Chapter One
Background
Terms of references
Methodology
Phase One – Administrative aspects
Phase Two – Consultation with stakeholders
Phase Three – ECC Process
Phase Four – Publication of the new sectoral determination
Structure of the report
Sector Profile/ Agricultural economy...... 10
Employment profile...... 10
Chapter Three
New minimum wage levels...... 12
Views of employers
Views of employees
Proposal by the Department
Annual wage increases
Views of employers
Views of employees
Proposal by the Department
Provident fund...... 17
Views of employers
Views of employees
Proposal by the Department...... 20
Chapter Four...... 23
Ability of employers to carry on their business successfully and operation of SMMEs and new businesses
The impact of the proposed minimum wage on the cost of living and poverty alleviation
Chapter Five
Recommendations of the ECC
REPORT OF THE EMPLOYMENT CONDITIONS COMMISSION ON THE
INVESTIGATION INTO THE FARM WORKER SECTOR, SOUTH AFRICA
Chapter One
As directed by you, the Employment Conditions Commission (ECC)has pleasure in presenting you with a report on its investigation into the farm worker sector.
Background
The current sectoral determination for the farm worker sector was last reviewed in 2009 and provided for a three year wage dispensation. The current wage regimein the determination will lapseat the end of February 2012, hence this review is necessary to determine minimum wages and wage increases for the next three years. The sectoral determination regulates conditions of employment and minimum wages payableinthe farm worker sector.
Employers in the farm worker sector are to a very large extent organised.There are a large number of employers’ organisations that organise employers, either in terms of sub-sectors or in terms of regions. The following organisations, amongst others, organise employers in the sector:Agriculture South Africa (AgriSA), Transvaal Agriculture Union of South Africa (TAUSA),South African Cane Growers Association, Cape Agri Employers’ Organisation (CAEO),Landbou Werkgewersorganisasie (LWO),National African Farmers Union (NAFU)and other independent provincial organisations and sub-sectoral organisations.
The Food and Allied Workers Union (FAWU)is one of the largerlabour organisations that organise in the farm worker sector and claims to have 11% membership in the sector.There are other provincial unions in the sector. However, a large number of employees in the sector arenot unionised.
Terms of references
The terms of reference for this investigation were published in the Government Gazette No. 34339 notice No. R.737 dated 27 May 2011as follows:
“to review wages and the conditions of employment in the Farm Worker Sector”
Prior to commencing with this investigation, the Department had also published terms of reference in relation to the feasibility of establishing a provident fund in the sector. The terms of reference for this investigation were published in the Government Gazette No. 33480notice No. R.737dated 20 August 2010 as follows:
“to investigate the feasibility of establishing a provident fund in the Farm Worker Sector, South Africa”
Methodology
A four-phased project framework was developed for the investigation.
Phase One – Administrative aspects
This phase commenced in August 2010 when the Department published a notice inviting interested parties to make written representations within 30 days to the Director-General in relation to the investigation on the feasibility to establish a provident fund for the sector.This was followed by the publication of a notice in the government gazettein May 2011 inviting interested parties to make written representations within 30 days to the Director-General relating to the investigation to review the sectoral determination.
In response to the notices, 10 writtensubmissions were received from the following organisations:
- CEASAR
- Cane growers Association
- Free State Agriculture
- AGRI SA
- TAU SA
- LWO
- East Cape Agricultural Research Project
- ORPA
- Mine, Engineering and Distributors Workers Union of South Africa
- Simeka Consultants & Actuaries
During the public hearings, further written submissions were received from the constituents of the above-mentioned organisations at the provincial level, which were similar to the submissions forwarded by their national offices.
Phase Two – Consultation with stakeholders
This phase involved meeting with stakeholders through the public hearing process or individual organizations. Regarding public hearings, invitations were issued through the Department’s provincial offices and labour centres, whileAgriSA,TAUSA,CAEO, LWO,Cane Growers Association,Consolidated Association of Employers of Southern African Region (CAESAR),(FAWU) and Joint Western Cape Farm Worker NGO & Trade Union / Farm Worker Living Wage Coalition (FWLWC),Soutpansberg Agriculture Union and SISONKE were forwarded invitations which they in turn forwarded to their respective structures at the provincial level.
