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#Budget2017: Where To From Here For The National Minimum Wage?

Rob Cooper, Tax Expert and Director of Legislation at Sage, gives his expert opinion on the matter of the National Minimum Wage, as the Deputy President signed a National Minimum Wage Agreement into existence on 8 February this year. Rob looks forward to what Minister Pravin Gordhan will have to say on the matter.

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Vital Stats

  • Event: South African Budget Speech 2017
  • Date: Wednesday, 22 February

We’ll be watching Finance Minister, Pravin Gordhan, closely this week in the run up to presenting his Budget for the 2017/8 tax year, on Wednesday, 22 February. One of the issues we hope the Minister will provide clarity on in his statement is the implementation of the National Minimum Wage. 

Deputy President Cyril Ramaphosa signed a National Minimum Wage Agreement into existence on 8 February this year – the culmination of years of debate between labour, business, government and economists. 

The arguments about whether a National Minimum Wage Agreement will close the wage gap and stimulate the economy or rather lead to job losses can be set aside. We should now focus on what needs to be done to ensure that it is a success for workers and businesses alike.

Related: Will Minimum Wage Increase Boost Economic Growth In South Africa?

With implementation set to begin in May 2018, government is proceeding with caution. Many details in the agreement still needs to be fleshed out as government creates draft legislation for the National Economic Development and Labour Council (Nedlac) discussions and public comment before promulgating an Act.

Minimum Wage Value

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The success of the National Minimum Wage will depend on setting the minimum wage at a high enough level to close the wage gap, yet not so high that businesses can’t afford it or decide to automate rather than hire. Government has taken a cautious stance, setting the initial National Minimum Wage at R20 per hour. 

This is a practical approach, aimed at limiting the potential economic damage of an unrealistically high minimum. It was not the intention (and it is not financially possible) to pay a minimum wage at the level of a ‘living wage’. The National Minimum Wage is not meant to be a wage that an individual can live on – it is designed to move people out of poverty and gradually close the ‘wage gap’. 

Specifying hourly rates as the base value is a pragmatic decision.  It is the only realistic way in which to monitor compliance since different industries have different ordinary hours of work and since working months vary between four and five weeks.

Minimum Working Hours

Parties to National Minimum Wage Agreement all accept that it should not be possible for employers to drastically reduce working hours to reduce the total wage cost. 

There appears to be general agreement that a minimum number of ordinary hours of work must be set, though labour and business differ about the minimum working hours.  

The panel favours a minimum of four hours per day; Cosatu wants a minimum of six hours which amounts to a minimum wage of R120 per day.  A morning-only job is five hours per day, so perhaps this could be a practical number to compromise on.

‘Casualisation’ is another matter for discussion.  To prevent permanent labour being replaced by casuals, premium rates of pay i.e. more than R20 per hour, and minimum working hours per day are on the table.

Related: #Budget2017: 5 Areas Where Businesses Are Seeking Clarity From The 2017 Budget Speech

Increases to the National Minimum Wage

Labour would like the National Minimum Wage to be increased substantially every year to overcome what it perceives to be a very low starting value, while business will argue for more moderate increases. The plan is to set a medium-term target, and then work progressively towards that.

Introduction of the National Minimum Wage

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When the National Minimum Wage is implemented from May 2018, businesses that are unable to afford the minimum wage will be able to apply for an exemption of up to 12 months. Farmworkers will phase in at 90% of the National Minimum Wage, and domestic workers at 75%.

All current wage regulating measures will have to be changed to bring their levels, if lower, up to the National Minimum Wage level by May 2018.  The National Minimum Wage will set the rock-bottom wage value across the length and breadth of the country, and across all industry sectors.

Employment Tax Incentive

To qualify for The Employment Tax Incentive (ETI), an employee must pass a minimum wage test, which involves comparing the employee’s wage paid to that of the sector’s wage regulating measure.

If there is no wage regulating measure, the monthly wage paid must be at least R2 000, with no option for a weekly or hourly minimum. The ETI legislation will need to be amended to be based on the National Minimum Wage’s hourly rate.

Related: Why Tax Law Changes Could Threaten The Uptake Of The Employment Tax Incentive

National Minimum Wage and Child Support Grants

The monthly national minimum wage of R3 500 (based on a 40-hour week) equates to an annual income of R42 000, which is the current maximum income ceiling for parents to qualify for child support grants.

If worker’s wages were today increased to the R3 500 monthly minimum, those who are parents would no longer qualify to receive child support grants. One assumes that this will be addressed by the relevant authorities.

Is the agreement going to assist Workers?

At 2016 values, over 6 million workers would benefit from being paid at R20 per hour. Even though the R20 will be eroded by inflation by May 2018 and even though it is being phased in for farm and domestic workers, approximately 4 million workers will still benefit from the National Minimum Wage when it is implemented. 

