EMPLOYMENT CONDITIONS COMMISSION - National …



Chapter One 3

Background 3

Terms of references 3

Methodology 3

Phase One – Administrative aspects 3

Phase Two – Consultation with stakeholders 3

Phase Three – ECC Process 3

Phase Four – Publication of the new sectoral determination 3

Structure of the report 3

Sector Profile/ Agricultural economy 10

Employment profile 10

Chapter Three 3

New minimum wage levels 12

Views of employers 3

Views of employees 3

Proposal by the Department 3

Annual wage increases 3

Views of employers 3

Views of employees 3

Proposal by the Department 3

Provident fund 17

Views of employers 3

Views of employees 3

Proposal by the Department 20

Chapter Four 23

Ability of employers to carry on their business successfully and operation of SMMEs and new businesses 3

The impact of the proposed minimum wage on the cost of living and poverty alleviation 3

Chapter Five

Recommendations of the ECC 3

REPORT OF THE EMPLOYMENT CONDITIONS COMMISSION ON THE

INVESTIGATION INTO THE FARM WORKER SECTOR, SOUTH AFRICA

Chapter One

As directed by you, the Employment Conditions Commission (ECC) has pleasure in presenting you with a report on its investigation into the farm worker sector.

Background

The current sectoral determination for the farm worker sector was last reviewed in 2009 and provided for a three year wage dispensation. The current wage regime in the determination will lapse at the end of February 2012, hence this review is necessary to determine minimum wages and wage increases for the next three years. The sectoral determination regulates conditions of employment and minimum wages payable in the farm worker sector.

Employers in the farm worker sector are to a very large extent organised. There are a large number of employers’ organisations that organise employers, either in terms of sub-sectors or in terms of regions. The following organisations, amongst others, organise employers in the sector: Agriculture South Africa (AgriSA), Transvaal Agriculture Union of South Africa (TAUSA), South African Cane Growers Association, Cape Agri Employers’ Organisation (CAEO), Landbou Werkgewersorganisasie (LWO), National African Farmers Union (NAFU) and other independent provincial organisations and sub-sectoral organisations.

The Food and Allied Workers Union (FAWU) is one of the larger labour organisations that organise in the farm worker sector and claims to have 11% membership in the sector. There are other provincial unions in the sector. However, a large number of employees in the sector are not unionised.

Terms of references

The terms of reference for this investigation were published in the Government Gazette No. 34339 notice No. R.737 dated 27 May 2011 as follows:

“to review wages and the conditions of employment in the Farm Worker Sector”

Prior to commencing with this investigation, the Department had also published terms of reference in relation to the feasibility of establishing a provident fund in the sector. The terms of reference for this investigation were published in the Government Gazette No. 33480 notice No. R.737 dated 20 August 2010 as follows:

“to investigate the feasibility of establishing a provident fund in the Farm Worker Sector, South Africa”

Methodology

A four-phased project framework was developed for the investigation.

Phase One – Administrative aspects

This phase commenced in August 2010 when the Department published a notice inviting interested parties to make written representations within 30 days to the Director-General in relation to the investigation on the feasibility to establish a provident fund for the sector. This was followed by the publication of a notice in the government gazette in May 2011 inviting interested parties to make written representations within 30 days to the Director-General relating to the investigation to review the sectoral determination.

In response to the notices, 10 written submissions were received from the following organisations:

1. CEASAR

2. Cane growers Association

3. Free State Agriculture

4. AGRI SA

5. TAU SA

6. LWO

7. East Cape Agricultural Research Project

8. ORPA

9. Mine, Engineering and Distributors Workers Union of South Africa

10. Simeka Consultants & Actuaries

During the public hearings, further written submissions were received from the constituents of the above-mentioned organisations at the provincial level, which were similar to the submissions forwarded by their national offices.

