Vutivi Business News: SBI calls for solutions to buffer wage hike

By: Tebogo Mokwena

Small Business Institute CEO John Dludlu has pleaded with small business owners not to retrench employees or cut salaries to stay afloat, but to find sustainable solutions for themselves and their workers. Dludlu has also discouraged SMME owners from incurring more debt to keep their businesses running.

This follows the national minimum wage increasing from 1 March by 9.6% from R23.19 to R25.42 per hour across sectors, with a few exceptions. Many small businesses are warning that they will not be able to afford the hike. Although the implementation of the increase could not be stopped, Dludlu told Vutivi News that SMME owners and employees should meet each other halfway to avoid retrenchments.

One of these solutions could be for businesses to moderate and reduce the level of incentives and bonuses. This was not dissimilar from the one faced by executives and directors of big businesses, with many of them not receiving bonuses. Dludlu strongly discouraged SMME owners from retrenching staff, cutting salaries or taking on more debt if they could not afford the wage increase.

“I am against retrenchments and would not advise them. Companies also cannot cut back on salaries as this is not only illegal, but it also takes away the only means of navigating this period of the high cost of living,” he said. “We have to be a little more creative and understanding, as companies can suspend bonuses until the economy recovers, which would go a long way.”

Thobile Nyawo, who owns Isambane Energy and Nyawo Construction and has 94 employees, said that the wage hike would cripple her as operational costs, which were already through the roof. However, she told Vutivi News that she would have to find other solutions and hoped that the economy would pick up so that there was more work. Also, the state needed to urgently address the load-shedding crisis, which had taken a financial toll on her business. “We are already struggling to keep employees as it is,” she pointed out.

Fikile Ndaba, who owns accountancy firm Fifi Ndaba Holdings and Fifi and Son Pies and employs 13 people, said that she too may find it difficult for her business to afford the increase. She said her current profits were being used to maintain her generator and purchase diesel. However, she did say that the hike was still too little for employees to survive. This is in line with warnings that the high cost of living, increasing food prices and the electricity tariff hike will leave minimum wage earners in the same situation despite the wage increase.

by Vutivi Business News