Public hearings were scheduled acrossthe country as set out in the table below. Factors such as operational requirementsand optimal participation from both the employers and employeeswere taken into consideration when the schedule was drafted. The hearings were held at a suitable time for both employers and employees to maximise attendance and participation, although at a later stage FAWU arranged further hearings in areas where they felt that employees were not represented. These additional hearings were held on Saturdays and Sundays to further accommodate employees.
A total of30public hearingswere conducted, covering all nineprovinces. There were two to three hearings in each of these provinces.In addition to the public hearings, farm visits were also conducted on farms in the Eastern Cape,Western Cape and Limpopo in order to maximise employee participation.
Despite all the efforts to improve attendance and participation, employee attendance was still disappointingat most of the public hearings. Trade unions cited reasons such as transport costs as a challenge for farm workers and proposed that,in order for these hearings to be a success, the Department should in future provide transportfor the workers. Some employees also alleged during the farm visits that employers either did not communicate the details of the meetingsor theywere not given an opportunity to attend the hearings.
Table 1 below indicates places visited together with the attendance profile of stakeholders for each hearing.
Day / Month / Province / Area / Employers / Employees6 / June / Northern Cape / Keimoes / 25 / 34
7 / June / Northern Cape / Upington / 27 / 0
13 / June / Mpumalanga / Ermelo (Grey Farm) / 25 / 50
14 / June / Limpopo / Groblersdal / 33 / 8
20 / June / KwaZulu Natal / Pietermaritzburg
(Boston Farm) / 21 / 46
21 / June / KwaZulu Natal / Port Shepstone
(The Margate) / 20 / 21
23 / June / KwaZulu Natal / Vryheid (Brakfontein Farm) / 19 / 03
22 / June / Gauteng / Krugersdorp / 15 / 04
24 / June / Gauteng / Bronkhorspruit / 16 / 05
27 / June / Free State / Bothaville / 1 / 0
28 / June / Free State / Bethlehem / 16 / 11
4 / July / Eastern Cape / Maclear / 0 / 139
5 / July / Eastern Cape / Queenstown / 4 / 0
17 / July / Eastern Cape / Grahamstown / 3 / 21
23 / July / Eastern Cape / Patensie / 5 / 14
24 / July / Eastern Cape / Louterwater / 0 / 50
10 / July / Western Cape / Welgemoed / 0 / 15
10 / July / Western Cape / Kleinpont / 0 / 14
10 / July / Western Cape / De La Fontein / 0 / 9
10 / July / Western Cape / De Eike / 0 / 19
11 / July / Western Cape / Paarl / 14 / 03
11 / July / Western Cape / Fairview / 0 / 13
11 / July / Western Cape / Citrusdal / 0 / 108
12 / July / Western Cape / Vredendal / 01 / 0
18 / July / North West / Brits / 15 / 06
19 / July / North West / Lichtenburg / 05 / 20
25 / July / Limpopo / Louis Trichardt / 25 / 0
25 / July / Limpopo / Makhado / 0 / 57
26 / July / Limpopo / Tzaneen / 22 / 4
27 / July / Limpopo / R K Boerdery / 0 / 22
27 / July / Limpopo / Modimolle (Vaalwater) / 35 / 0
The hearings were attended by a total of 387 farmers or employer representatives and 696employees or employee representatives.
Phase Three – ECC Process
During this stage the ECCengagedwith the inputs received and made its recommendations to you as contained in this report.
Phase Four – Publication of the new sectoral determination
This phase will see the publication of the amendments to thesectoral determination once you have decided whether or not to approve the recommendations of the ECC.
