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Minimum wages and conditions Minimum wages and conditions of employment for farm workersof employment for farm workers

REPORT ON INVESTIGATIONREPORT ON INVESTIGATION

Department of LabourDepartment of Labour

Parliamentary BriefingParliamentary Briefing

18th September 200118th September 2001

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Structure of presentationStructure of presentation

• IntroductionIntroduction

• Socio and economic position of farm Socio and economic position of farm workersworkers

• Scope for increasing wagesScope for increasing wages

• Motivation for a minimum wageMotivation for a minimum wage

• RecommendationsRecommendations

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IntroductionIntroduction

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Focus of the investigationFocus of the investigation

• Conditions and circumstances facing:Conditions and circumstances facing:

– Farmers Farmers

– Farm workersFarm workers

• Establishing an appropriate minimum Establishing an appropriate minimum wage and conditions of employment in wage and conditions of employment in the agricultural sectorthe agricultural sector

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Information gatheringInformation gathering

• Lack of:Lack of:– good statistical information on size of agricultural good statistical information on size of agricultural

sectorsector

– Information on wages and conditionsInformation on wages and conditions

• Used:Used:– Case studies (70 farms)Case studies (70 farms)

– Statistics SA: census and agricultural censusStatistics SA: census and agricultural census

– October Household Surveys.October Household Surveys.

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Part I:Part I: Social and Social and economic position of farm economic position of farm

workersworkers

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Major findings: Major findings: EmploymentEmployment

• Agriculture and hunting provide 930 000 Agriculture and hunting provide 930 000 jobs or 11,4 of formal South African jobs or 11,4 of formal South African employmentemployment

• 70% of all SA farm workers are male 70% of all SA farm workers are male relatively young and have small householdsrelatively young and have small households

• Most farm workers are South AfricanMost farm workers are South African

• Approximately two thirds in permanent Approximately two thirds in permanent employment. employment.

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0 20,000 40,000 60,000 80,000 100,000 120,00 0 140,000 160,000

W es tern Cap e

Eas tern Cap e

No rth ern Cap e

Free State

KwaZu lu -Natal

No rth W es t

Gau ten g

M p u malan g a

No rth ern Pro v in ceA g ricu ltu ral Su rv ey 1996

A g ricu ltu re an d h u n tin g

(Cen s u s )

Employment: Provincial Employment: Provincial distributiondistribution

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Employment: changes in Employment: changes in numbers: 1918 - 2010numbers: 1918 - 2010

Regular employment in agriculture 1918-2010

0

200000

400000

600000

800000

1000000

1200000

Years

No

. o

f w

ork

ers

Regular employment Linear (Reg. employment)

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PovertyPoverty

• Defined poverty as a lack of Defined poverty as a lack of capability.capability.

• Used following indicators of poverty:Used following indicators of poverty:– Nutritional statusNutritional status

– Literacy statusLiteracy status

– Access to infrastructure including Access to infrastructure including housing.housing.

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Major findings: PovertyMajor findings: Poverty

• Farm workers children are more likely to be Farm workers children are more likely to be stunted and underweight. Only children in stunted and underweight. Only children in the former homelands had a higher the former homelands had a higher prevalence of wastingprevalence of wasting

• A third A third of farm workers children are of farm workers children are stuntedstunted

• One in five are underweightOne in five are underweight

• One in 25 display symptoms of wastingOne in 25 display symptoms of wasting

• Only one in four is food secure.Only one in four is food secure.

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Hunger risk classificationin children aged 1-9

Food secureFood secure At risk of hungerAt risk of hunger Experience hungerExperience hunger

Commercial farmsCommercial farms 23 23 2929 4848

Formal urbanFormal urban 4141 2323 3737

Informal urbanInformal urban 2121 1818 6161

Former homelands Former homelands areasareas

1111 2323 6666

South AfricaSouth Africa 2525 2323 5252

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Major findings: PovertyMajor findings: Poverty

• 65% of all farm workers live in 65% of all farm workers live in formal dwellingsformal dwellings

• Farm workers have the lowest levels Farm workers have the lowest levels of literacy in the country of literacy in the country

• Female workers receive lower Female workers receive lower wages, less benefits and are less wages, less benefits and are less likely to be permanent workers.likely to be permanent workers.

