There is concern that the increase may have a detrimental impact on small and medium-sized businesses, particularly in light of the ongoing electricity crisis and other challenges.
GLOBAL Business Solutions chairman Jonathan Goldberg has expressed concerns over the recent announcement by the South African government regarding a 9.6% increase in the national minimum wage.
While acknowledging the need to address the economic situation in the country, Goldberg believes that this increase may have a detrimental impact on small and medium-sized businesses, particularly in light of the ongoing electricity crisis and other challenges.
Goldberg notes that the increase is 4.1% above the most conservative prediction for inflation in the coming year.
He points out that the original Gazette published for public comment on the 15th of December 2022 indicated a range of options from minority reports to majority reports in the commission, ranging between Consumer Price Index (CPI) up to CPI +2. In the same report, the latest inflation rate was published at 7.6%, which Goldberg believes is extremely outdated.
Goldberg states that inflation is falling, both in South Africa and around the world, and economists predict it to be within a range, on average, of between 5% and 5.5% for this year. He therefore emphasises that businesses may struggle to absorb such a high increase, potentially resulting in job losses and other negative consequences.
Furthermore, he questions why the government is defending a proposed 3% increase in the public service while prescribing a much higher increase in the private sector. He believes that the decision is inexplicable in these tough economic times and may have unintended consequences for businesses and employees.
While Goldberg recognises the importance of compensating workers fairly, he emphasises the need for a balanced approach that takes into account the needs of both employees and businesses.
– BUSINESS REPORT
