Jonathan Goldberg | Chairman | Global Business Solutions | mail me |
As you know, the threshold has increased by 7.6%. Upon investigation, it seems that the October Consumer Price Index (CPI) was used to increase the threshold. More significantly, the National Minimum Wage has gone up by 9.6% as well.
If one looks at the original Gazette published for public comment on the 15th of December 2022 indicating the range of options from minority reports to majority reports in the commission, they range between CPI, CPI+½, CPI +1 and CPI +2.
In the same report, the latest inflation rate was published at 7.6%. Clearly, that inflation rate is extremely outdated. Inflation is falling, both in South Africa and around the world, and economists predict it to be within a range, on average, of between 5% and 5.5% for this year. This increase of 9.6% is a whopping 4.1% above the most conservative prediction that the range of inflation would be.
It seems like the extensive input made on this Gazette of the 15th of December by various organisations have been largely ignored.
What is also puzzling is that the minister and government seem happy to defend a proposed 3% increase in the public service and a potentially protracted strike by the trade unions, while at the same time prescribing a staggering 9.6% increase in the private sector. In these tough economic times, this is inexplicable.
With our ongoing electricity crisis and other problems besetting the operating environment, a lot of businesses, especially small and medium-sized firms, are not likely to absorb the shock of such a high increase. Unfortunately, jobs and employment opportunities will be lost.