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Education and literacy Education and literacy levelslevels

0%

20%

40%

60%

80%

100%

Farm W o rkers Oth er (u rb an ) Oth er (n o n -

u rb an )

Un emp lo y ed

(u rb an )

Un emp lo y ed

(n o n -u rb an )

No n e Grad e 1

Grad e 2 Grad e 3

Grad e 4 Grad e 5

Grad e 5+

Source: Case studies

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Major findings: Wages Major findings: Wages

• Average wage was found to be R544,00 per Average wage was found to be R544,00 per monthmonth

• Average wages paid to males:Average wages paid to males: R667R667females:females: R458R458

• Farm workers are the lowest paid workers Farm workers are the lowest paid workers amongst the formally employed amongst the formally employed

• About 25% of the wages paid to farm workers About 25% of the wages paid to farm workers are “in-kind”are “in-kind”

• High levels of debt to the farmer or ‘farm shop’.High levels of debt to the farmer or ‘farm shop’.

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Range of weekly wagesRange of weekly wages

Rands per week

451-500

351-400

301-350

251-300

201-250

151-200

101-150

51-100

1-50

% o

f e

mp

loye

es

40

30

20

10

0

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Wages and payment in Wages and payment in kind per provincekind per province

0 100 200 300 400 500 600 700 800 900 1000

W estern Cape

East ern Cape

Northern Cape

Free Stat e

KwaZulu-Natal

North W est

Gauteng

Mpumalanga

Northern P rovince

Ran ds pe r m on th

Cas h

Oth er Remu n eratio n

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Major findings: Conditions Major findings: Conditions of work of work

• 54% of workers work more hours than the 54% of workers work more hours than the maximum allowable limit but do not get maximum allowable limit but do not get paid overtimepaid overtime

• 27% do not get annual leave27% do not get annual leave

• Evidence of child labour.Evidence of child labour.

• Need for substantial improvement in Need for substantial improvement in compliance.compliance.

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Conclusions: 1Conclusions: 1• Farm workers and their families live in Farm workers and their families live in

absolute and relative povertyabsolute and relative poverty

• Poverty is more usefully defined as the Poverty is more usefully defined as the absence of capabilities than with reference to absence of capabilities than with reference to a wage rate.a wage rate.

• Policy interventions should address the Policy interventions should address the improvement of capabilities of farmworkersimprovement of capabilities of farmworkers

• Clear correlation between farm worker income Clear correlation between farm worker income and access to housing, household services, and access to housing, household services, literacy levels, health services, etc.literacy levels, health services, etc.

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Conclusions: 2Conclusions: 2• A minimum wage can improve access to A minimum wage can improve access to

these capabilities and the circumstances these capabilities and the circumstances of farm workers justifies the introduction of farm workers justifies the introduction of a minimum wage. of a minimum wage.

• Howver the most vulnerable farm workers, Howver the most vulnerable farm workers, women and children, could lose most if set women and children, could lose most if set too high.too high.

• A minimum wage can only be one A minimum wage can only be one instrument amongst others required to instrument amongst others required to eradicate poverty from among farm eradicate poverty from among farm workers.workers.

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Part II:Part II: Scope for Scope for increasing minimum increasing minimum

wageswages

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Issues addressed Issues addressed

• This Part looked at:This Part looked at:– Theoretical backgroundTheoretical background

– Competitiveness of commercial Competitiveness of commercial farming sectorfarming sector

– Employer and employee expectationsEmployer and employee expectations

– Wider economic implications.Wider economic implications.

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Theoretical backgroundTheoretical background

• While theoretically, minimum wage can have While theoretically, minimum wage can have adverse effect on employment it depends on at adverse effect on employment it depends on at what level the wage is set.what level the wage is set.

• The effect of a minimum wage on alleviation of The effect of a minimum wage on alleviation of poverty is ambiguous; income transfers may be poverty is ambiguous; income transfers may be better.better.

• Decentralised wage setting may be Decentralised wage setting may be desirable,depending on implementation desirable,depending on implementation constraints. constraints.