Phase Two – Consultation with stakeholders

This phase involved meeting with stakeholders through the public hearing process or individual organizations. Regarding public hearings, invitations were issued through the Department’s provincial offices and labour centres, while AgriSA, TAUSA, CAEO, LWO, Cane Growers Association,Consolidated Association of Employers of Southern African Region (CAESAR),(FAWU) and Joint Western Cape Farm Worker NGO & Trade Union / Farm Worker Living Wage Coalition (FWLWC), Soutpansberg Agriculture Union and SISONKE were forwarded invitations which they in turn forwarded to their respective structures at the provincial level.

Public hearings were scheduled across the country as set out in the table below. Factors such as operational requirements and optimal participation from both the employers and employees were taken into consideration when the schedule was drafted. The hearings were held at a suitable time for both employers and employees to maximise attendance and participation, although at a later stage FAWU arranged further hearings in areas where they felt that employees were not represented. These additional hearings were held on Saturdays and Sundays to further accommodate employees.

A total of 30 public hearings were conducted, covering all nine provinces. There were two to three hearings in each of these provinces. In addition to the public hearings, farm visits were also conducted on farms in the Eastern Cape, Western Cape and Limpopo in order to maximise employee participation.

Despite all the efforts to improve attendance and participation, employee attendance was still disappointing at most of the public hearings. Trade unions cited reasons such as transport costs as a challenge for farm workers and proposed that, in order for these hearings to be a success, the Department should in future provide transport for the workers. Some employees also alleged during the farm visits that employers either did not communicate the details of the meetings or they were not given an opportunity to attend the hearings.

Table 1 below indicates places visited together with the attendance profile of stakeholders for each hearing.

|Day |Month |Province |Area |Employers |Employees |

|6 |June |Northern Cape |Keimoes |25 |34 |

|7 |June |Northern Cape |Upington |27 |0 |

|13 |June |Mpumalanga |Ermelo (Grey Farm) |25 |50 |

|14 |June |Limpopo |Groblersdal |33 |8 |

|20 |June |KwaZulu Natal |Pietermaritzburg |21 |46 |

| | | |(Boston Farm) | | |

|21 |June |KwaZulu Natal |Port Shepstone |20 |21 |

| | | |(The Margate) | | |

|23 |June |KwaZulu Natal |Vryheid (Brakfontein Farm) |19 |03 |

|22 |June |Gauteng |Krugersdorp |15 |04 |

|24 |June |Gauteng |Bronkhorspruit |16 |05 |

|27 |June |Free State |Bothaville |1 |0 |

|28 |June |Free State |Bethlehem |16 |11 |

|4 |July |Eastern Cape |Maclear |0 |139 |

|5 |July |Eastern Cape |Queenstown |4 |0 |

|17 |July |Eastern Cape |Grahamstown |3 |21 |

|23 |July |Eastern Cape |Patensie |5 |14 |

|24 |July |Eastern Cape |Louterwater |0 |50 |

|10 |July |Western Cape |Welgemoed |0 |15 |

|10 |July |Western Cape |Kleinpont |0 |14 |

|10 |July |Western Cape |De La Fontein |0 |9 |

|10 |July |Western Cape |De Eike |0 |19 |

|11 |July |Western Cape |Paarl |14 |03 |

|11 |July |Western Cape |Fairview |0 |13 |

|11 |July |Western Cape |Citrusdal |0 |108 |

|12 |July |Western Cape |Vredendal |01 |0 |

|18 |July |North West |Brits |15 |06 |

|19 |July |North West |Lichtenburg |05 |20 |

|25 |July |Limpopo |Louis Trichardt |25 |0 |

|25 |July |Limpopo |Makhado |0 |57 |

|26 |July |Limpopo |Tzaneen |22 |4 |

|27 |July |Limpopo |R K Boerdery |0 |22 |

|27 |July |Limpopo |Modimolle (Vaalwater) |35 |0 |

| | | | | | |

The hearings were attended by a total of 387 farmers or employer representatives and 696 employees or employee representatives.

Phase Three – ECC Process

During this stage the ECC engaged with the inputs received and made its recommendations to you as contained in this report.