We are coming off a base of high levels of unemployment (27.1% of the workforce), and according to recent surveys, we have the worst wage inequality in the world. To estimate the countrywide cost of introducing the National Minimum Wage, assume an average wage of R1 per hour per worker for 4 million workers for a 160-hour month and do the sums. 

The principle is that in the process of employers paying an extra wage of R640 million every month to help uplift 4 million workers, that the R640 million will circulate back into and stimulate the economy. 

Follow @SageGroupZA on 22 Feb for LIVE expert insights from the annual Budget Speech. #Budget2017

Rob will be conducting the 2017 Annual Payroll Tax Seminars in different cities around South Africa, where he will discuss the 2017 Budget proposals. 

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Surge In South Africans Swopping Their Cars For Bitcoin

The cryptocurrency Bitcoin has experienced a seemingly interminable rise. Early adopters have experience lottery-sized pay-outs on minor investments as the currency exploded in value in 2017.

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The cryptocurrency Bitcoin has experienced a seemingly interminable rise. Early adopters have experience lottery-sized pay-outs on minor investments as the currency exploded in value in 2017.

As South Africans are itching to get their hands on the digital currency, there’s been an increase in swops and bitcoin-only sales on Gumtree.co.za, says Claire Cobbledick, Head of Core at Gumtree. “This is particularly true for high-value items like cars, bikes and boats. Many sellers are willing to take a gamble with their assets in hopes of a large pay-out.”

This is on trend with other marketplaces. In the United States a McLaren 720S was put up for sale in exchange for 25 bitcoin, a theoretical value of $425,000.

Related: 11 Things You Need To Know About Bitcoin

While Gumtree does not allow for the sale of bitcoin miners or services, Cobbledick says that customers can exchange goods for bitcoin on the site, but should be fully aware of the risks. “Bitcoin is a volatile currency, so while you could easily see a 50% increase in your investment, you could just as easily end up with nothing. It’s up to the seller to decide if they are willing and able to take a gamble.”

Some cars currently up for sale in exchange for bitcoin includes a Land Rover Defender, BMW X5 and a rare 1970 Mercury Cougar V8.

“There are also a few other sellers accepting bitcoin in exchange for Kruger Rands,” says Cobbledick. “Perhaps proving that gold as a store of value is falling out of vogue.”

But the most unusual swop would have to go to an entrepreneurial seller who is offering carnivorous plants in exchange for the cryptocurrency.

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Zando Sold 80 Items A Minute During Black Friday – By Doing This

Black Friday has brought immense success for numerous local online retailers – reflecting the potential of e-commerce in South Africa. Why not learn from Zando’s success in 2017 to ensure your success during the 2018 Black Friday sales season?

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For South African e-retailers, Black Friday is a big sales event. But you need to ensure you’re prepared for the web traffic and that your e-commerce store can handle the logistics of thousands of orders.

zando-sascha-breussAccording to Zando, they experience 100% up-time during Black Friday and less than a week after the season sales event, 95% of customer orders have already been shipped.

To help fellow e-tailers perform better next year, Zando’s CEO, Sascha Breuss answers some key questions about the company’s preparations and learnings around Black Friday:

1. How did you encourage greater sales on Black Friday?

Over the last few years Black Friday has developed a following in South Africa, so we benefitted from the existing hype around it. We didn’t focus too much on upfront marketing, but put our energy into flawless execution and of course great deals for the customers.

Related: The Evolution Of Retail: From Corner Store To Artificial Intelligence

2. How much planning went into ensuring your store platform ran at optimum?

The real ‘hot phase’ started with the first day of November when our IT department went into a ‘feature freeze’ and we focused 100% on site-stability and scalability.

We went through some intense testing of our site with loads up to 15 times the average daily amount of visitors. So, when the actual day came, we were confident in our systems.

3. How were you able to successfully co-ordinate logistics during Black Friday?

Early preparation and experience from past years have been the key to success. We increased our head count in both Warehouse and Customer Service well in advance so that we could rely on well-trained and experienced colleagues come Black Friday.

4. How did you ensure a seamless experience between your website and your app?

We know that our customers are browsing Zando on all platforms, desktop, mobile and app so we implemented some handy features to make the transition between each platform easier. For example, shared baskets and wish lists are now a feature. Some of the deals however have been app-only and sometimes we reward our app users with early access to shop the best deals. So it is definitely worth it to download our app.

Related: How SA’s Online Retailers Can Cash In On Black Friday Fever

5. How did you scale your entire operation for a single event?

This is easy to summarise in one word – TEAMWORK. The Zando staff did an amazing job and were the backbone of our success. Not only did they put the required extra hours in and worked hard until the job was done, but they also showed real team-spirit. When you called our Customer Service during Black Friday it’s very possible that you spoke to someone in our HR, Social Media or Legal team who helped out answering calls.