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Competitiveness of Competitiveness of commercial agriculturecommercial agriculture

• The sector as a whole has benefited from The sector as a whole has benefited from restructuring and deregulation although there have restructuring and deregulation although there have been winners and losersbeen winners and losers

• The share of labour and capital has declined and the The share of labour and capital has declined and the share of intermediary goods have increasedshare of intermediary goods have increased

• There was a positive growth in net farm income There was a positive growth in net farm income from1990 to1996.from1990 to1996.

• There has been improved productivity but a lower There has been improved productivity but a lower gross value of production.gross value of production.

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Employee and employer Employee and employer expectationsexpectations

• Employers believed they would be Employers believed they would be negatively affected if a minimum wage negatively affected if a minimum wage was above R25 per day or R608,90 per was above R25 per day or R608,90 per month.month.

• Workers expectations were modest: 20% Workers expectations were modest: 20% higher than employers. higher than employers.

• Workers recognised the possibility of job Workers recognised the possibility of job loss. loss.

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Macro-economic Macro-economic considerationsconsiderations

• Modeling exercise showed that increasing Modeling exercise showed that increasing the minimum wage would:the minimum wage would:– Have no significant impact on prices or outputHave no significant impact on prices or output

– Could lead to some job shedding (depending Could lead to some job shedding (depending on where it was set)on where it was set)

– May increase total economic output and May increase total economic output and household incomeshousehold incomes. .

• 39% of rural incomes derives from 39% of rural incomes derives from agricultural wages. agricultural wages.

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Part IIIPart III: Motivation for a : Motivation for a minimum wageminimum wage

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Why set a minimum wageWhy set a minimum wage

• To reduce inequalities within the agricultural To reduce inequalities within the agricultural sector sector

• To improve the situation of the most To improve the situation of the most vulnerablevulnerable

• To contribute to rural incomes To contribute to rural incomes

• To help to alleviate povertyTo help to alleviate poverty

• To contribute to a rural development strategyTo contribute to a rural development strategy

There is the political will. There is the political will.

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Under what circumstances Under what circumstances can a minimum wage can a minimum wage

achieve its aims?achieve its aims?• If it is accompanied by:If it is accompanied by:

– Improved enforcementImproved enforcement

– Other labour market interventions to improve Other labour market interventions to improve skills, health and safety, social security and skills, health and safety, social security and labour relationslabour relations

– Other government interventions to improve Other government interventions to improve capabilities e.g. housing, education, health carecapabilities e.g. housing, education, health care

– If it not set too high since this could lead to the If it not set too high since this could lead to the most vulnerable loosing their jobs. most vulnerable loosing their jobs.

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Is it affordable?Is it affordable?

• YES since:YES since:– In the long term, agricultural sector is In the long term, agricultural sector is

healthier now than in the pre-healthier now than in the pre-regulation eraregulation era

– Success of minimum wage is Success of minimum wage is dependent on future health of sector dependent on future health of sector which is positive.which is positive.

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How should a minimum How should a minimum wage be set?wage be set?

• No single minimum wage: aligned to No single minimum wage: aligned to accommodate different sub-sectors accommodate different sub-sectors and conditions within agriculture.and conditions within agriculture.

• Modest level: to protect the most Modest level: to protect the most vulnerable.vulnerable.

• Phased in: to give stakeholders time Phased in: to give stakeholders time to prepare. to prepare.

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Part Part IVIV:Recommendations:Recommendations

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Scope of sectoral Scope of sectoral determinationdetermination

• The sectoral determination should apply The sectoral determination should apply to:to:– permanent and seasonal workerspermanent and seasonal workers

– all forms of primary and secondary agricultureall forms of primary and secondary agriculture

– including aqua farming. including aqua farming. 

– farmers as well as labour- only sub-contractors farmers as well as labour- only sub-contractors in the agricultural sector.in the agricultural sector.

• Minimum wages should not apply to Minimum wages should not apply to farmers who employ 5 or less workers. farmers who employ 5 or less workers.