Phase Four – Publication of the new sectoral determination

This phase will see the publication of the amendments to the sectoral determination once you have decided whether or not to approve the recommendations of the ECC.

Structure of the report

The report consists of the following chapters:

• Chapter 1 of this report gives a background of the sector and the methodology utilised.

• Chapter 2 of this report outlines the state of the agricultural sector.

• Chapter 3 discusses the findings of the investigation and resultant proposals.

• Chapter 4 discusses the proposals in light of the criteria that the ECC has to consider.

• Chapter 5 summarises the recommendations of the ECC.

Chapter Two

2.1. Sector Profile/ Agricultural economy

According to the Quarterly Economic Overview of the Agriculture, Forestry and Fisheries sector: January 2011 to March 2011, the SA unemployment rate rose to 25% in the first quarter of 2011, from 24% in the previous quarter. The number of people employed in the South African economy declined by 14 000 in the first quarter of 2011 compared to the fourth quarter of 2010. However, on a year-on-year basis, the economy gained 42 000 jobs. Employment in agriculture has been declining for the past three consecutive quarters, with the sector shedding 24 000 jobs quarter-on-quarter and 55 000 jobs year-on-year during the first quarter of 2011. On a quarterly basis, the number of jobs lost in agriculture is less compared to jobs lost in the transport and construction sectors during the first quarter of 2011.

Gross farm income from all agricultural products increased by 2,6%, form R26,7 billion in the first quarter of 2010 to R27,3 billion in the first quarter of 2011. The increase was mainly boosted by the 4,1% increase in the gross income from animal products, which amounted to R17,3 billion in the first quarter of 2011, whilst gross income from field crops increased slightly by 0,9% and horticulture products declined by 0,2%. The net farm income is estimated at R4,3 billion for the first quarter of 2011, a significant 20,4% drop from the first quarter of 2010. This sharp decline can mainly be attributed to the 12,8% increase in expenditure on intermediate goods and services, which amounted to R18,2 billion in the first quarter of 2011.

The value of agricultural exports increased by 5,9%, from R10,2 billion in the first quarter of 2010 to R10,8 billion in the first quarter of 2011. The imports value also increased by 23% from R8,7 billion to R10,7 billion during the same period.

2.4. Employment

South Africa’s Quarterly Labour Force Survey showed that the economy experienced a quarter-to-quarter decrease of 14 000 in the number of people employed between the last quarter of 2010 and the first quarter of 2011. The agricultural sector shed 24 000 jobs. On quarterly basis, the sector employed only 603 000 people in the first quarter of 2011, compared to 627 000 people in the previous quarter, resulting in a quarter-on-quarter decline of 3,8%. On an annual basis, the sector shed 55 000 jobs, which represents a 8,4% fall in employment. The agricultural sector shed the least number of jobs when compared with transport and construction sectors.

Although employment in the agricultural sector declined during the first quarter of 2011, the Bureau of Economic Research, 2011: Economic Outlook argues that employment is likely to rise during the harvesting of summer grains and planting of winter grains after the second quarter of 2011. The BER expects total employment in the country to grow at an annual average rate of 1,9% between 2011 and 2016.

Chapter Three

This chapter deals with the current dispensation in the sectoral determination in relation to minimum wages and conditions of employment. It also deals with the inputs received from stakeholders during the consultation process, proposals by the Department, and recommendations of the ECC in each of the topics.

During this investigation, from the previous reports of the ECC and the inputs received from stakeholders, the following issues were identified to be the critical issues to be discussed during the consultation process:

• New minimum wage level

• Annual increases

• Provident fund

• Other conditions:

.

3.1. New Minimum wage levels

The current prescribed minimum wage for farm workers is R1 375.94 per month or R7.04 per hour.

