospitality sector are required to be open 7 days a week, 365 days a year. The Department proposes that the current provision in the determination should be maintained. This means that Sunday should be remunerated at one and one-half times the employee’s wage for overtime worked. If an employer requires an employee who does not ordinarily work on a Sunday to work on a Sunday, that Sunday should be remunerated at double the normal rate.

Views of the ECC

With respect to the Sunday pay, the ECC supports the proposal by the Department that Sunday be remunerated at one and one-half times the employee’s wage for overtime worked. And that if an employer requires an employee who does not ordinarily work on a Sunday to work on a Sunday that Sunday shall be remunerated at double the normal rate.