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Proposals for minimum Proposals for minimum wages and remunerationwages and remuneration

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Proposed minimum wage Proposed minimum wage levelslevels

Proposed Proposed Minimum Minimum WageWage

Group and example of Group and example of magisterial districtmagisterial district

R750R750 Group 1Group 1: Worcester, : Worcester, Bredasdorp, Ceres, Bredasdorp, Ceres, StellenboschStellenbosch

R600R600 Group 2Group 2: Bethal, Aberdeen, : Bethal, Aberdeen, Schweizer-Reneke, VredendalSchweizer-Reneke, Vredendal

R500R500 Group 3:Group 3: Aliwal North, Aliwal North, Nelspruit, Lady Grey, UnderbergNelspruit, Lady Grey, Underberg

R400R400 Group 4:Group 4: Albany, Barberton, Albany, Barberton, Harrismith, Hoopstad.Harrismith, Hoopstad.

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Minimum wagesMinimum wages

• Seasonal workers should get slightly Seasonal workers should get slightly higher wages higher wages

• Up to 20% can be deducted for Up to 20% can be deducted for payment in kind.payment in kind.

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Payment in kindPayment in kind

• Only accommodation or food can constitute Only accommodation or food can constitute payment in kind and only if it is provided:payment in kind and only if it is provided:– by the employer at his or her costby the employer at his or her cost

– on a consistent and regular basis as a condition on a consistent and regular basis as a condition of employment.of employment.

• It It may not constitute more than 20% of the may not constitute more than 20% of the total wage and the maximum value total wage and the maximum value may may only be 10% of the wage if only food or only be 10% of the wage if only food or housing is provided.housing is provided.

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AccommodationAccommodation

• Must meet the following conditions: Must meet the following conditions: – Roof does not leak Roof does not leak

– Glass windows that can openGlass windows that can open

– Has electricityHas electricity

– Water is available inside the houseWater is available inside the house

– Flush toilet or pit latrine is available in, or in Flush toilet or pit latrine is available in, or in close proximity to, the house, andclose proximity to, the house, and

– The size of the house is not less than 54 square The size of the house is not less than 54 square metres or 10 square metres per adult resident. metres or 10 square metres per adult resident.

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Proposed conditions of Proposed conditions of employmentemployment

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Conditions of employmentConditions of employment

• Most conditions were found to be appropriate for Most conditions were found to be appropriate for the farming sectorthe farming sector

• Greater problem of non-complianceGreater problem of non-compliance

• Changes were required to:Changes were required to:– Sick leaveSick leave - Extension of hours- Extension of hours

– Night workNight work - Notice periods- Notice periods

– Work on SundayWork on Sunday - Children in employment- Children in employment

• Some changes from the transitional provisions of Some changes from the transitional provisions of BCEA.BCEA.

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Sick leaveSick leave

• Due to problems of accessing health care in rural areas, Due to problems of accessing health care in rural areas, number of people who would be able to issue a medical number of people who would be able to issue a medical certificates increased to include:certificates increased to include:– clinical nurse practitioner clinical nurse practitioner with clinical curative skillswith clinical curative skills

– traditional healer traditional healer

– community health worker community health worker

– psychologistpsychologist

– any other health practitioner authorised to diagnose a medical any other health practitioner authorised to diagnose a medical condition.condition.

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Extension of hoursExtension of hours

• Farm workers need to work longer Farm workers need to work longer hours at certain times such as hours at certain times such as harvestingharvesting

• Can extend hours in some parts of Can extend hours in some parts of the year on condition that reduce the year on condition that reduce during other partsduring other parts

• Maximum weekly working hours: 50.Maximum weekly working hours: 50.

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Payment for work on Payment for work on SundaysSundays

• Farm workers sometimes required to work for Farm workers sometimes required to work for short periods on Sundayshort periods on Sunday

• Proposed that:Proposed that:– If work less than 1 hour, get double the wage for one If work less than 1 hour, get double the wage for one

hourhour

– If work more than 1 hour but less than 2, get double If work more than 1 hour but less than 2, get double pay for time actually workedpay for time actually worked

– If work longer than 2 hours but less than 5, get If work longer than 2 hours but less than 5, get ordinary wage and another day off in the next week.ordinary wage and another day off in the next week.

– If work longer than 5, get double pay and another day If work longer than 5, get double pay and another day off in the next week.off in the next week.

