Minimum wages and conditions of employment for farm workers REPORT ON INVESTIGATION

1. Minimum wages and conditions of employment for farm workers REPORT ON INVESTIGATION Department of Labour Parliamentary Briefing 18th September 2001

2. Structure of presentation • Introduction • Socio and economic position of farm workers • Scope for increasing wages • Motivation for a minimum wage • Recommendations

3. Introduction

4. Focus of the investigation • Conditions and circumstances facing: • Farmers • Farm workers • Establishing an appropriate minimum wage and conditions of employment in the agricultural sector

5. Information gathering • Lack of: • good statistical information on size of agricultural sector • Information on wages and conditions • Used: • Case studies (70 farms) • Statistics SA: census and agricultural census • October Household Surveys.

6. Part I: Social and economic position of farm workers

7. Major findings: Employment • Agriculture and hunting provide 930 000 jobs or 11,4 of formal South African employment • 70% of all SA farm workers are male relatively young and have small households • Most farm workers are South African • Approximately two thirds in permanent employment.

8. Employment: Provincial distribution

9. Employment: changes in numbers: 1918 - 2010

10. Poverty • Defined poverty as a lack of capability. • Used following indicators of poverty: • Nutritional status • Literacy status • Access to infrastructure including housing.

11. Major findings: Poverty • Farm workers children are more likely to be stunted and underweight. Only children in the former homelands had a higher prevalence of wasting • A third of farm workers children are stunted • One in five are underweight • One in 25 display symptoms of wasting • Only one in four is food secure.

12. Hunger risk classificationin children aged 1-9

13. Major findings: Poverty • 65% of all farm workers live in formal dwellings • Farm workers have the lowest levels of literacy in the country • Female workers receive lower wages, less benefits and are less likely to be permanent workers.

14. Education and literacy levels Source: Case studies

15. Major findings: Wages • Average wage was found to be R544,00 per month • Average wages paid to males: R667 females: R458 • Farm workers are the lowest paid workers amongst the formally employed • About 25% of the wages paid to farm workers are “in-kind” • High levels of debt to the farmer or ‘farm shop’.

16. Range of weekly wages

17. Wages and payment in kind per province

18. Major findings: Conditions of work • 54% of workers work more hours than the maximum allowable limit but do not get paid overtime • 27% do not get annual leave • Evidence of child labour. • Need for substantial improvement in compliance.

19. Conclusions: 1 • Farm workers and their families live in absolute and relative poverty • Poverty is more usefully defined as the absence of capabilities than with reference to a wage rate. • Policy interventions should address the improvement of capabilities of farmworkers • Clear correlation between farm worker income and access to housing, household services, literacy levels, health services, etc.

20. Conclusions: 2 • A minimum wage can improve access to these capabilities and the circumstances of farm workers justifies the introduction of a minimum wage. • Howver the most vulnerable farm workers, women and children, could lose most if set too high. • A minimum wage can only be one instrument amongst others required to eradicate poverty from among farm workers.

21. Part II: Scope for increasing minimum wages

22. Issues addressed • This Part looked at: • Theoretical background • Competitiveness of commercial farming sector • Employer and employee expectations • Wider economic implications.

23. Theoretical background • While theoretically, minimum wage can have adverse effect on employment it depends on at what level the wage is set. • The effect of a minimum wage on alleviation of poverty is ambiguous; income transfers may be better. • Decentralised wage setting may be desirable,depending on implementation constraints.

24. Competitiveness of commercial agriculture • The sector as a whole has benefited from restructuring and deregulation although there have been winners and losers • The share of labour and capital has declined and the share of intermediary goods have increased • There was a positive growth in net farm income from1990 to1996. • There has been improved productivity but a lower gross value of production.

25. Employee and employer expectations • Employers believed they would be negatively affected if a minimum wage was above R25 per day or R608,90 per month. • Workers expectations were modest: 20% higher than employers. • Workers recognised the possibility of job loss.

26. Macro-economic considerations • Modeling exercise showed that increasing the minimum wage would: • Have no significant impact on prices or output • Could lead to some job shedding (depending on where it was set) • May increase total economic output and household incomes. • 39% of rural incomes derives from agricultural wages.

27. Part III: Motivation for a minimum wage

28. Why set a minimum wage • To reduce inequalities within the agricultural sector • To improve the situation of the most vulnerable • To contribute to rural incomes • To help to alleviate poverty • To contribute to a rural development strategy • There is the political will.

