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August : ‘Few farm job losses’ despite big minimum wage hike

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6 August, 2013

‘Few farm job losses' despite big minimum wage hike

by Carol Paton, 02 August 2013, 05:51

THE 52% increase in the minimum wage in agriculture in March has had a remarkably small effect on employment, giving the lie to dire predictions of masses of jobs to be lost.

The quarterly labour force survey released this week shows agricultural employment between March and June dropped 26,000, leading agricultural economists to conclude that most farmers had absorbed the new minimum wage of R105 a day.

The drop amounts to a 3.5% decline in agricultural employment from a total of 739,000 at the end of March. The increase in the minimum wage, on the other hand, added a further R2bn to the wage bill.

University of Pretoria economist Frikkie Liebenberg said on Thursday: "The drop in employment is a very small one given the magnitude of the numbers and the size of the increase in the minimum wage. I don't think that the hype over the minimum wage was warranted."

University of Stellenbosch agricultural economist Nick Vink said that anecdotal evidence collected from surveys of the top 10 agricultural industries showed job losses would be nowhere near what had been predicted. Initial modelling by the Bureau for Food and Agricultural Policy estimated the majority of farms would not be able to afford the hike. It nonetheless recommended that R105 be the new minimum level given the extent of poverty and poor nutrition among farm workers. The assumption was that the effect would be "structural adjustment" which would involve the consolidation of farming enterprises and large-scale job losses.

Prof Vink said: "Generally, there does not seem to have been a lot of concern about the R105. I think everyone agreed that R69 was too low."

Dr Liebenberg said the explanation for the small decline of the last quarter could lie in the longer-term trend, which shows steadily rising employment in agriculture since June 2011. During the same period there has also been a large shift in farms from casual and seasonal labour to permanent labour.

Using slightly different numbers to those in the quarterly labour force survey - as he includes workers over the age of 65 who are excluded in the survey - Dr Liebenberg says in June 2011 total agricultural employment was 621,650. This rose to 759,729 in March this year. "This is a trend. It is not a one-off blip ... It shows that there is increased demand."

Dr Liebenberg says the trend could be due to changes in the nature of farming, which has become more of a precision business and more mechanised. Permanent rather than casual labour is required for this kind of work. A second motivation for the shift is that it is easier to supervise one's own employees rather than those provided by labour brokers.

"Seasonal workers bring instability and risk onto the farms. The trend is now to hire permanent, more skilled workers. It seems farmers have been able to adjust the production system in such a way that it is still affordable," he said.

It was also not a simple matter for farmers to shed large amounts of their labour force.