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Does a litre of petrol cost more than the minimum hourly wage in South Africa?




UPDATE: Shortly after publishing this article, President Cyril Ramaphosa signed the National Minimum Wage bill into law. It will come into effect on 1 January 2019.

While South Africa’s politicians get ready to contest the 2019 elections, ordinary people are left with real problems, Daily Maverick’s Marianne Thamm has argued. One is that “a litre of petrol costs more in South Africa than the minimum hourly wage”.

Both the minimum wage and the price of petrol have been subjects of public debate in 2018.

Petrol prices have increased several times. And a new National Minimum Wage bill to set a standard hourly rate for workers across the country has been making its way through parliament.

Can the minimum wage and petrol price be compared?

No single minimum wage, no single petrol price


Thamm told Africa Check she was making a “general comparison” using official petrol prices from June 2018 and the hourly rates in the National Minimum Wage bill, as reported by Fin24.

But the bill is yet to become law. It has been passed by parliament, but still needs President Cyril Ramaphosa’s signature. Until then, South Africa has no single minimum wage. The legal minimum workers can be paid depends on where they work.

There’s also no single petrol price. The cost of petrol is less at the coast than inland and varies according to type: 95- and 93-octane unleaded, and lead replacement. It currently ranges from R16.49 at the coast to R17.08 for 95-octane unleaded petrol at inland fuel stations.


How do petrol prices compare to the current minimum wage?


Once the president signs the National Minimum Wage bill, it will be “the first time South Africa has a national minimum wage,” director of employment standards at the department of labour, Stephan Rathai, told Africa Check. Until then, “minimum wages are different according to the sectors”.

These range from R11.89 per hour for domestic workers to R16.25 for farm and forestry workers. Minimum wages are also set for the hospitality and retail sectors.

“Other sectors are not covered because they are not national,” Rathai said.

Minimum wages are also set through collective agreements.

“These are agreed upon by industry bargaining councils – a collective of union representatives and firms who negotiate the wages of better-paid workers such as metal and clothing workers,” Marlies Piek of the Research on Socio-Economic Policy group at Stellenbosch University told Africa Check.

“Many workers are still not covered by either of these two mechanisms, which is one of the main reasons for the national minimum wage.”

Lower minimums for some sectors


When the bill comes into effect, the hourly rate will be set at R20. This will be the minimum below which no employee should be paid. Employers who pay less than this will face penalties.

But in some sectors the hourly rate will be less. Farm workers will get a minimum of R18 an hour, domestic workers R15 an hour and workers in Expanded Public Works Programmes R11 an hour.

“Those sectors are responsive to wage movements,” Rathai told Africa Check. “We were a bit worried that if you don't give them that flexibility, come the national minimum wage, the employers in these sectors will retrench… and there is nothing that puts people in immense poverty than unemployment. Therefore, those sectors were given flexibility.”

What does this mean for South Africans?


Though a litre of petrol is currently cheaper than the proposed national minimum wage of R20 an hour, many workers will continue to earn less than that.

And workers in the lowest income groups buckle more under transport costs than wealthier households.

“Although average monthly transport costs per person are higher for the wealthiest income groups (since the richest households often own vehicles), it is important to look at how much of total income is being spent on transport costs,” Piek said.

Data from the 2013 National Household Travel Survey shows that in 2013, two-thirds of households in the lowest income group spent more than 20% of their household income per person on public transport, compared to only 3% in the wealthiest group.

“High petrol prices can, therefore, be a relatively bigger burden for the poorer compared to richer households,” Piek said. - Cayley Clifford (23/11/2018)



CORRECTION: A previous version of this report said that forestry workers will get a minimum of R18 an hour when the minimum wage bill comes into effect. It should have been farm workers. We've corrected the report and apologise for the error.





Further reading:

https://africacheck.org/2015/06/24/as-sa-debates-a-minimum-wage-a-primer-on-income-inequality/

 

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