29. Under what circumstances can a minimum wage achieve its aims? • If it is accompanied by: • Improved enforcement • Other labour market interventions to improve skills, health and safety, social security and labour relations • Other government interventions to improve capabilities e.g. housing, education, health care • If it not set too high since this could lead to the most vulnerable loosing their jobs.

30. Is it affordable? • YES since: • In the long term, agricultural sector is healthier now than in the pre-regulation era • Success of minimum wage is dependent on future health of sector which is positive.

31. How should a minimum wage be set? • No single minimum wage: aligned to accommodate different sub-sectors and conditions within agriculture. • Modest level: to protect the most vulnerable. • Phased in: to give stakeholders time to prepare.

32. Part IV:Recommendations

33. Scope of sectoral determination • The sectoral determination should apply to: • permanent and seasonal workers • all forms of primary and secondary agriculture • including aqua farming.  • farmers as well as labour- only sub-contractors in the agricultural sector. • Minimum wages should not apply to farmers who employ 5 or less workers.

34. Proposals for minimum wages and remuneration

35. Proposed minimum wage levels

36. Minimum wages • Seasonal workers should get slightly higher wages • Up to 20% can be deducted for payment in kind.

37. Payment in kind • Only accommodation or food can constitute payment in kind and only if it is provided: • by the employer at his or her cost • on a consistent and regular basis as a condition of employment. • It may not constitute more than 20% of the total wage and the maximum value may only be 10% of the wage if only food or housing is provided.

38. Accommodation • Must meet the following conditions: • Roof does not leak • Glass windows that can open • Has electricity • Water is available inside the house • Flush toilet or pit latrine is available in, or in close proximity to, the house, and • The size of the house is not less than 54 square metres or 10 square metres per adult resident.

39. Proposed conditions of employment

40. Conditions of employment • Most conditions were found to be appropriate for the farming sector • Greater problem of non-compliance • Changes were required to: • Sick leave - Extension of hours • Night work - Notice periods • Work on Sunday - Children in employment • Some changes from the transitional provisions of BCEA.

41. Sick leave • Due to problems of accessing health care in rural areas, number of people who would be able to issue a medical certificates increased to include: • clinical nurse practitioner with clinical curative skills • traditional healer • community health worker • psychologist • any other health practitioner authorised to diagnose a medical condition.

42. Extension of hours • Farm workers need to work longer hours at certain times such as harvesting • Can extend hours in some parts of the year on condition that reduce during other parts • Maximum weekly working hours: 50.

43. Payment for work on Sundays • Farm workers sometimes required to work for short periods on Sunday • Proposed that: • If work less than 1 hour, get double the wage for one hour • If work more than 1 hour but less than 2, get double pay for time actually worked • If work longer than 2 hours but less than 5, get ordinary wage and another day off in the next week. • If work longer than 5, get double pay and another day off in the next week.

44. Night work • Farm workers often have to begin work earlier than other workers • Night work takes place between 20h00 and before 04h00 • In other sectors it is defined as between 23h00 and 0600. 

45. Termination of employment • Longer notice periods are proposed since if farmers loose their jobs, they could also loose their accommodation • Provisions are proposed to protect crops and cattle of farm workers • Proposals aligned to Extension of Security of Tenure Act.

46. Children and young workers • Children under 15 are prohibited from working on farms • It is proposed that for children between 15 and 18 there is a: • ban on night work • 35 hour ordinary work week • prohibition on working with agro-chemicals.

47. Other • It is proposed that: • there be a six-month period between promulgation of a sectoral determination and its coming into operation • further variations or exemptions can be granted on the basis of evidence, as specified in BCEA.

48. Improved enforcement

49. New initiatives: 1 • Report recognised limitations of existing forms of enforcement • Identified five current initiatives that could assist with implementation • One is being spearheaded by Department of Labour and has support of key social partners: “Vision for Agricultural Labour Relations” • Anticipates common and co-ordinated programme of action around awareness raising, training and addressing of obstacles.

50. New initiatives: 2 • Other initiatives include: • Voluntary efforts to create a code of conduct or good practice amongst a specific group of farmers • Reward farmers for following fair labour practices with access to state support e.g. Social Product of the Land Bank • Industry agreements to support fair labour standards • External interventions such as ethical trading initiatives.