The South African government has unveiled a national minimum wage of 3,500 rand ($261) per month in 2018, Deputy President Cyril Ramaphosa said on Wednesday.
According to Reuters, the announcement follows protracted negotiations between the government and labour unions.
The Deputy President also added that the national minimum wage, which equates to 20 rand ($1.50) per hour, would come into effect in May 2018.
“The balance we have sought to strike is that it must not be too low, so that it doesn’t affect the lowest paid workers, but not too high that it leads to massive job losses,” Ramaphosa told a news conference.
He also explained that firms and businesses that are unable to afford the minimum wage would be permitted to apply for an exemption of up to 12 months.
The development has been greeted with approval from supporters who maintained that it would stimulate growth as workers can spend more, and reduce inequality.
However, critics have said that it could lead to increased unemployment as employers will be unable to afford higher wage bills.
Meanwhile, the announcement is coming at a time when Africa’s most popular nation, Nigeria, is battling to raise its own minimum wage as it has been gorged in the abysmal depth of an economic crisis.
The country’s current minimum wage stands at N18,000 ($60) with organised labour demanding that it be increased to at least N50,000 ($166), even though several states and local governments have ‘continuously’ defaulted on the existing amount.
The Nigerian government has failed to accede to the demand of labour in the wake of a biting recession that has crippled Africa’s largest economy.
This was evident in the recent protest by labour unions who argued that the N18,000 is way below a living wage and cannot meet basic needs of workers.