6. How did your marketing campaign affect traffic on your platforms?

The most surprising element was probably the high volume of traffic that we saw during the night. Visits started to increase every minute before midnight and during the first two hours of the day we saw peaks that were higher than on our strongest week day. This traffic never dropped with a lot of orders being placed between 2am and 3am on Black Friday.

7. How did your technology systems handle the influx of shopper traffic?

In the build up to Black Friday we added additional server capacity and changed the way we handled the flow of traffic. This made us very flexible to switch on additional capacity wherever required. So it was a combination of intensive preparation, close monitoring and ultimately very little sleep for a couple of days to ensure we monitored our system health 24 hours a day.

8. What was your sales strategy?

For us everything that had a discount of 40%-80%, and was still a relevant and recent look, qualified for Black Friday 2017. Once these criteria were fulfilled we made sure that we had sufficient stock available – in some cases the demand was so high that we brought on additional stock from our suppliers during the Black Friday weekend.

Related: 5 Last-Minute Tips For Small Retailers To Boost Black Friday Sales

9. What were your biggest learnings?

We have been very successful in our approach to remain true to the idea of Black Friday – offering great deals on relevant product and not outdated clearance ranges. The customer is very educated and will identify a good deal, and we have seen consumers’ negative comments on stores who used Black Friday solely as a warehouse clearance opportunity.

10. What surprised you about Zando’s success during Black Friday?

Thanks to extensive preparation we have been able to achieve an uptime of 100% for the full month of November. We also kept the deliveries and returns 100% free regardless of discount or basket size. It seems like our customers appreciated this approach and we have actually seen very positive sales numbers after Black Friday while we expected a drop. I believe the full focus and investment on the Customer Experience has worked for us.

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Team Resolutions: 11 Tips To Uncover Passion And Potential In New Hires

If there’s one resolution HR departments should make this new year, it should be to transform the onboarding experience for new hires.

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If there’s one resolution HR departments should make this new year, it should be to transform the onboarding experience for new hires says Michelle Seko, Talent Acquisition Manger at Sage Africa & Middle East.

The importance of a good candidate experience cannot be underestimated. Research has shown that 88% of job applicants are more likely to buy from a company if they’ve had a positive experience when applying for work there. Research has also shown that candidates talk about their experiences with a company, regardless of whether they got the job. Some candidates would even refer a friend to the company and others will re-apply for a future role, if the experience was a good one.

Research also found that:

Related: Why You Should (Seriously) Stop Hiring People

Win-win

Businesses enter into a relationship with a new hire the moment they sign on the dotted line. And, as with any relationship, it will only flourish if built on trust, respect and a commitment to self-improvement.

When you set new hires up for personal success, the outcomes naturally feed into your business’ success, which means you both win.

Here are a few ideas to get the most out of your new hires:

Make them feel welcome

Introduce them to the people they’ll be working with as soon as possible so that they immediately feel part of a team. At Sage, we partner new hires with a buddy, or Sage Ambassador, who helps them settle in and meet new people, contributing to the positive on-boarding experience.

Focus on the benefits

Compelling benefits not only attract the best candidates but also boost loyalty and job satisfaction. People are motivated by different things: one person might value flexi-time while another could place more importance on growth opportunities or bonuses. Focus on the benefits that align with the individual’s values when onboarding.

Set goals early and outline a plan to achieve them

This keeps your team focused, especially if they will be rewarded for achieving their goals.

Assess performance

Monthly, at least. Adjust goals and plans where necessary, reward good performance, introduce new challenges and deal with issues promptly.

Show genuine interest

Regular catch-ups and remembering children’s names, for instance, makes people feel appreciated.

Empower them

Let your new hires apply their knowledge to business challenges and offer training opportunities outside of their comfort zones. Reward ideas that help you do things better and faster.

Related: Hiring The Right Person Is Critical When Growing A Business

Encourage collaboration

People thrive when they can learn from others and when they can share their knowledge. Involve experienced team members in the new hire’s training. This is a great way to recognise and appreciate their loyalty and skills.

Be transparent

Do you have difficult clients? Will the new hire have to work overtime? What are the business’s goals? New hires should know what they’re getting into.

Provide solid training on everything from company culture and benefits, to opportunities for growth

The biggest cost associated with training people is the time it takes for them to become productive. But rushing through on-the-job training could lead to a host of other problems, including repeated mistakes and a lack of confidence.

Openly communicate any changes in the business

Manage your team’s expectations and be clear about yours. Allow new hires to question and understand how you do things and to point out errors – their past experience probably gave them new ideas and ways of working that could boost your team’s efficiency and productivity.

Be upbeat

Your mood sets the tone for everyone else. You can have the best product in the world but unless your team is passionate and enthusiastic about that product, you won’t get the results you’re hoping for.

Keeping people motivated and productive is hard work

But if you provide them with the tools, knowledge and support to do their best work and to contribute their best ideas, motivation and productivity will come naturally.

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