Structure of the report
The report consists of the following chapters:
- Chapter 1 of this report gives a background of the sector and the methodology utilised.
- Chapter 2 of this report outlines the state of the agricultural sector.
- Chapter 3 discusses the findings of the investigation and resultant proposals.
- Chapter 4 discusses the proposals in light of the criteria that the ECC has to consider.
- Chapter 5 summarises the recommendations of the ECC.
Chapter Two
2.1.Sector Profile/ Agricultural economy
According to the Quarterly Economic Overview of the Agriculture, Forestry and Fisheries sector: January 2011 to March 2011, the SA unemployment rate rose to 25% in the first quarter of 2011, from 24% in the previous quarter. The number of people employed in the South African economy declined by 14 000 in the first quarter of 2011 compared to the fourth quarter of 2010. However, on a year-on-year basis, the economy gained 42 000 jobs. Employment in agriculture has been declining for the past three consecutive quarters, with the sector shedding 24 000 jobs quarter-on-quarter and 55 000 jobs year-on-year during the first quarter of 2011. On a quarterly basis, the number of jobs lost in agriculture is less compared to jobs lost in the transport and construction sectors during the first quarter of 2011.
Gross farm income from all agricultural products increased by 2,6%, form R26,7 billion in the first quarter of 2010 to R27,3 billion in the first quarter of 2011. The increase was mainly boosted by the 4,1% increase in the gross income from animal products, which amounted to R17,3 billion in the first quarter of 2011, whilst gross income from field crops increased slightly by 0,9% and horticulture products declined by 0,2%. The net farm income is estimated at R4,3 billion for the first quarter of 2011, a significant 20,4% drop from the first quarter of 2010. This sharp decline can mainly be attributed to the 12,8% increase in expenditure on intermediate goods and services, which amounted to R18,2 billion in the first quarter of 2011.
The value of agricultural exports increased by 5,9%, from R10,2 billion in the first quarter of 2010 to R10,8 billion in the first quarter of 2011. The imports value also increased by 23% from R8,7 billion to R10,7 billion during the same period.
2.4.Employment
South Africa’s Quarterly Labour Force Survey showed that the economy experienced a quarter-to-quarter decrease of 14 000 in the number of people employed between the last quarter of 2010 and the first quarter of 2011. The agricultural sector shed 24 000 jobs. On quarterly basis, the sector employed only 603 000 people in the first quarter of 2011, compared to 627 000 people in the previous quarter, resulting in a quarter-on-quarter decline of 3,8%. On an annual basis, the sector shed 55 000 jobs, which represents a 8,4% fall in employment. The agricultural sector shed the least number of jobs when compared with transport and construction sectors.
Although employment in the agricultural sector declined during the first quarter of 2011, the Bureau of Economic Research, 2011: Economic Outlook argues that employment is likely to rise during the harvesting of summer grains and planting of winter grains after the second quarter of 2011. The BER expects total employment in the country to grow at an annual average rate of 1,9% between 2011 and 2016.
Chapter Three
This chapter deals with the current dispensation in the sectoral determination in relation to minimum wages and conditions of employment. It also deals with the inputs received from stakeholders during the consultation process, proposals by the Department, and recommendations of the ECC in each of the topics.
During this investigation, from the previous reports of the ECC and the inputs received from stakeholders, the following issueswere identified to be the critical issues to be discussedduring the consultation process:
- New minimum wage level
- Annual increases
- Provident fund
- Other conditions:
.
3.1.New Minimum wage levels
The current prescribedminimum wagefor farm workers isR1 375.94per month or R7.04 per hour.
