Statutory minimum wages

The example of South Africa

One way in which the minimum wage is determined in South Africa is through “sectoral determination”.

The Basic Conditions of Employment Act (BCEA) provides for the establishment of the Employment Conditions Commission, which plays a key role in drawing up and advising the Minister on sectoral determinations. The Commission initially consisted of five members, with three (including the chairperson) nominated by government, one by organised business and one by organised labour. The composition was later expanded to allow for one alternate for each of organised business and organised labour. The nominees must be approved by the National Economic Development and Labour Council (NEDLAC), which is South Africa’s primary statutory body for social dialogue and which must be consulted during the development of labour and economic policies. However, the nominees to the Employment Conditions Commission do not serve as “representatives” of the social partners and are not accountable to them in the sense of receiving mandates and reporting back to their constituencies. The Commission is thus not a tri-partite body in the strict sense of the term.

The BCEA specifies the procedure for drawing up sectoral determinations in some detail. It requires that the Department of Labour issue a public notice announcing the terms of reference and asking for written input from members of the public, conduct an investigation, and prepare a report for consideration by the Commission. The Commission then discusses the report and makes recommendations to the Minister in respect of a determination. The Act also provides for the Commission to hold public hearings. In practice, the hearings are organized by the Department with government officials always in attendance and Commission members sometimes in attendance.

Source: Debbie Budlender, 2016. “The Introduction of a minimum wage for domestic workers in South Africa”, ILO Working Paper, Geneva.