3.1.1 Views of employers in relation the level of the new wage

Employers in general throughout the country proposed that the new wage level be set by considering the CPI plus 1%, provided that it does not exceed 6%. They argued that majority of employers are paying above the stipulated minimum wage and therefore if wages are increased without considering the efforts by employers in paying higher than the prescribed wages it could discourage such employers, who will then revert to the stipulated minimum wage. Some employers also argued that, since the Department wants to introduce a provident fund for the sector, the wage increase should be on CPI only in order to accommodate the further cost which employers would have to face as contribution towards the provident fund. In addition, employers indicated that their challenge regarding minimum wage increases is that the price of their products at which they trade in the market has remained steady for some time whilst wages were increasing. They also cited the frequent increases in fuel prices and argued that if wages are increased substantially high, farmers will move out of farming business and this could have a negative impact for the country. Furthermore farmers raised a concern regarding products from foreign countries that influence their market prices in South Africa and suggested that government should relook at the trade agreements in order to curb dumping of products in the country.

In Mpumalanga, a farmer regarded the current level of the minimum wage to be too little for workers to survive on. He proposed that the sector should consider the fact that low wages have made farming unattractive to the youth.

3.1.2 Views of employees

The Mine, Engineering and Distributers Workers Union of South Africa (MEDWUSA) proposed R1 612.50 per month whilst FAWU proposed R1800 per month. They cited reasons relating to increases on foodstuffs and the difficulty for most children on farms to complete school due to the low income of their parents. FAWU alleged that every year employees are given low increases whilst they are working under bad conditions. They argued that wages of farm workers are almost equivalent to the social grant earned by pensioners who do not work. They further indicated that on the little salary which farm workers are earning, deductions for UIF, accommodation, and food are still being effected, which leaves the employees with nothing to survive on.

Farm workers also indicated that currently there is a high dependency by workers on the farmer due to the low levels of wages paid. They proposed that wages should be improved to ensure that workers can address challenges posed by the cost of living and also be able to educate their kids.

In all the provinces visited, majority of employees proposed between R2 500 and R3 500 as the new level of the minimum wage. They argued that although the determination stipulates minimum wages, employers regard the stipulated wages as the relevant wage and therefore do not pay higher than that. They argued that the prescribed minimum wage does not take into consideration the experience of the farm worker as it assumes that all workers have the same level of experience. East Cape Agricultural Research Project (ECARP), an organization that is currently conducting research on farms, farm workers as well as farm dwellers, reported to the Department that wages paid to farm workers are so low that they can not even afford to buy basics. ECARP believes that the current level of wages do not alleviate poverty and further pointed out that there is a need for social protection of farm workers by creating a high wage economy.

In addition, FAWU requested the Department to remove the hourly rate provision in the determination since, they argued, those employees employed as seasonal workers are paid the hourly rate prescribed without employers considering the fact that the prescribed hourly rate applies to employees working on full time basis.

3.1.3. Proposal by the Department

The Department acknowledges the hardship that workers are facing and the impact of inflation on the country as a whole. It is also evident that farm workers have increasingly been marginalised as a result of the inflation rate. The recent escalation of food prices and the current inflation rate also pose a serious challenge for the farm workers who are only dependent on the minimum wage.

The Department also acknowledges the latest developments in the agricultural sector in respect of reductions of export quotas and the escalation of input costs, which raise serious challenges for the employers. Challenges like global warming will also have an impact in the near future on the agricultural sector.

The concerns raised by farmers in relation to the challenges on the production costs and also market prices when trading with their products were also considered in this regard. The challenge, however, remains the fact that employees are faced with an increasing cost of living, which can only be addressed through wage increases. Furthermore it should be noted that the farm worker sector is not the only sector in which prices are determined by the market forces and therefore the prices of products depend highly on the demand and supply chain.

Employees and trade unions also raised critical issues which need to be considered when setting the minimum wage. Apart from the fact that the cost of living and price increases have negatively affected the ability of employees to sustain themselves and their families, an increase to wages should also consider the impact on employment generating. It would be a futile exercise to increase wages to R3500 as proposed by employees and subsequently employees are retrenched due to unaffordability by employers. A balanced approach is necessary, which will take into consideration all the aspects mentioned to ensure that employees are able to survive on their wages and that employers are able to pay the prescribed wages without having to reduce the number of employees employed.

