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The minimum wage will be hiked by 9.62% for the year, taking the going rate to R25.42 (up R2.23 from R23.19 before).

Farm workers will earn a minimum in line with the rate, as will domestic workers. However, workers employed in expanded public works programmes will be entitled to a lower rate at R13.97 per hour.

The new minimum wage means that domestic workers in South Africa should see a 9.6% pay hike. Calculated at 8 hours a day, the monthly wage for domestic workers (160 hours a month) should increase from around R3,700 to R4,100 – an increase of R400.

According to the department, however, most jobs earning the minimum wage will see their wages increase to R1,144 a week (45 hours) or R4,957 a month (195 hours).

The increase to the minimum wage came in higher than initially expected.

When the department started consultations on the increase, it was planning for a hike of around 8%, slightly ahead of CPI, which has been sitting above 7% for the past few months, only dropping to 6.9% in January.

CPI is expected to average between 5% and 6% in 2023.

Despite the above-inflation hike to the national minimum wage, low earners in South Africa are still expected to face significant pricing pressure this year.

Most notably, while headline inflation is cooling off and moving toward the South African Reserve Bank’s 3% to 6% range, food prices in the country are going in the opposite direction, remaining stubbornly high.

According to the latest inflation data from Stats SA, the annual food inflation rate climbed to 13.4% in January, the highest reading since April 2009, when the rate was 13.6%.

Of all the product groups in the CPI basket, bread & cereals recorded the highest rate in January (21.8%). This was up from 20.6% in December and is the highest reading for this category since February 2009 (23.8%).

Bread & cereal products that recorded notable monthly increases in January include pastry products (pizzas and pies), which increased by 3,6%, maize (up 3.1%), and brown bread (up 1.3%).

Meat inflation increased to 11.2% in January from December’s 9.7%. Individually quick frozen (IQF) chicken portions, the highest-weighted meat product, witnessed a monthly price increase of 2.7% between December and January.

All these staples are far higher than the minimum wage hike.

Food purchases make up a significant portion of lower-income households’ spending each month, with data from the Pietermaritzburg Economic Justice and Dignity group showing that a nutritional basket of food sets a household back over R4,900 a month – R800 more than the new monthly minimum.

This is before factoring in other essentials like hygiene products, transportation and electricity.

Electricity prices are another major sticking point, with energy regulator Nersa approving an 18.65% hike in electricity tariffs for Eskom direct customers from 1 April 2023 – and even higher hikes expected from municipalities from 1 July 2023.

For the national minimum wage to simply absorb the coming electricity price hike, the PMBEJD said it would have had to have been hiked by 11.8%.
Source > Originally Posted on Business Tech

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