March 10 (Bloomberg) -- South Africa’s ruling African National Congress is in talks with its labor allies on imposing a national minimum wage to help redistribute wealth.
While the ANC’s program to boost black participation in the economy has focused on ownership, a minimum wage is aimed at broadening income distribution, Enoch Godongwana, head of the party’s economic committee, told reporters in Johannesburg today.
The ANC is facing its toughest election on May 7 since taking power in 1994 amid growing dissatisfaction with a 24 percent jobless rate, and a lack of housing, water and other basic services in poor townships. Two decades after the end of apartheid white South Africans still earn on average six times more than their black counterparts.
“It’s a redistributive strategy, focusing on those vulnerable sectors,” Godongwana said after the briefing. While there are minimum wages set in some industries, the plan is to “extend the model to the whole economy and bring levels of income higher up.”
Labor Minister Mildred Oliphant said the ANC is looking at minimum wage policies in Brazil and China. The ruling party’s manifesto plans for a minimum wage in five year’s time, she said.
South Africa already has minimum wages in nine industries, including in retail, forestry, private security and farming, according to the Department of Labor’s website.
President Jacob Zuma said in an interview on March 6 that the government must push for increased black ownership of the economy because the ANC’s empowerment policy hasn’t done enough to redistribute wealth.
Tito Mboweni, a member of the ANC’s economic committee and a former governor of the central bank, told reporters today that the party wants “deep intervention” in the financial sector to improve access to capital for black businesses. The ANC will discuss creating a state-owned bank, possibly through the South African Post Office’s PostBank, Mboweni said.
While the ANC wants to speed up economic transformation, party officials said the election pledges are affordable within the current budget plan. Expenditure limits set by Finance Minister Pravin Gordhan will be adhered to by the next administration, Godongwana said.
“We need to maintain macroeconomic stability and sustain the debt-to-GDP ratio at levels consistent with development,” Mboweni said. The ANC supports a low inflation environment and “prudent” monetary policy, he said.
Gordhan pledged in his budget speech on Feb. 26 to narrow the fiscal deficit to 2.8 percent of gross domestic product in three years’ time from an estimated 4 percent in the year ending March 31. Gross debt is set to rise to 48.3 percent from 45.8 percent in the period.
Mboweni, who resigned last month as chairman of AngloGold Ashanti Ltd. to focus on his other business ventures, said the ANC’s economic policies are based on long-term planning.
“The ANC is not in the business of governing for today or tomorrow,” Mboweni said. “We are in the business of governing for a long time.”
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