Given the above mentioned challenges that employers and employees are facing, in order to ease the financial burden from the employees and to ensure that employers still continue with their businesses successfully, the Department proposes that the new level of the minimum wage be set at 9.3% higher than the current wage. This means that the new wage will increased from R 1 375.94 per month to R1503.90 per month, which amounts to an increase of R126.96 per month. The proposed increase is informed by the fact that farm workers spent majority of their money on buying food and therefore the CPI (Excluding Owner’s equivalent rent) as normally used to determine wages does not perfectly match the situation of farm workers especially in the context of the ECC in ensuring that wages contribute towards poverty alleviation. In determining the new wage for 2012, the Department has considered the CPI for the lowest quintile and an additional 1,5% which will be the actual wage increase for farm workers.

3.2. Annual increases

For the past two years of the determination, wage increases were determined by adding CPI plus 1% to the existing wage.

3.2.1. Views of employers

AgriSA proposed that the current methodology of utilizing November’s CPI be utilized. They further proposed that for the next two years, CPI plus 1% be utilized to determine minimum wage increases. In all the provinces which were consulted farmers proposed that the current approach of utilizing CPI plus 1% be maintained in determining wage increases. Apart from the inputs received from majority of employers, there were however few employers who indicated that it is difficult to predetermine future wage increases as they cannot predict future business trends. They argued that their business is dependent on various factors, including natural factors. However, they did not make any proposal on how future wage increases should be determined.

3.2.2. Views of employees

In all the provinces, FAWU proposed that annual increases should be determined by using the CPI + 5%. They argued that the current approach of adding 1% on the inflation does not adhere to the criteria spelt out in the BCEA which compel the determination to address poverty and challenges posed by cost of living. FAWU felt that 1% added to inflation which translates to be the actual wage increases for farm workers does not help them any how. They further argued that the current approach would fit employees working in the factories where there are other benefits like provident fund or pension fund, but not farm workers who do not have any benefit.

Farm workers in the Northern and Western Cape proposed a CPI+ 2% annual increases in the sector.

3.2.3. Proposal by the Department

In dealing with wage increases for the two subsequent years, the Department proposes that the CPI for the lowest quintile +1,5% be utilized to determine wage increases. The CPI to be utilized will be the one published by StatsSA six weeks prior to the increment date.

3.3. Provident fund

The current sectoral determination does not make provision for a provident fund or pension fund for the farm worker sector. During the budget speech vote in 2009, the then Minister of Labour announced in Parliament that the Department would establish a provident fund for both farm workers and domestic workers as part of the decent work agenda. It is on this basis that the Department has commenced with the consultation process to determine the feasibility of having such a fund for farm workers established.

There is currently a voluntary provident fund for farm workers employed by the members of AgriSA and TAUSA. The fund is administered by ABSA and provides provident fund benefits, including funeral cover benefits. The Department has met with ABSA in order to have a sense of how the current fund is administered, the level of contributions by farm workers and also the process of accessing benefits by farm workers. During the recent consultation process, apart from the issues relating to the sectoral determination, inputs around the feasibility of establishing a provident fund were sourced and the following reflects stakeholder views in this regard. It should also be noted that meetings were also held with FAWU to discuss the matter and they expressed support for the proposal, but raised certain concerns, which will be addressed during the execution of this project.

3.3.1. Views of employers

AgriSA supported the idea of establishing a provident fund for farm workers and proposed that in the event such a fund is established, there should be a single fund for the sector. They indicated that the agricultural sector is losing employees to other sectors and by establishing such a fund it would also contribute towards retaining workers in the sector and develop interest of the youth to join the sector.

Farmers in the Northern Cape indicated that they are in favour of a pension fund instead of a provident fund. They indicated that in the event of a provident fund, employees could resign simply to withdraw their benefits from the fund, but this was not possible with a pension fund. They also indicated that since some workers are seasonal, it would be difficult for such workers to contribute to the provident fund.

