REPORT ON THE INVESTIGATION INTO A SECTORAL
DETERMINATION FOR THE HOSPITALITY SECTOR-2010
INDEX
CHAPTER ONE:.............................................................................................. 3
Background to the investigation...................................................................... 3
Terms of reference ............................................................................................ 5
Methodology ...................................................................................................... 5
Phase One – Administrative aspects ...................................................................... 5
Phase Two – Consultation with stakeholders ........................................................ 5
Phase Three – ECC Process ................................................................................... 8
Phase Four – Publication of the amended sectoral determination ......................... 8
Structure of the report ............................................................................................ 9
Sector Profile ................................................................................................... 10
Employee profile within the sector ................................................................ 11
CHAPTER THREE ........................................................................................ 13
Job categories ................................................................................................. 13
Minimum wages ............................................................................................... 16
Minimum wage increases for year 2 and 3 ................................................... 22
Accommodation .............................................................................................. 23
Sunday Work.................................................................................................... 24
Night work and provision of transport .......................................................... 26
Additional issues raised ................................................................................. 27
CHAPTER FOUR .......................................................................................... 31
EVALUATION IN TERMS OF ECC CRITERIA ................................................ 31
The ability of employers to carry on their business successfully ........................ 31
The operation of small, medium and micro-enterprises ...................................... 32
The cost of living ................................................................................................. 32
The alleviation of poverty .................................................................................... 32
The likely impact of any proposed condition of employment on current
employment or the creation of employment ........................................................ 32
CHAPTER FIVE............................................................................................. 33
SUMMARY OF THE RECOMMENDATIONS BY THE ECC ............................ 33
5.1
Job categories ...................................................................................... 33
5.3
Minimum wages.................................................................................... 33
5.4 Minimum wage increases for year 2 and 3.......................................... 33
5.5
Accommodation ................................................................................... 33
5.6
Sunday Work......................................................................................... 34
5.7
Night work and provision of transport ............................................... 34
2
CHAPTER ONE:
As directed by you, the Employment Conditions Commission (ECC) has pleasure in
presenting you with a report on its investigation into the Hospitality Sector.
Background to the investigation
The current sectoral determination 14 for the Hospitality sector was published on 15
May 2007 and became effective from 1 July 2007. The wages component of the
determination will lapse on 30 June 2010. The determination regulates conditions of
employment and minimum wages to be paid in the hospitality sector. The wages were
set in accordance with the number of employees an enterprise employs, where an
enterprise with 10 or less employees pays 10% less than an enterprise with more
employees. This approach was informed by the fact that the majority of employees in
the hospitality sector are employed by small firms, i.e. those with 10 or less
employees. The new minimum wages and the wage increase regime for the hospitality
sector need to be in place by 1 July 2010.
Employers in the hospitality sector are to a very large extent organized in terms of the
different fields in which they operate. Table 1 provides an overview of the range of
organizations within the hospitality sector. As illustrated in the table, these
organizations represent a reasonable profile of the main sub-sectors in the scope of
coverage of the Sectoral Determination.
3
Table 1: overview of the range of organizations existing within the hospitality
sector
Organisation
Sub-sector/description
Tourism Business Council
SA
Umbrella body representing business sector in tourism on
macro-issues;
Members include trade associations and individual businesses.
THETA
Training body for all sub-sectors related to tourism and
hospitality, conservation, sport and recreation.
The Federated Hospitality
Associations of South
Africa (FEDHASA)
Hospitality trade association including, hotels, restaurants,
caterers, self-catering, time-sharing, home hosting (B&B,
guesthouses), suppliers, consultants and service providers to
hospitality industry; conference venues, country clubs and
