To illustrate the importance of applying labour law correctly, in 2012 the annual earnings of government ministers were R2,006,292 and the public service minimum pay was R59,226. Ministers earned 34 times more than entry-level public servants. At the quoted annual entry level of R30,275 for farm owners they only earn just over 13 times more.
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Entry-level wages of R30,275 pm for private farm owners
Small private farm owners are not ‘rent-seeking capitalists’ (“Rent-seeking implies extraction of uncompensated value from others without making any contribution to productivity“). They are entitled to remunerate themselves like any other employee. So what is ‘sauce for the goose is sauce for the gander’. Apart from all the risks inherent in farming, private hands-on farmers are required to take policy decisions, adopt strategies, make tactical decisions and supervise all the other employees. Farmers, like other businesses, are obliged by section 27 of the Employment Equity Act (“EEA”) to eliminate all ‘disproportionate income differentials’. Based on schedule EEA 9 the farmers would be on occupational level six, with the entry-level employees on level one. If the entry-level wage determined by the Minister of Labour is R2,274 per month (R105 per day) then the ‘entry-level wage’ for the farm owners is between R30,275 and R36,943 per month. This is in addition to the usual farm operating expenses.
All South Africans need to understand the financial implications of legal compliance and the unnecessarily threatening consequences of enforcement. The farm owner receives a very low level of ‘reward’ in an industry like agriculture with so many risks and uncertainties.
Section 27 of the Employment Equity Act requires employers to eliminate disproportional income differentials, wrongly referred to as the so-called ‘wage gap’. But to measure the success of labour law in achieving fair workplace practices, measuring differences in pay must also measure ‘equal pay for work of equal value’.
Form EEA9 is the prescribed framework intended to ‘level the playing-field’. Classifying farm owners at occupational level 6 of that framework is correct, namely the same level as a minister of a government department. Their scope of work is the same, with the only possible difference being that of workload.
Presumably the Minister of Labour regarded the public service ‘wage gap’ as justifiable. Simply using this as an exploratory ‘benchmark’ when determining the monthly minimum wage of R2,274 the Minister would have known that farm owners should be entitled to earn R77,032 pm.
In the real world of farming this is simply not possible. Unlike public servants whose pay and benefits are guaranteed by the taxpaying public, farmers depend on market forces and currency fluctuations for the income they require to be sustainable and have no choice but to shed jobs when the regulated wages become unaffordable.
Our labour laws are highly sophisticated but if they cannot be applied to promote economic growth and a better life for all then they should be amended on the simple ‘back-to-basics’ approach of ‘fair dealing’ and ‘value exchange’. This will mean that all economically active individuals will know that their ‘rewards’ will depend on their ability to create and offer value.