A steel industry employer states in a letter to Employment and Labour Minister Thulas Nxesi that the current proposals for a minimum wage of R78 cost to company "will ruin the future, not only of small, medium-sized and microenterprises (SMMEs), but especially job seekers with no experience".

The letter, distributed by The National Employers' Association of South Africa (Neasa), in a newsletter on September 14, is in response to proposed plans to extend the Consolidated Main Agreement (CMA) of the Metal and Engineering Industries Bargaining Council (MEIBC) to nonparties.

The letter states that the steel industry employer has been in business for 21 years and that it has built up a proven record in developing the capabilities to train unskilled individuals and provide them with jobs and renumeration packages that can be associated with skilled labour.

"Our two top welders were a forklift driver and a security guard. We are far advanced in our training of a road freight assistant to become a skilled welder too. Suffice to say, their current wages are several orders of magnitude higher than when we originally employed them.

"Also, their current wage rates are on par with the highest rates currently paid by companies operating in the food and wine industry in which we are role-players. Their wages are, to a large extent, determined by market forces and the economic realities within which we operate. Over all the years that we have been in business, the wages of skilled employees have never been an issue," it further highlights.

The company argues that, in terms of the proposed minimum wage of R78 cost to company, based on the motor industry and road freight industry’s minimum wages, the CMA "can simply not be referred to as a minimum wage.

"On the contrary, it acts as a final barrier to enter the workforce for workers with no experience.

"The operational realities and deterioration of the macroeconomic environment, in conjunction with the serious and negative knock-on effects that the lockdown regulations had on the wine and alcohol beverage industry (to which our business is intricately linked), inevitably brought many SMMEs and larger businesses in the metal industry to a breaking point. We have not been able to make a profit for the past 30 months, barely surviving from month to month," the employer states.

It adds that, despite the difficulties, and owing to the current minimum wage being affordable, it has been able to employ unskilled individuals.

"Thus, they were provided with an opportunity to learn, be trained and become accustomed to a work environment. Not only has this saved them from dire poverty, but also provided them with hope for the future, enabling them to take control of their own lives.

"It is inevitable, that with an increase in skill, income also increases. I cannot over emphasise the important role that an affordable minimum wage plays to accomplish proper job creation.

"This is the junction where we as industry players find ourselves now. Should the proposal of the CMA be extended to all role-players in the metal industry, the potential of job creation will not only be lost, but thousands of people will inevitably remain in poverty without any hope for a better future. The fact that the Steel and Engineering Industries Federation of Southern Africa (Seifsa), in conjunction with the MEIBC have proposed an extension of the CMA, is beyond comprehension. Their concept of a minimum wage is not in agreement with the meaning and purpose of a minimum wage," the company says.

It adds that, following the introduction of the proposed minimum wage, for all the benefits to society to be realised, it must pass several tests, including being a minimum wage, affordable within the economic environment, taking into account the varied circumstances and micro-environments where employment is possible (the realities of rural areas and industrialised cities cannot be compared) and offer protection against exploitation, besides others.

"The current proposals do not pass any of these critical tests.

"Should the extension be granted by the Minister, due to reasons outlined above, several negative consequences will inevitably follow. In fact, there is not a single positive to be realised by the proposal, should it be implemented," the company states.

It concludes by saying that, for any large and integrated economic system to function properly, several unseen but important threads must be maintained.

"One is the mutuality of trust and being able to work together for a better outcome. Both Seifsa and the MEIBC have displayed their animosity to role-players other than themselves, opting to rather bring destruction to an entire industry, instead of playing a supporting role to the wider industry.

"Once the 'threads' referred to above are broken, the objectives of Seifsa and the MEIBC will be met and have devastating consequences. It is inevitable that this will be the outcome of their proposals," the employer says.