taverns.
National Accommodation
Association
Trade association for smaller establishments- 1-30 bedroom
establishments.
1500 members
Bed & Breakfast
Association of South
Africa (BABASA)
Mostly Small, Micro and Medium Enterprises SMME’s
including lodges, guest houses (1- 15 rooms), B&Bs (1-6
rooms) & caterers.
Mostly informal and “unregistered”, partnerships and “mom
and pop” shops.
National Council for Tour
Guides
Represents tour guides and adventure operators (e.g. bungee
jumping etc.)
National Association of
Catering Employers
(NACE)
South African
Commercial and Catering
Workers’ Union
(SACCAWU)
Employers organization in the catering industry
Hotel, Liquor, Catering &
Allied Workers Union
(HOTELLICA)
Trade union representing hotel and catering employees.
In the process of registering as an employers’ organization
Trade union
Hotels, restaurants, tourism, gambling.
Congress of South African Trade Unions (COSATU) affiliate
National Council of Trade Unions (NACTU) affiliate
Commercial Catering,
Independent trade union- breakaway from South African
Accommodation Workers’ Catering, Commercial and Allied Workers’ Union
Union (CCRAWU)
(SACCAWU) mainly hospitality sector
4
Terms of reference
The terms of reference for this investigation as published in the Government Gazette
No. 32526 notice No. R.873 dated 25 August 2009 was as follows:
“to review wages and the conditions of employment in the Hospitality Sector”.
Methodology
A four-phased project framework was developed for the investigation:
Phase One – Administrative aspects
A notice was published in the government gazette on 25 August 2009, inviting
interested parties to make written representations within 30 days to the DirectorGeneral. In response to the notice, four (4) written submissions were received from
the following organisations:
1. SACCAWU;
2. FEDHASA;
3. Southern Sun; and
4. Southern Midlands Tourism.
Phase Two – Consultation with stakeholders
Public hearings were scheduled across the country as set out in table 2 below.
A total of 28 public hearings were conducted, covering all nine provinces. There were
almost three hearing sessions in each of the provinces. After the initial planned public
hearings, site visits were conducted in certain workplaces, targeting specifically
employees. This was due to the poor turnout of employees during the public hearings.
Employee attendance was disappointing in most of the public hearings.
Table 2 below indicates places visited together with the attendance profile of
stakeholders for each hearing.
5
Table 2: Public hearing schedule and attendance profile
Province
Eastern
Cape
Limpopo
Western
Cape
Hospitality Public Hearings 2009
Dates
Venues
Time Employers
20/10/09
21/10/09
22/10/09
20/10/09
21/10/09
22/10/09
28/10/2009
29/10/2009
30/10/2009
02/11/2009
Kwa-Zulu
Natal
03/11/2009
04/11/2009
Mpumalanga 02/11/2009
03/11/2009
09/11/2009
Northern
Cape
10/11/2009
11/11/2009
18/11/09
North West
19/11/09
20/11/09
18/11/09
Gauteng
South
Employees
Mthata
East London
Port Elizabeth
Modimolle
Polokwane
Tzaneen
Cape Town
Beaufort West
10H00
10H00
10H00
10H00
10H00
10H00
10H00
10H00
17
12
0
10
12
16
9
13
15
5
3
11
10
6
0
3
George
Durban
Richards Bay
Newcastle
Nelspruit
10H00
10H00
10H00
10H00
10H00
6
4
10
4
10
2
5
4
0
5
Witbank
Kimberley
SpringBok
Upington
Brits
Potchefstroom
Christiana
Johannesburg
10H00
10H00
10H00
10H00
10H00
10H00
10H00
10H00
13
7
14
5
8
4
10
4
4
1
0
0
0
0
3
0
Gauteng
North
17/11/09
18/11/09
Pretoria
Magaliesburg
10H00
10H00
2
8
0
5
Free State
23/11/09
24/11/09
25/11/09
Bloemfontein
Welkom
Harrismith
10H00
10H00
10H00
18
4
8
19
13
7
As reflected in table 2 above, public hearings were not well attended, particularly in
respect of employees’ representation. Subsequent to the public hearings, site visits
were arranged where interviews in the form of a questionnaire administration were
conducted. The questionnaire process yielded results, as the secretariat managed to
visit workplaces and interviewed a total of 253 employees and 15 employers. Table 3
reflects the places visited and the number of employees and employers spoken to
during the site visits.
6
Table 3: Questionnaire administration
Name of outlets.
No. of Employers
BLOEMFONTEIN
Aloe Guest House
2
City Lodge
1
Palm lodge
2
Altair Guest House
Bloem spar
1
Formula one hotel
TOTAL
NELSPRUIT
La Roca guest house
Town lodge
Road lodge
Mugg and Bean
Panarotti restaurant
Bairoo restaurant
Milky lane
TOTAL
RUSTERNBURG
Sparkling Waters
Blue Hill guest house
Spur restaurant
Wimpy restaurant
Southern Sun hotel
Akwaba Lodge
Rustenburg Boutique
TOTAL
Pietermaritzburg/Durban
Nando’s
Ocean basket
Mugg and Bean
Rievere hotel
Albany Hotel
Palm breeze B& B
All Season B& B
Spur
Wimpy
TOTAL
Beaufort West/Cape
town
Oasis hotel
Formula 1 Hotel
Beaufort manor
Steers
Daddy long legs
1
Harbour bridge hotel
Protea hotel
Southern Sun
KFC
7
No. of employees.
2
4
4
8
2
8
28
2
6
5
10
2
4
2
31
11
2
18
4
12
6
4
57
6
5
4
3
4
4
4
5
4
39
2
2
5
4
5
6
3
4
12
Tree top guest house
TOTAL
1
3
46
PORT ELIZABETH
Avocet guest house
Formula one hotel
KFC (Heugh Road)
Nando’s
Kwadwesi Fish Tale
Admirality Guesthouse
Palm Beach Guesthouse
TOTAL
0
2
0
0
0
1
1
4
2
0
10
5
2
2
0
21
KIMBERLEY
Dulce café
John Dory
China restaurant
Protea hotel
Bench mark
Chicken licken
Road lodge
King pie
TOTAL
1
0
1
0
0
1
0
0
3
3
3
0
1
12
3
6
3
31
Phase Three – ECC Process
During this stage the ECC considered the inputs received and made its
recommendations as contained in this report.
Phase Four – Publication of the amended sectoral determination
This phase will see the publication of amendments to the sectoral determination, once
you have considered the recommendations of the ECC.
8
Structure of the report
The report consists of the following chapters:

Chapter 1 of this report gives a background of the sector and the methodology
utilized;

Chapter 2 of this report outlines the state of the hospitality sector;

Chapter 3 discusses the findings of the investigation and resultant proposals;

Chapter 4 discusses the proposals in light of the criteria that the ECC has to
consider; and

Chapter 5 summarizes the recommendations of the ECC.
9
Chapter Two
Sector Profile
Over the last decade or so we have witnessed a spectacular growth of the sector. It is
generally accepted that the hospitality sector is one of the fastest growing sectors of
the economy. In March 2009, the CEO of Tourism Business Council of SA during a
press conference said, 'the travel and tourism industry is one of the world’s highest
priority industries and employers, the world’s leading growth sector, one of the fastest
growing economic sectors globally and a sector whose business volume equals or
even surpasses oil exports, food products and or automobiles.' The CEO continued to
point out that, 'in SA the sector generates R179 billion of economic activity and 445
000 jobs through direct employment and a total of 1 011 000 jobs, representing 7.6%
of total employment.'
In anticipation of future opportunities the Development Bank of Southern Africa
(DBSA) announced at the 2009 Tourism Indaba that it intended prioritizing tourism
projects locally and in the Southern African Development Community (SADC) region
with development finance to invest in tourism infrastructure, since commercial
finance institutions might be more cautious in the context of the economic downturn.
Similarly, the Minister of Tourism remained positive about the prospects for the
sector in the coming period. He claimed that the domestic market remained strong
despite the downturn, with 13, 9- million South Africans spending R25, 8bn on local
travel. According to the 2010 research by the World Travel and Tourism Council
report on SA the overall tourism sector’s share of the economy rose to an estimated 8,
5% of gross domestic product last year from 8.1% the year before. It was estimated
that tourism’s total contribution to the economy was R194, 5bn, a 19% rise, with an
estimated employment of 1, 04-million people in 2009.
Tourism has become the lifeblood of the South African economy and has injected
R350-billion in foreign direct spending since 2003, according to Engineering News
(July 2009). Last year, the sector contributed 8, 4% to the country’s gross domestic
product. While growth in the global tourism industry came in at 1, 3% last year, South
Africa fared better, at 5, 5%. A significant indicator of growth in this sector is that it is
estimated to have double in size since 1994. According to Stats SA January 2010
report, tourism contributed eight percent of South Africa's gross domestic product last
year and provided employment for 1.2 million people.
10
According to the web-based Bluechip Journal, 'despite the global economic downturn,
it seems that the hospitality industry is booming in South Africa. The listed Private
Equity investment company Dale Capital Partners (DCP) identified the hotels and
leisure sector in South Africa as a core component of its current investment strategy.
It has taken the step of increasing the level of investment in excess of R200 million.
Despite the global economic slowdown the hotel sector in South Africa continued to
record significant growth. In South Africa the hospitality sector continued to reflect an
increase in numbers of staff for the first quarter of 2009 and further, several highdemand events should add further yielding opportunities, not the least of which is the
2010 FIFA Soccer World Cup, which is estimated to contribute in excess of R51.1
billion to South Africa’s gross domestic product.'
Bluechip Journal further claimed that despite the current global financial crisis, the
hotel and leisure sector in South Africa would continue to record significant growth
because South Africa had established itself as a MICE (Meeting, Incentive,
Conference & Event) destination.
The doubling of tour operators in the past five years, while expansion in hotel rooms
and rapid expansion in non-hotel accommodation as well as product proliferation
generally, are indicative of the current growth phase of the tourism industry.
According to the THETA 2007 sectoral plan, there are more than 40 430 enterprises
in the hospitality sector, most employing fifty or less employees. According to
Tourism Business Council of South Africa (TBCSA), SMMEs account for almost
90% of employment opportunities in the tourism sector, employing less than 50
people.
Thirty percent of labour in the hospitality sector is classified as unskilled. While there
has been a steady increase in the number of employees in this sector, general workers
dominate the industry by 72%. Most of the employment opportunities remain labour
intensive.
Employee profile within the sector
According to research by NALEDI, more than 70% of workers in the sector are not
covered by collective agreements or Bargaining Councils.
According to THETA, Conservation and Tourist Guiding together with Hospitality
are the sectors that employ the highest percentage of black people, with more than
11
70% of the workforce being black and majority of them in lower skilled occupational
categories.
THETA also points out that business outsourcing has become a major force in the
sector and this trend is impacting on wage levels, job security and other benefits.
Services such as cleaning, babysitting, training, security, payroll, information
technology, call centres, catering and others are being outsourced and more than half
of hotel staff is not employed by hotels but by different service providers. The
THETA analysis reveals that the majority of employees in the hotel trade are still in
lower job levels, either as service workers (54%) or general workers (18%),
constituting a total of 72%. Employment growth was estimated at 7.2% in 2005,
14.3% in 2006 and 10.6% in 2007. As far as ownership patterns are concerned
THETA provided the following information on Hospitality ownership patterns: black
(21%) and white (79%).
THETA in its report identified the following sources contributing to atypical trends of
employment in the sector:

Outsourcing

Operational nature – 24/7

Seasonality of the sector – fluctuation of demand for services

Cost reduction

Increased flexibility

SMME’s

Labour broking

Franchising
As in the previous research report by HSRC, the employment patterns still reflect
85% of employees being employed by enterprises employing less than 50 workers.
Eighty percent of employees are those employed by employers employing less than
ten employees and 72% are black.
12
CHAPTER THREE
This section focuses on inputs received from the stakeholders, both from the public
hearings and also from the questionnaire administration process. The format of the
report in respect of these issues is as follows: issues for discussion, followed by the
views of stakeholders, then the Department’s proposals and, finally, recommendations
of the ECC. The following issues were discussed during the public hearings:

Job categories;

Demarcation;

New minimum wages;

Minimum wage increases;

Accommodation;

Sunday work;

Night work and transport provision; and

Other related conditions
Job categories
Views of employers
In line with setting of a new minimum wage, some employers in Limpopo proposed
that job categories be included in the determination to allow specialization by
employees. They also suggested that Theta should be consulted when introducing job
categories to ensure that they meet the standards set in the NQF.
Views of employees
Some employees employed in bigger establishments proposed the introduction of job
categories in the determination and emphasized that skills and work experience should
be taken into consideration when dealing with minimum wages. They argued that a
newly appointed employee should not receive the same wage as an employee who has
worked a number of years with more experience. They also argued that job categories
would eliminate exploitation where an employee is required to perform a variety of
13
duties without any form of compensation. According to them, job categories would
motivate employees since they would be performing specialized jobs and be paid
accordingly. However, some employees working in guest houses and B&Bs indicated
that job categories would not be suitable for them due to the size of their businesses.
They indicated that the current determination covers their situation perfectly.
SACCAWU, on the other hand, submitted that a breakdown of occupations with clear
job descriptions should be included in the determination. SACCAWU also proposed
that an appropriate definition of workers classified as domestic workers should be
included to avoid a situation where employers utilized their domestic workers in their
establishments, especially guest houses and B&Bs. The union also suggested that
temporary workers be given a clear definition, with defined regulations in terms of
hours of work and duration of contracts. Lastly, SACCAWU requested the
introduction of a full-time permanent and temporary employee ratio to try and curb
the casualization within the sector.
Views of the Department
During the initial discussions prior to the establishment of the sectoral determination,
proposals regarding job categories were discussed extensively. Stakeholders indicated
that the Minister has powers to establish minimum conditions of employment which,
in this case, would be setting of minimum wages and proposed that employers in their
operations should benchmark on the minimum wages to determine wages for the
skilled staff. Another consideration in this regard was the fact that the majority of
employers in the sector are small establishments, who may not have the capacity to
employ staff according to fixed job categories. The Department therefore proposes
that the scope of application should be maintained as it is in the current determination.
Views of the ECC
The ECC supports the proposal by the Department that this matter is appropriately
addressed in the determination and no further changes are proposed during this time.
Demarcation
Currently a two tier wage dispensation is applicable in the sector. The wages are set in
terms of the number of employees employed in the establishment. The minimum
14
wage for employers employing more than 10 employees is set at a higher rate, whilst
the minimum rate for those employing 10 or less employees is set at 10% lower.
Views of the employers
The Southern Midlands Tourism forwarded inputs on behalf of their stakeholders
based in KwaZulu-Natal. In their submission they argued that the decision of
