{"id":19048,"date":"2026-02-05T14:27:46","date_gmt":"2026-02-05T14:27:46","guid":{"rendered":"https:\/\/microvibenews.com\/?p=19048"},"modified":"2026-02-05T14:27:46","modified_gmt":"2026-02-05T14:27:46","slug":"wage-inflation-versus-productivity-a-growing-threat-to-employment","status":"publish","type":"post","link":"https:\/\/microvibenews.com\/?p=19048","title":{"rendered":"Wage inflation versus productivity: A growing threat to employment"},"content":{"rendered":"<p><\/p>\n<div id=\"textFreeArticle\">\n<p><iframe loading=\"lazy\" src=\"https:\/\/iframe.iono.fm\/e\/1642959?layout=modern\" width=\"100%\" height=\"170\" frameborder=\"0\" data-mce-fragment=\"1\"><\/iframe><\/p>\n<p>You can also listen to this podcast on iono.fm here.<\/p>\n<p><strong>J<\/strong><strong>EREMY MAGGS:<\/strong> Government has gazetted South Africa\u2019s national minimum wage increase to R30.23\/hour. That\u2019s from 1 March. It\u2019s a move that\u2019s going to impact an estimated 5.5 million workers across the economy, including farm and domestic workers.<\/p>\n<p>While the hike was widely expected, it lands at a time of intense cost-of-living pressure for households and tightening margins for employers, with compliance enforcement also ramping up.<\/p>\n<p>Read: SA to raise minimum wage 5%, exceeding expectations<\/p>\n<p>I want to discuss in a little more detail what this increase really means in practice. I\u2019m joined by John Botha, labour relations expert, joint chief executive officer at Global Business Solutions.<\/p>\n<p>John, a warm welcome to you. R30.23\/hour sounds modest, in real terms, does this meaningfully protect workers against today\u2019s cost of living?<\/p>\n<p><strong>JOHN BOTHA: <\/strong>The short answer to that, Jeremy, is you have to look at it in the context maybe of the last five years. As you know, the national minimum wage is renewed every year in March by the National Minimum Wage Commission.<\/p>\n<p>Listen\/read:<\/p>\n<div class=\"ApplePlainTextBody\" dir=\"auto\">National minimum wage rises to R30.23 an hour<\/div>\n<p>If you look at the increases on a compound annual growth rate, Jeremy, over the last five years, we\u2019re looking at a 6.8% annual increase on a compound growth rate. Now, that is more than double CPI (Consumer Price Index), if one had to express it in that manner.<\/p>\n<blockquote>\n<p>Whether or not it is sufficient to help the 5.5 million individuals with the massive cost-of-living increases that is not represented in the CPI.<\/p>\n<div class=\"visible-sm-block visible-xs-block m1010\">\n<div class=\"ad-container-wrapper\">\n<p>ADVERTISEMENT<\/p>\n<p>CONTINUE READING BELOW<\/p>\n<\/div>\n<\/div>\n<\/blockquote>\n<p>In other words, the cost of food, the cost of transport and so on. That\u2019s a different question, and I don\u2019t think we are quite there yet.<\/p>\n<p><strong>JEREMY MAGGS: <\/strong>For labour-intensive sectors, John. I\u2019m thinking of agriculture, maybe even the hospitality industry. I wonder if this increase is absorbable, or do you think there is the danger, the risk that it could push some businesses closer to the edge, if not to closure?<\/p>\n<p><strong>JOHN BOTHA: <\/strong>Jeremy, the short answer to that is I think there are problems on the horizon, and I\u2019ll tell you why. For example, domestic workers, we see a dramatic decrease in the number of domestic workers over the last three to four years who are employed.<\/p>\n<p>If my memory serves me correctly, there are 200 000 to 300 000 domestic workers who are no longer employed. So we\u2019ve seen a tremendous fall-off in the number of domestic workers employed.<\/p>\n<p>Now, if that is an indicator, one must say, why is it that\u2019s happening in households, for example. So consumer spending, disposable income is under pressure, as you indicated. Then on top of that you\u2019ve got these regulatory increases, and then even workmen\u2019s compensation, Jeremy, traditionally wasn\u2019t extended to domestic workers.<\/p>\n<p>Read:<\/p>\n<div class=\"ApplePlainTextBody\" dir=\"auto\">Major minimum wage victory for women workers<\/div>\n<p>Then we had a Constitutional Court case that said domestic workers needed to be covered, because the unfortunate incident was a domestic worker fell into the pool and drowned. The Constitutional Court said, well, it\u2019s unconstitutional not to have domestic workers covered.<\/p>\n<p>I think what I\u2019m trying to say is you\u2019ve got this, and you touch on it when you open today\u2019s discussion, is you\u2019ve got this ambiguity. You\u2019ve got the organisations that are under the hammer. We\u2019ve got massive disruption with technology and automation and mechanisation.<\/p>\n<p>Read:\u00a0One in three domestic workers earn below minimum wage \u2013 report<\/p>\n<p>We\u2019ve got very low labour productivity in South Africa compared globally. Then on the other hand, you\u2019ve got this rising minimum wage rate that, albeit very low still, it\u2019s definitely having an impact on the labour market.<\/p>\n<p><strong>JEREMY MAGGS: <\/strong>John, we know that enforcement is becoming more data-driven, but how successful is it?<\/p>\n<div class=\"visible-sm-block visible-xs-block m1010\">\n<div class=\"ad-container-wrapper\">\n<p>ADVERTISEMENT:<\/p>\n<p>CONTINUE READING BELOW<\/p>\n<\/div>\n<\/div>\n<p><strong>JOHN BOTHA: <\/strong>Enforcement is something that needs to be lamented on, Jeremy.<\/p>\n<blockquote>\n<p>The enforcement of the national minimum wage, as with various other aspects of law, has been historically poor. There are lots of organisations not paying the national minimum wage.<\/p>\n<\/blockquote>\n<p>I must say the Department of Labour have tried to step it up.