1. Agri SA’s submission to Parliament’s Portfolio Committee on Labour Workshop regarding a National Minimum Wage Cape Town, 17 September 2014

2. Introduction Agri SA welcomes opportunity Employer of largely un-unionised labour force Important role of farm workers Close relationship: farmers and workers Higher national minimum wage – various challenges

3. Background of the organisation Agri SA federation of agricultural organisations Established 1904 9 Provincial and 24 commodity organisations Represents a diverse grouping of farmers Agri SA’s policy advocacy Member of BUSA, NEDLAC, WFO, SACAU, Cairns, etc.

4. Government policy objectives NDP goal = 1 million jobs in agriculture in 2030 NDP refers to expanding irrigation agriculture Potential of horticultural products, table grapes, citrus, subtropical fruits and vegetables Conducive labour market practices NPC assumptions based on lower minimum wage (R67/day)

5. NDP’s illustration of their proposal with regards to job creation

6. Background on the sector SA agriculture diverse sector with intensive and less intensive labour practices Trend – fewer workers but higher skilled Farming units: 1993 = 57 980; 2002 = 45 848 and 2007 = 39 982 Employment: 1993 = 1 093 265 and 2007 = 796 806 20% of commercial farms are responsible for 80% of SA’s total production

7. Background on the sector (continues) Larger farms have ability to mechanise Wages rise – mechanisation more attractive Trend of increase in larger farms and higher levels of mechanisation will continue Result = lower number of jobs but increased employment for staff with higher skill levels (higher remuneration)

8. Background on the sector (continues)

9. Effect of the structural adjustment in the minimum wage Sectoral determination governs the wages and conditions of work Agriculture’s wage bill ±R14.5 billion in 2013/14 (13.3% of total cost) Social wage Statutory provident fund for farm workers Sector – price taker not a price maker

10. Effect of the structural adjustment in the minimum wage (continues) Prof Bhorat study – minimum wage has negative impact on employment (17% decline) 2013 – 52% increase in minimum wages had major impact 1996 producers applied for relief Take time to bring about structural adjustments (73 000 job losses) A national minimum wage higher than current minimum wage – even more job losses

11. Effect of the structural adjustment in the minimum wage (continues)

12. Social and competitive challenges of a higher national minimum wage High wage – attractive to foreign workers Attractive for RSA and other farmers to invest in neighbouring countries Neighbouring country Monthly minimum wage for agriculture NamibiaN$888.00 per monthR888.00 per month BotswanaP408.00 per monthR570.00 per month Mozambique2,500 meticals (U$61.5)R615.00 per month ZimbabweUS$ 59R590.00 per month South Africa R2420.00 per month

13. Affordability of higher wages by the sector BFAP analysis – negative net farm income if wages rise to more than R105/day More that R105/day – mechanisation; more skilled labour and consolidation of enterprises Sector cannot absorb more significant wage increases BFAP report – R150/day not enough to afford balanced daily food for a household of two adults and two kids

14. National Minimum Wage: Factors for consideration Productivity sets level of prosperity Productivity determines competitiveness, return on investment economic growth World Competitiveness Report of 2014/2015 SA ranked 56th out of 148 countries in terms of world competitiveness

15. National Minimum Wage: Factors for consideration (continues) “Labour context” - problematic Sectoral consideration (rural vs urban labour; skills availability; social wages; differing minimum wages) Minimum wage in agriculture is R2 420/month vs that of a wholesale and retail shop assistent is R3 063/month

16. Conclusion Higher wage – more structural adjustments -Shedding of jobs -Increased mechanisation -Consolidation of farming units Collective effect/risk factors should be carefully considered NPC objective – 1 million additional jobs in 2030

17. Thank You