Paarl La Concorde,
57 Main Road,
Paarl, 7646

Tel: +27 21 863 0830

Fax: +27 21 863 0906

MINIMUM WAGE ‘DOES NOT KILL FARM JOBS’

by Linda Ensor, 15 September 2014, 06:08

Contrary to popular belief, it is macroeconomic and trade policies, rather than the introduction of a minimum wage, that have been the main cause of the fall in employment in the farming sector, says an academic at the University of the Western Cape.

These policies — which exposed the sector to sharp global price fluctuations — had not fostered sustainable growth for agriculture, a failure that could not be addressed through wage policy, an associate professor of the Institute for Poverty, Land and Agrarian Studies, Ruth Hall, told MPs on Friday.

Prof Hall made contributions during a workshop organised by Parliament’s labour committee on a national minimum wage. Submissions have been received from economists, business and unions.

Those groups arguing against a national minimum wage, such as the Free Market Foundation, have pointed to job losses in the farming sector as proof of the devastation that it would cause.

But Prof Hall debunked this theory, saying it was macro economic policy that led to the consolidation and restructuring of farming, and that this was the main cause of the decline in agricultural employment. Since 2011, employment in the sector had actually been rising steadily.

“The rising cost of intermediate goods rather than labour, land or capital, plus the growing power of downstream intermediaries and retailers, are the main factors in the cost-price squeeze in agriculture, not labour costs. Wage determination has modestly increased real average wages and the overall wage bill, while the decline in employment has tapered off and the number of workers per farm is stable,” she said.

Minimum wages for different sectors of agriculture were laid down in 2003 and then merged into a single minimum wage in 2009. This was increased 50% to R105 per day last year after protests by Western Cape fruit farm workers.

The increase, which added R2bn to the wage bill, resulted in the loss of 26,000 jobs or 3.5% of the total workforce. But agricultural econo-mists had said that loss was very small relative to total employment in agriculture, and given the size of the wage increase.

“Farmers have been able to adjust production systems to make the new wages affordable,” said Prof Hall. Marginal farms had already cut workers or gone bankrupt.

Prior to the period between 1990 and 2010, the sector was characterised by job-shedding and the casualisation of labour. However, the long-term trend since June 2011 both before and after the 50% wage hike, was of steadily rising employment along with a significant shift from casual and seasonal to permanent employment. Labour consumed a declining share of total input costs.

There was a growing demand for higher-skilled labour in more precision-based farming.

Prof Hall did not believe that there was much further scope for labour-substituting mechanisation, which had largely been achieved.

She highlighted the shrinkage in the number of commercial farms and the increase in their size as they consolidated, creating what is today a highly concentrated system of commercial farming.

Employment in the agriculture, forestry and fishing sector has, meanwhile, fallen from about 1.5-million in 2002 to 613,000 in 2012.

The Progressive Professionals Forum was in favour of the introduction of a national minimum wage as a means of redressing poverty and inequality, and to ensure that vulnerable workers were guaranteed a minimum income.