Let’s unpack the constant referencing by our critics to an entry level rate of R78.00 per hour.

On 1 July 2022 Rate H was increased by the second leg of the three-year deal concluded last year by R 3.15 raising Rate H from R 52.52 to R 55.67 per hour.

Compared to the National Minimum Wage (R 23.19), Rate 1(a) Structural Engineering (R 45.91), Grade 1 Five Grade (R 51.41), Gate and Fence Manufacturing Rate H (R 41.80) or the Special Phase-in Dispensation to reach 60% of the 2020 Rate H by 30 June 2024 (R 29.73) there is no denying, it is too high. In 1968 Rate H was 19c per hour. That was 54 years ago.

However, unlike most of our critics we haven’t been sitting on our hands all this time nor have we been negotiating with ourselves. Visit the SEIFSA Boardroom and view the names of SEIFSA Presidents, Captains of Industry, stretching back to 1944 and I would dare anyone to call any one of them weak.

Returning to R 78 per hour. In South Africa if one is not covered by a collective agreement, the Basic Conditions of Employment Act (BCEA) is applicable, in addition to binding statutory levies and contributions affecting all employers in a sector like ours.

So, how does one arrive at a Rate of R78 per hour? Simple, by applying the principle of total cost to employment.

It’s interesting to note that even if one had the freedom to pay National Minimum Wage or any other affordable rate, various cost to employment conditions contained in the BCEA, together with statutory levies and contributions, would still apply.

Unfortunately, the notion of a free market, dictated by the natural laws of demand and supply, given our history and legacy, is just that – a notion. Since 1968 terms and conditions of employment in this sector have been bargained, fought for and begrudgingly agreed. Nothing was given away without difficult contestation.

Let’s examine in a little bit more detail the principle of total cost to employment.


Main Agreement and BCEA*

* Asterix denotes must be observed even if not covered by the Main Agreement

Cost to Company
1.      Annual Leave (15 days)* 6.41%
2.      Additional annual leave (5 days on fourth time of proceeding on leave) 2.14%
3.      Leave enhancement pay 8.33%
4.      Paid sick leave (30 days in a 3-year cycle – effectively 10 days per year)* 4.27%
5.      Sick Pay Fund contributions* 0.09%
6.      Family Responsibility Leave (3 days)* 1.28%
7.      Public holidays* 5.13%
8.      Pension / Provident Fund Contributions* 7.70%
9.      COIDA / WCA* 1.15%
10.   UIF* 1.00%
11.   Skills Development Levy* 1.00%
Total additional cost to company 38.50%

Importantly, the above excludes: MEIBC Administration Levy, MEIBC Dispute Levy, PPE, COVID Compliance etc. which must be paid whether or not one is covered by the Main Agreement – so, let’s round the CTC to 40% i.e., a 40% add on to the base rate of R 55.67 – which takes you to approx. R 77.93

However, keep in mind that if one were not covered by the Main Agreement all the above items denoted by an asterix would still apply, approx. 30%

The point being that if one is going to blandly throw out a number, give it some context, narrative and explanation. Simply lamenting it’s too high is just not good enough.

No one across all employer ranks is saying the current entry level rate is not too high. But there is context, history and narrative to this reality. In an ideal collective bargaining world this on its own would be enough to rally all employer groupings behind a single cause, a cause that seeks to ensure that if we stand any chance of encouraging entry of new workers into the industry, the entry level rate must be reviewed but alas we would rather spend all our time and energy fighting each other in the Courts, how short sighted.

Should you require any assistance on understanding any aspect of the recently gazetted Main Agreement, contact the SEIFSA Office on (011) 298-9400 and ask for Vuyiswa, Michael, Monica or Lucio – we will be more than happy to assist.

If you would like to find out a little bit more about the benefits of joining an Association federated to SEIFSA fill in the membership form, or send us an email at nuraan@seifsa.co.za

Next week I will address the flexibility benefits contained in the Main Agreement, watch this space!

Lucio Trentini

Chief Executive Officer