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Night workNight work

• Farm workers often have to begin Farm workers often have to begin work earlier than other workers work earlier than other workers

• Night work takes place between Night work takes place between 20h00 and before 04h00 20h00 and before 04h00

• In other sectors it is defined as In other sectors it is defined as between 23h00 and 0600. between 23h00 and 0600. 

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Termination of Termination of employmentemployment

• Longer notice periods are proposed Longer notice periods are proposed since if farmers loose their jobs, they since if farmers loose their jobs, they could also loose their accommodationcould also loose their accommodation

• Provisions are proposed to protect Provisions are proposed to protect crops and cattle of farm workerscrops and cattle of farm workers

• Proposals aligned to Extension of Proposals aligned to Extension of Security of Tenure Act. Security of Tenure Act.

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Children and young Children and young workersworkers

• Children under 15 are prohibited from Children under 15 are prohibited from working on farmsworking on farms

• It is proposed that for children It is proposed that for children between 15 and 18 there is a:between 15 and 18 there is a:– ban on night work ban on night work

– 35 hour ordinary work week35 hour ordinary work week

– prohibition on working with agro-prohibition on working with agro-chemicals. chemicals.

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OtherOther

• It is proposed that:It is proposed that:– there be a there be a six-month period between six-month period between

promulgation of a sectoral promulgation of a sectoral determination and its coming into determination and its coming into operationoperation

– further variations or exemptions can be further variations or exemptions can be granted on the basis of evidence, as granted on the basis of evidence, as specified in BCEA.specified in BCEA.

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Improved enforcementImproved enforcement

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New initiatives: 1New initiatives: 1

• Report recognised limitations of existing forms of Report recognised limitations of existing forms of enforcementenforcement

• Identified five current initiatives that could assist Identified five current initiatives that could assist with implementationwith implementation

• One is being spearheaded by Department of One is being spearheaded by Department of Labour and has support of key social partners: Labour and has support of key social partners: “Vision for Agricultural Labour Relations” “Vision for Agricultural Labour Relations”

• Anticipates common and co-ordinated programme Anticipates common and co-ordinated programme of action around awareness raising, training and of action around awareness raising, training and addressing of obstacles. addressing of obstacles.

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New initiatives: 2New initiatives: 2

• Other initiatives include:Other initiatives include:– Voluntary efforts to create a code of conduct or Voluntary efforts to create a code of conduct or

good practice amongst a specific group of farmersgood practice amongst a specific group of farmers

– Reward farmers for following fair labour practices Reward farmers for following fair labour practices with access to state support e.g. Social Product of with access to state support e.g. Social Product of the Land Bankthe Land Bank

– Industry agreements to support fair labour Industry agreements to support fair labour standardsstandards

– External interventions such as ethical trading External interventions such as ethical trading initiativesinitiatives..

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ConclusionConclusion

• It is a process to improve conditions for It is a process to improve conditions for vulnerable workersvulnerable workers

• Aspects of this process include:Aspects of this process include:– Establishing the appropriate regulatory Establishing the appropriate regulatory

environmentenvironment

– Improving skillsImproving skills

– Improved enforcementImproved enforcement

– Poverty alleviation and social development Poverty alleviation and social development strategies of government as a whole. strategies of government as a whole.

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RememberRemember

• These are only proposals. They are not These are only proposals. They are not legally enforceable.legally enforceable.

• These are only minimum wages. Employers These are only minimum wages. Employers can still pay more than the minimum.can still pay more than the minimum.

• Let us have your views before 13 Let us have your views before 13 December 2001December 2001

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Details of Department of Details of Department of LabourLabour

• Write to:Write to:– Employment Conditions CommissionEmployment Conditions Commission

– Private Bag X117, PretoriaPrivate Bag X117, Pretoria

• Fax to: 012 309 4709Fax to: 012 309 4709

• E-mail to: mandisa.pamlaE-mail to: mandisa.pamla@labour.gov.za@labour.gov.za

• Or contact:Or contact:– Mandisa Pamla (012) 309 4333Mandisa Pamla (012) 309 4333

– Your nearest Department of Labour office.Your nearest Department of Labour office.