Employers in the KZN indicated that the fund should be voluntary as they are already contributing towards UIF as well as COIDA and this would be an additional burden to them. However, they indicated that the matter of a provident fund needs to be discussed with employees first since this will result in a deduction of a certain percentage of money from their wages. In addition, they cautioned the Department about the challenges of establishing and managing this kind of a fund, citing the example of the contract cleaning provident fund which was poorly administered and led to court battles.

In general, employers supported the provident fund and proposed that contributions be based on the level of the minimum wage. They further emphasized the fact that the Department should also contact ABSA who is currently running such a fund to determine the feasibility of establishing the fund and also to have a sense on the challenges relating to the administration.

3.3.2. Views of employees

FAWU strongly supported the establishment of a provident fund, but indicated that there are administrative issues to be discussed before such a fund can be in place. In addition, FAWU proposed that looking at the location of workers within the sector, the service provider should be someone with a national footprint so that workers can access their benefits or services wherever they are.

In relation to the premiums, FAWU indicated that it is the norm that risk premiums are priced as 4% of the gross earnings of an employee yet paid by an employer. This is in addition to 6% the employer pays towards retirement credit of its employees. The employee pays 6% of their salary/wages towards their retirement credit. Only 4% goes to death, disability and funeral underwriting as well as administration costs. They therefore proposed that such a norm be retained and that as part of the Sectoral Determination, employers must pay 10% (i.e 6% retirement credit and 4% risk premiums) from their pocket in pursuit of the provident fund. Furthermore, they raised process issues to be considered prior to the appointment of a suitable service provider.

Employees also indicated their support for the establishment of a provident fund in their sector, which they proposed to be compulsory for every employee to join. In terms of the contributions, employees proposed a R20.00 monthly contribution by the employee and R40.00 monthly contribution by the employer.

3.3.3. Proposal by the Department

The Department acknowledges the inputs received during the consultation process in relation to the establishment of the provident fund. The Department also takes into cognisance the broader social security reform process as proposed by government and want to indicate that if such a fund is established, consideration should be made in terms of how it will relate to the proposed government intervention in this regard. The fact that some employers have voluntary established provident funds in the sector is a clear indication that such an intervention is necessary in promoting decent work agenda in the agricultural sector. The department is currently finalizing the consultation

Chapter Four

EVALUATION IN TERMS OF ECC CRITERIA

Ability of employers to carry on their business successfully and operation of SMME’s and new businesses

In the first quarter of 2011, gross farm income from all agricultural products amounted to R27,3 billion compared to the R26,7 billion reported in the first quarter of 2010, an increase of 2,6%. Gross income from field crops was R1,7 billion in the first quarter of 2011, a 0,9% increase compared to the first quarter of 2010. Contribution from soya beans, oats and chicory roots increased significantly by 80,4%, 41,2% and 30,3% respectively. The huge increase in gross income from soya beans might be the result of the 34% increase in area planted, from 311 450 ha in the 2010 marketing year to 418 000 ha in the 2011 marketing year. Soya bean plantings in South Africa increased, as more farmers recognise the value of soya beans in a crop rotation system with maize. In addition, the production of soya beans is made relatively easier with the GM cultivars that are available in South Africa. Indications are that this upward trend in soya-bean plantings will continue in future. Gross income from maize and wheat increased by 6,9% and 1,4% respectively, while gross income from sunflower and sugar cane decreased by 22,6% and 7,7% respectively. The gross income from animal products increased by 4,1%, to R17,3 billion in the first quarter of 2011, from R16,6 billion in the first quarter of 2010. Gross income from goats slaughtered, sheep slaughtered and other livestock products increased by 24,9%, 20,4% and 11,2% respectively. The income from wool, pigs slaughtered and poultry meat also increased, by 8,7%, 6,0% and 5,7% respectively. Gross income from cattle and calves slaughtered increased by 5,1%, while gross income from ostrich feathers and products decreased by 14,7%. The income from mohair, milk and eggs decreased by 9,5%, 4,7% and 3,1% respectively between the two quarters under review. Horticultural crops recorded a slight 0,2% annual drop in gross income amounting to R8,3 billion in the first quarter of 2011. Gross income from rooibos tea and citrus fruit increased significantly, by 62,8% and 40,8% respectively. The slight increase in the gross farm income from all agricultural products in the first quarter of 2011 can be attributed to a rise in income from field crops and animal products. Net farm income in the first quarter of 2011 was lower compared to the net farm incomes for the first quarters of both 2010 and 2009. The net farm income in the first quarter of 2011 was R4,3 billion, a decrease of 20,4% compared to R5,5 billion in the first quarter of 2010. The decrease in net farm income was mainly the result of an increase of 12,8% in expenditure on intermediate goods and services, and this had a negative impact on the cash flow of farmers. This was mainly the result of a negative contribution by field crops, which may have been negatively affected by flooding experienced in January and February 2011.