3.1.1Views ofemployers in relation the level of the new wage
Employers in general throughout the country proposed that the new wage level be set by considering the CPI plus 1%,provided that it does not exceed 6%. They argued that majority of employers are paying above the stipulated minimum wage and therefore if wages are increased without considering the efforts by employers in paying higher than the prescribed wages it could discourage such employers,who will then revert to the stipulated minimum wage. Some employers also argued that, since the Department wants to introduce a provident fund for the sector, the wage increase should be on CPI only in order to accommodate the further cost which employers would have to face as contribution towards the provident fund. In addition, employers indicated that their challenge regarding minimum wage increases is that the price of their products at which they trade in the market has remained steady for sometime whilst wages were increasing. They also cited the frequent increases in fuel prices and argued that if wages are increased substantially high, farmers will move out of farming business and this could have a negative impact for the country. Furthermore farmers raised a concern regarding products from foreign countries that influence their market prices in South Africa and suggested that government should relook at the trade agreements in order to curb dumping of products in the country.
In Mpumalanga, a farmer regarded the current level of the minimum wage to be too little for workers to survive on. He proposed that the sector should consider the fact that low wages have made farming unattractive to the youth.
3.1.2Views of employees
The Mine, Engineering and Distributers Workers Union of South Africa (MEDWUSA) proposed R1 612.50 per month whilst FAWU proposed R1800 per month. They cited reasons relating to increases on foodstuffs and the difficulty for most children on farms to complete school due to the low income of their parents. FAWU alleged that every year employees are given low increases whilst they are working under bad conditions. They argued that wages of farm workers are almost equivalent to the social grant earned by pensioners who do not work. They further indicated that on the little salary which farm workers are earning, deductions for UIF, accommodation, and food are still being effected, which leaves the employees with nothing to survive on.
Farm workers also indicated that currently there is a high dependency by workers on the farmer due to the low levels of wages paid. They proposed that wages should be improved to ensure that workers can address challenges posed by the cost of living and also be able to educate their kids.
In all the provinces visited, majority of employees proposedbetween R2 500 and R3 500 as the new level of the minimum wage. They argued that although the determination stipulates minimum wages, employers regard the stipulated wages as the relevant wage and therefore do not pay higher than that. They argued that the prescribed minimum wage does not take into consideration the experience of the farm worker as it assumes that all workers have the same level of experience.East Cape Agricultural Research Project (ECARP), an organization that is currently conducting research on farms, farm workers as well as farm dwellers, reported to the Department that wages paid to farm workers are so low that they cannot even afford to buy basics. ECARP believes that the current level of wages do not alleviate poverty and further pointed out that there is a need for social protection of farm workers by creating a high wage economy.
In addition, FAWU requested the Department to remove the hourly rate provision in the determination since, they argued, those employees employed as seasonal workers are paid the hourly rate prescribed without employers considering the fact that the prescribed hourly rate applies to employees working on full time basis.
3.1.3.Proposal by the Department
The Department acknowledges the hardship that workers are facing and the impact of inflation on the country as a whole. It is also evident that farm workershaveincreasingly been marginalised as a result of the inflation rate. The recent escalation of food prices and the current inflation rate also pose a serious challenge for the farm workers who are only dependent on the minimum wage.
The Department also acknowledges the latest developments in the agricultural sectorin respect of reductions of export quotas and the escalation of input costs,which raise serious challenges for the employers. Challenges like global warming will also have an impact in the near future on the agricultural sector.
The concerns raised by farmers in relation to the challenges on the production costs and also market prices when trading with their products were also considered in this regard. The challenge, however, remains the fact that employees are faced with an increasing cost of living, which can only be addressed through wage increases. Furthermore it should be noted that the farm worker sector is not the only sector in which prices are determined by the market forces and therefore the prices of products depend highly on the demand and supply chain.
Employees and trade unions also raised critical issues which need to be considered when setting the minimum wage. Apart from the fact that the cost of living and price increases have negatively affected the ability of employees to sustain themselves and their families, an increase to wages should also consider the impact on employment generating. It would be a futile exercise to increase wages to R3500 as proposed by employees and subsequently employees are retrenched due to unaffordability by employers. A balanced approach is necessary, which will take into consideration all the aspects mentioned to ensure that employees are able to survive on their wages and that employers are able to pay the prescribed wages without having to reduce the number of employees employed.