<\/p>\n<p>Their Inspection and Enforcement Services division is a lot more active than they used to be, and they\u2019ve also changed the legislation to include, for example, under employment equity, that if a company is not paying the national minimum wage and they are found out, they lose their employment equity certificate, which means they lose access to business tenders.<\/p>\n<p>Listen: Are you paying your domestic workers enough?<\/p>\n<p>They are also trying to have this economic penalty as a potential threat. So for companies, especially reputable companies, if they don\u2019t comply and they are caught out, they\u2019re toast.<\/p>\n<p><strong>JEREMY MAGGS: <\/strong>We also know, John, that outsourcing and labour brokers are increasingly common in South Africa. I\u2019d be interested to know where the legal liability sits when a minimum wage breach occurs.<\/p>\n<p><strong>JOHN BOTHA: <\/strong>That is a very good question, Jeremy. Organisations are trying to reduce their payrolls, and the only way they do that is to outsource, subcontract and use a TES (Temporary Employment Service) or labour brokers, as you indicate correctly. We see the migration of these new workforce models increasing dramatically.<\/p>\n<p>The truth of the matter is when a labour broker or a TES is involved, the Basic Conditions of Employment Act appropriates joint liability between the client and the labour broker.<\/p>\n<p>Read:<\/p>\n<div class=\"ApplePlainTextBody\" dir=\"auto\">Executive pay under scrutiny: Legislative changes explained [Oct 2024]<\/div>\n<div class=\"ApplePlainTextBody\" dir=\"auto\">SA\u2019s wage gap is huge \u2026 [Nov 2023]<\/div>\n<p>Clients right now, and I think that\u2019s where you\u2019re heading, they\u2019d better be talking to their labour brokers to adjust their pay rates, to adjust the contributions, to ensure they\u2019re not found wanting, because if a broker is in breach, the client is automatically in breach as well.<\/p>\n<div class=\"visible-sm-block visible-xs-block m1010\">\n<div class=\"ad-container-wrapper\">\n<p>ADVERTISEMENT:<\/p>\n<p>CONTINUE READING BELOW<\/p>\n<\/p><\/div>\n<\/div>\n<p><strong>JEREMY MAGGS: <\/strong>Just a final one, and maybe looking ahead, John. If wages keep rising, but productivity doesn\u2019t. What gives first? Is it margins, jobs or prices?<\/p>\n<p><strong>JOHN BOTHA: <\/strong>Oh, my goodness. Jeremy, is I\u2019ve studied this because I\u2019m a keen academic in the context of disruption and the impact of that on the workplace. But the truth of the matter is the labour productivity in South Africa has been dropping tremendously.<\/p>\n<p>If you look at the increase in the wage rates and the commensurate productivity trends, in fact, Nedlac (National Economic Development and Labour Council) published a beautiful graph last week or the week before, in their quarterly review, where they showed that there\u2019s a massive disconnect between wage inflation and productivity. There\u2019s almost an inverse relationship.<\/p>\n<blockquote>\n<p>Now the more you\u2019re paying; it\u2019s almost the less productive organisations are becoming. So where does it give? In my view, technology, automation, artificial intelligence, mechanisation is going to be front of mind.<\/p>\n<\/blockquote>\n<p>Robots don\u2019t go on leave. They don\u2019t injure themselves at work. They don\u2019t have UIF (Unemployment Insurance Fund) and workmen\u2019s compensation, and they are a fraction of the cost of remuneration for a year.<\/p>\n<p>Read: Paycheques gutted by debt, particularly among high earners<\/p>\n<p>You can pay R30 000 for a bot rather than R300 000 for a labour relations officer. So it\u2019s going to give. Margins are under pressure. The labour markets are under pressure, I think we\u2019re going to see unemployment grow significantly.<\/p>\n<p>You see the automotive industry, like with the Nissan plant now, the Chery acquisition of that plant. Jeremy, I think we\u2019re in for the high jump, and the sad thing is we still remain the most inequitable geography in the world when the Gini coefficient is brought into the mix. It\u2019s a very sad situation, to be honest.<\/p>\n<p><strong>JEREMY MAGGS: <\/strong>John Botha, as always, thank you very much for the insight. Labour relations expert, joint chief executive, Global Business Solutions. I appreciate your time today. Thank you.<\/p>\n<p><em>Follow Moneyweb\u2019s in-depth finance and business news on WhatsApp here.<\/em><\/p>\n<\/p><\/div>\n<p><script data-cfasync=\"false\">\n            !function(f,b,e,v,n,t,s)\n            {if(f.fbq)return;n=f.fbq=function(){n.callMethod?\n                n.callMethod.apply(n,arguments):n.queue.push(arguments)};\n                if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version='2.0';\n                n.queue=[];t=b.createElement(e);t.async=!0;\n                t.src=v;s=b.getElementsByTagName(e)[0];\n                s.parentNode.insertBefore(t,s)}(window, document,'script',\n                'https:\/\/connect.facebook.net\/en_US\/fbevents.js');\n            fbq('init', '779812924991616');\n            fbq('track', 'PageView');\n        <\/script>#Wage #inflation #productivity #growing #threat #employment<\/p>\n","protected":false},"excerpt":{"rendered":"<p>You can also listen to this po&hellip; <\/p>\n","protected":false},"author":1,"featured_media":19049,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[2006,2489,176,1980,615,9624],"_links":{"self":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/19048"}],"collection":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=19048"}],"version-history":[{"count":0,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/19048\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/media\/19049"}],"wp:attachment":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=19048"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=19048"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=19048"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}