- 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.
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
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.
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
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.
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.
Old Mutual Committed To Empowering South African Entrepreneurs
South African small and medium-sized enterprises (SMEs) looking to take their venture to the next level will get a chance to network with big business – such as the likes of Old Mutual – at Global Entrepreneurship Week, currently running from 12 – 16 November 2018 at the Enterprise Room in Rosebank, Johannesburg.
Global Entrepreneurship Week is an annual celebration of the innovators and job creators, who launch start-ups that bring ideas to life, drive economic growth and social inclusivity.
According to the Banking Association of South Africa, SMEs have been identified as productive drivers of inclusive economic growth and development in South Africa, as well as globally. Some researchers have estimated that the local SME sector makes up 91% of formalised businesses. The sector also provides employment to an estimated 60% of the labour force and accounts for around 34% of Gross Domestic Product (GDP) in total economic output.
Old Mutual has been actively working to empower SMEs for more than a decade through structured programmes and vehicles designed to provide both the financial – and non-financial – support that is critical for success. This focus on creating both business and societal value means that the company continues to invest in creating opportunities for all South Africans.
The company’s innovative Enterprise and Supplier Development Fund works to create opportunities for small businesses to become integrated into Old Mutual’s supply chain, creating sustainable partnerships of mutual benefit. In addition, Old Mutual’s Masisizane Fund offers SMEs operating in the manufacturing, franchising and agricultural arenas a mix of grants, loans and technical support, to enable them to gain vital market access and create jobs.
Collectively, these two small business empowerment funds have approved over R750-million in funding to small businesses across the country, having already disbursed close to R600-million, while creating more than 8330 job opportunities in the process.
Old Mutual recognises that funding alone is not the key catalyst for growth where SME development is concerned, which is why it also offers a range of non-financial support option to SMEs both pre and post investment. This includes SME training in financial education, as well as business support in the form of technical mentorship, financial management tools and advice, as well as bespoke accounting services.
Old Mutual will be hosting a special session at Global Entrepreneurship Week on Wednesday 14 November 2018 titled “Doing Business with Old Mutual” at which SMEs looking to connect with the company can get more information on its unique empowerment and development programmes.
Entrepreneurs can get more information on Old Mutual’s small business empowerment programmes here:
Enterprise and Supplier Development Programme:
Supplierdevelopment@oldmutual.com or 011 217 1000
Via the Old Mutual Website at www.oldmutual.co.za/masisizane
Email: MasisizaneEnquiries@oldmutual.com or call 011 217 1000
Getting Maximum Value This Black Friday
Here are Toni Wilkinson’s, Chief Marketing Officer at PriceCheck, top six tips for getting the best deals on Black Friday and Cyber Monday.
Black Friday is almost here! Around South Africa, eager shoppers are double-checking their budgets and making wish-lists! Black Friday is now so well-entrenched, everyone’s getting in on the action. With discounts of as much as 80%, thousands of bargain hunters will flood SA’s online retailers when the clock strikes midnight.
With a number of lead-up sales also soon to be underway, many shoppers have already begun to flex their bargain-grabbing muscles. But is there an art to shopping safely and wisely when the real madness strikes? The answer is yes.
Toni Wilkinson, Chief Marketing Officer at PriceCheck, South Africa’s number one product discovery and comparison platform, and a Silvertree Internet Holdings company, shares her thoughts.
Here are Toni’s top six tips for getting the best deals on Black Friday and Cyber Monday.
- Have a plan. Know what you want, need and can afford before you get enticed by all the offers in front of you.
- Choose a secure way to pay. Credit card payment methods that ask you for a supplementary one-time PIN such as Verified by Visa, Snapscan and PayPal are all good options.
- Take note of the delivery and return details. Will you get the purchase when you need it? And, if you need to return it, will you end up paying more on delivery costs?
- Look out for hidden costs or additional purchases you might need to make.
- Compare deals. Similar deals might be packaged slightly differently, so make sure you are comparing apples with apples.
- Only buy from reputable retailers so you can be sure you will receive authentic products.
“Our Black Friday deals run for an entire week on PriceCheck.” Toni explains, “starting 19 November and running through until Cyber Monday 26 November 2018.”
In 2017, PriceCheck witnessed a huge increase in site traffic at midnight on Black Friday compared to the average day – almost 3 times the normal number of users logged on – showing that SA’s online shoppers stand ready and waiting for Black Friday deals to break.
To help them prepare for the increased demand, PriceCheck has been working closely with its merchants over the last 4 weeks to curate their product offerings. ‘From a customer demand side, we’ve also been upscaling and testing our servers to accommodate the increased traffic to our site, to ensure we have no downtime,’ Toni explains. ‘We’ll also have our developers on standby for the full 24 hours. We experienced no downtime last year, and are confident we can replicate this again this year.’