The impact of the proposed minimum wage on the cost of living and poverty alleviation

Rising food and commodity prices pose a threat to poor households, adding to social and economic tensions in emerging and developing economies. Rising food and commodity prices resulted in an upward revision of the projection of inflation for 2011. The CPI inflation in advanced economies went up by 0,6 percentage points to 2,2% for 2011, while in developing countries it was 0,9 percentage points higher at 6,9%. Already, the

oil price has surged by more than 30% in 2011. Inflation is expected to remain higher in the medium term, but the IMF does not expect this to have a major adverse effect on growth.

The South African Reserve Bank’s Monetary Policy Committee (MPC) left the repo rate

unchanged during their two monetary policy meetings in January and March 2011, as surging food and oil prices threaten to boost inflation. Total real household consumption expenditure is projected to rise by 4,3% during 2011. The consumption of non-durable goods is forecast to rise by 14,3%, although the relatively high increases in food and administered prices (e.g. electricity and water) will likely weigh down the volume of growth in these categories (BER, 2011). Real disposable income is also expected to be under pressure this year.

In April 2011, the annual inflation for bread and cereals and for meat increased to 3,9% and 8,3% respectively. In the same period, inflation for vegetables increased by 2,4%, while milk, eggs and cheese fell to -0,9%.

This therefore poses a challenge in trying to strike a balance when setting minimum wage in response to the challenges posed by the cost of living. The proposed minimum wage might not be able to deal with the challenges raised above but should be able to ensure that farm workers can afford to purchase basic foodstuff for their families as majority of their wage is spent on food.

Chapter Five

Summary of the ECC’s recommendations

The ECC recommends that the new level of the minimum wage be set at 9.3% higher than the current wage. This means that the new wage will increased from R 1 375.94 per month to R1503.90 per month, which amounts to an increase of R126.96 per month. The proposed increase is informed by the fact that farm workers spent majority of their money on buying food and therefore the CPI (Excluding Owner’s equivalent rent) as normally used to determine wages does not perfectly match the situation of farm workers especially in the context of the ECC in ensuring that wages contribute towards poverty alleviation. In determining the new wage for 2012, the Department has considered the CPI for the lowest quintile and an additional 1,5% which will be the actual wage increase for farm workers.

| Table 1: Minimum wages for employees in the Farm worker Sector |

|Minimum rate for the period |Minimum rate for the period |Minimum rate for the period |

|1 March 2012 to 28 February 2013 |1 March 2013 to 28 February 2014 |1 March 2014 to 28 February 2015 |

|Monthly |Weekly |Hourly |Monthly |Weekly |

|* The CPI to be utilized is the available CPI for the lowest quintile as released by Statistics South Africa 6 prior to the increment date.|

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REPORT OF THE EMPLOYMENT CONDITIONS COMMISSION TO THE MINISTER OF LABOUR ON THE FARM WORKER SECTOR, SOUTH AFRICA

2011/2012

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