National minimum wage hike - lifeline for workers or risk to jobs?

From March 1, 2026, South Africa’s national minimum wage will increase to R30.23 an hour, a 5% rise that takes the rate past the R30 mark for the first time. For millions of low-paid workers, the increase offers modest relief against rising living costs. But in an economy with stubbornly high unemployment and weak growth, the adjustment also raises an important question: how do we protect vulnerable workers without putting further pressure on job creation?

The answer lies in understanding the delicate balance between improving livelihoods and sustaining employment in a fragile labour market.

Small increases still matter

In the bigger picture, the increase is important. While the adjustment is modest, it forms part of a series of annual increases aimed at keeping wages in line with inflation and rising household costs. For low-income workers, even small changes can make a difference. Higher transport, food and housing costs continue to put pressure on household budgets, and this increase helps prevent wages from falling further behind.

Will it close the gap between earnings and the true cost of living? Probably not. But the intention is clear: to stop the lowest-paid workers from losing ground.

It is also important to understand what the national minimum wage is meant to do. It is not designed to dramatically improve living standards overnight. Its purpose is to set a basic level of protection – a wage floor that helps safeguard vulnerable workers, rather than a complete solution to poverty or income inequality.

The pressure on employers is real

Higher wages also have an impact on how businesses operate. For labour-intensive companies working with tight margins, rising wage costs are a major expense. This doesn’t mean employers are against fair pay, but in a weak economy, every increase in costs means tough decisions.

Businesses need to stay competitive, especially those that compete in global markets. To manage higher labour costs, some may invest more in automation, mechanisation or new technology. Others may slow down hiring, restructure their operations or reduce their reliance on lower-skilled roles.

The risk is not sudden, large-scale job losses but a gradual change in how companies manage their workforce. Over time, this could mean fewer entry-level opportunities for workers trying to enter the formal job market.

South Africa’s competitiveness challenge

South Africa faces a difficult reality. The country has many people looking for work, many of whom are low-skilled. In the past, the availability of affordable labour had been one of the factors that attracted investment.

As labour costs increase, this advantage becomes less certain. If higher wages are not supported by improvements in productivity, skills and economic growth, businesses may become more cautious about expanding or investing.

This is why minimum wage increases cannot be looked at on their own. Protecting workers is important, but lasting wage growth is only possible if the economy becomes stronger and businesses remain competitive.

Businesses are planning ahead

One important shift since the introduction of the national minimum wage is predictability. Employers now expect an adjustment each year from March 1 and build this into their budgeting cycles. While the exact percentage may vary, the increase itself is no longer a surprise. For many businesses, it forms part of normal annual planning.

Not all sectors are equally affected. Industries covered by bargaining councils or sectoral determinations often operate above the national minimum. The greatest pressure falls on smaller and labour-intensive employers that rely heavily on entry-level workers. As wage costs rise, workforce flexibility is becoming an essential strategy. Many businesses experience fluctuating demand, with periods of peak activity followed by quieter cycles. Maintaining a full-time workforce through these changes can be difficult, particularly as labour costs increase each year.

Flexible staffing approaches, including the use of Temporary Employment Services (TES) providers, allow employers to scale their workforce in line with operational needs. For workers, this model can also offer an important benefit. By being deployed across multiple client sites as demand shifts, employees can maintain more consistent employment and income rather than facing intermittent layoffs or reduced hours. In a constrained labour market, this type of shared flexibility can support business sustainability while helping workers maintain greater income stability.

A necessary but cautious step

The increase to R30.23 an hour is unlikely to be a major turning point on its own. Instead, it continues a gradual and careful approach to raising the minimum wage in line with economic conditions. At its core, the policy is trying to balance two important priorities: helping workers cope with rising living costs while ensuring businesses remain competitive and able to create jobs.

The impact of the increase will depend on more than the hourly rate. It will be shaped by broader economic growth, investment, productivity improvements and how well businesses are able to adapt. Breaking the R30 level sends a clear message that protecting low-income workers remains important. The challenge now is to make sure this support improves livelihoods without adding further pressure to an already fragile jobs market.

*Donne Nieman is Sales Director at Workforce Staffing

** The views expressed do not necessarily reflect the views of IOL, Independent Media or the Independent on Saturday.