On Black Friday, PriceCheck will have a dedicated list of curated Black Friday deals, encompassing all site-wide deals either above 30% or equal to R2 000 or more in saving. ‘Global research shows that there is limited consumer pre-planning for Black Friday 2018, which is a great opportunity for consumers to use a comparison service such as PriceCheck to see all the Black Friday and Cyber Monday deals in one place and click-through directly to get the deal before it sells out,’ Toni explains.
PriceCheck’s Black Friday deals will run from 19 November – 26 November, with category specials running daily in the build-up to Black Friday.
‘Consumers can look out for offers from the following categories in the build-up week to Black Friday,’ says Wilkinson. ‘Deals will cover Fashion & Beauty on Monday, Home on Tuesday, Toys & Gadgets on Wednesday, and Electronics on Thursday, with every category of course available on Black Friday itself. Deals will also run across all categories and brands.’
What are some of the brands to watch out for this year? Toni highlights some of 2017’s top performers: ‘The most popular brands last year were Samsung, Apple and Hisense. In general, our top products included cell phones, TVs, smart watches, laptops and multimedia players. Last year the most popular category was tech by far, followed by fashion, toys and baby.’
On the question of whether Black Friday is profitable for businesses, Toni explains that volume and demand are key. ‘Global research shows that consumers are planning to spend even more on purchases in 2018 compared to previous years, reaffirming Black Friday as one of the most significant revenue-generating opportunities in the retail calendar. Retailers may experience a slow start to sales in November, due to the high demand for deep discounts over the Black Friday week. During Black Friday week itself, retailers generally experience a spike in sales, relying on high sales volumes to compensate for low margins. They also use the event to mark the start of the shopping season.’
To help shoppers find the best Black Friday deals, PriceCheck uses a powerful, intelligent search function. ‘We want to be the first site South Africans head to on Black Friday,’ Toni emphasises. ‘We aggregate products from all the reputable retailers, saving consumers time when searching for the products they want.’
It’s Never Too Late To Start A Business
Entrepreneurship at any age is key to minimising unemployment in SA.
Whilst the country continues to battle a high unemployment rate – which increased to 27,5 percent, according to the Quarterly Labour Force Survey for the Third Quarter of 2018 – the narrative of entrepreneurship as a viable career choice should be widely promoted and encouraged across all generations.
However, according to Anton Roelofse, regional general manager at Business Partners Limited (BUSINESS/PARTERS), the recently released 2018 Real State of Entrepreneurship Survey, compiled by Seed Academy and Old Mutual, revealed that 80 percent of entrepreneurs in South Africa are under the age of 45, with the majority of entrepreneurs reported to be between the ages of 25 and 34.
“In light of the high prevalence of unemployment, there is no reason that entrepreneurship should be reserved for the younger generation. Considering that only 20 percent of entrepreneurs are over 45, it is now more important than ever for older aspiring entrepreneurs to realise that the country needs them and it is never too late to start a business,” he says.
Delving into the reasons for this low rate of entrepreneurship among older generations in South Africa, Roelofse refers to the 2016-2017 Senior Entrepreneurship Report. “According to the report, older individuals have the lowest confidence in their ability to start and run their own businesses, and many believe that entrepreneurship is a young person’s occupation because the majority of entrepreneurs are young.”
In contrast to these beliefs, Roelofse says that it has actually been shown that older entrepreneurs are more adept at building resilient businesses, which is especially crucial during times of slow economic growth.
“If more older entrepreneurs follow their entrepreneurial dreams, not only will more jobs be created, but the idea of entrepreneurship will become more socially accepted for all ages and hopefully have a ripple effect.”
As such, it is vital for older aspiring entrepreneurs to realise that they are more equipped than they think to start and run a business, says Roelofse, who lists three pointers to boost older aspiring entrepreneurs’ confidence:
- Work experience: Starting a business at a later age means that the entrepreneur will have a lot more work experience. This will be extremely beneficial as it will contribute to the entrepreneur’s leadership skills, business management and acumen, problem solving skills, and industry experience, should the entrepreneur decide to open a business in the same industry.
- Personal networks: It is often said that it’s not what you know, but who you know, and as one grows in age, so do their personal and professional networks. Older entrepreneurs will therefore be more likely to know other established professionals who they can turn to for advice, collaboration, and offer their services to.
- An established passion: Older entrepreneurs tend to be less restless in their pursuits, as they have had more time to figure out what they are most passionate about, which can often be a driving force to start a business as well as motivate their success in the future.
These are just a few of the reasons supporting the notion that more older aspiring entrepreneurs should start their own businesses and contribute to increasing employment opportunities in the country, says Roelofse. “Age should be seen as an added strength, not a hindrance, when it comes to entrepreneurship. And aspiring entrepreneurs, regardless of their age, should be encouraged and supported to contribute economically,” he concludes.
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