South Africa’s Top Labor Federation Agrees to Minimum Wage

  • Cosatu Labor Group calls government proposal a step forward
  • Government says companies are able to apply for exemption

South Africa’s main labor union federation accepted a government-proposed minimum wage of about 3,500 rand ($268) a month, calling it a “step forward for the country.”

While Cosatu favored a minimum monthly salary of 4,500 rand a month, the government’s proposal “is still a significant starting base towards a living wage,” Congress of South African Trade Unions Secretary-General Bheki Ntshalintshali told reporters Thursday in Johannesburg. President Jacob Zuma’s administration wants it to start on May 1 next year.

The government has said businesses that aren’t able to afford the minimum wage for a 40-hour week will be able to apply for an exemption. Africa’s most-industrialized economy, which has an unemployment rate of almost 27 percent, has 6.6 million people earning less than 3,500 rand monthly, Deputy President Cyril Ramaphosa said last month.

S&P Global Ratings, which has had a negative outlook on South Africa’s BBB- assessment for more than a year, has said the country needs to reform labor laws to reduce protracted strikes and create certainty about black empowerment laws in mining to avoid a cut to junk. Fitch Ratings Ltd. also has South Africa at the lowest investment grade, while Moody’s Investors Service rates the nation’s debt one level higher.

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