demarcating in terms of the number of employees employed has a negative impact in
that employers have decided to remain below 10 employees in order to pay the
reduced wage. They proposed that the occupancy rate should be utilized to determine
the wage which the employer should pay.
FEDHASA argued for demarcation based on rural and urban areas within the
hospitality sector. They indicated that establishments located in the rural areas do not
enjoy the same level of economic prosperity as their counterparts in the major
metropolitan areas. They also do not enjoy similar average levels of occupancy as
their urban counterparts. Their room/meal rates are generally considerably lower than
the rates charges in the urban areas. In addition, they mentioned that many of the rural
hotels are struggling and therefore proposed that the determination should provide for
an urban/rural differential as far as the minimum wage provision was concerned.
Some employers in the Northern Cape also proposed that a regional differentiation
should be made to accommodate establishments in the rural areas. They argued that
SMMEs in the rural areas were not as profitable or economically active as those in
urban areas. Some employers in Springbok also proposed an urban/rural divide,
indicating that they relied on the mines in the area, many of which had shut down and
led to a further downturn in business. Consequently, they had to rely on passing trade
in order to sustain their businesses and retain staff.
Views of employees
Some employees of small establishments like the B&Bs and guesthouses indicated
that the determination should provide for a single wage without any distinction in
terms of the number of employees employed. They argued that employees of small
establishments were required to do everything whilst their counterparts in hotels do
specialized work. They indicated that their workload is more than that of employees
employed in big establishments.
15
Views of the Department
Demarcation was extensively debated prior to the establishment of the sectoral
determination. The proposal to demarcate based on the urban and rural was also
examined and the challenge was the fact that establishments in urban areas did not
necessarily make more profits when compared with those in rural areas. For example,
the Kruger National Park establishments are located in a rural area but are more
profitable than some urban establishments. Another challenge in this regard was the
fact that there are developments taking place in a number of towns located in the rural
areas, e.g. Nelspruit. Most of the tourists visiting South Africa would prefer to visit
Nelspruit as their point of destination and therefore the income generated by the
hospitality establishments in this area could be much more than that of some urbanbased establishments. On the basis of this inconsistency, it was therefore
recommended by the ECC that the number of employees employed by the
establishment be utilized to demarcate the establishments, which resulted in a two tier
wage dispensation.
The Department therefore proposes that the current demarcation in the determination
should be maintained.
Views of the ECC
The ECC supports the proposal by the Department that this matter is appropriately
addressed in the determination and no further changes are proposed during this time.
Minimum wages
The current minimum wages in the sector are as follows:
TABLE 1:
Table 1: Minimum wages for employers with 10 or less employees
Minimum rate for the period Minimum rate for the
Minimum rate for the
period
period
1 July 2007 to 30 June 2008
1 July 2008 to 30 June 2009 1 July 2009 to 30 June 2010
Monthly
Weekly Hourly Monthly Weekl Hourly Monthly Weekly Hourly
y
R1480-00 R341-60 R7-59 R1659-08 R382-93 R8-51 R1843-23 R425-43 R9-45
16
TABLE 2:
Table 2: Minimum wages for employers with more than 10 employees
Minimum rate for the period
Minimum rate for the Minimum rate for the period
period
1 July 2007 to 30 June 2008
1 July 2008 to 30 June
1 July 2009 to 30 June 2010
2009
Monthly
Weekly
Hourly Monthly Weekly Hourly Monthly Weekly Hourly
R1650-00
R380-80
R8-46
R1849-65 R426-88 R9-48 R2054-96 R474-26 R10-53
Views of the employers
Some employers complained that the hospitality industry was becoming less
economically viable. They emphasized that profitability in rural areas was less than in
that in metropolitan areas. The Southern Midlands Tourism indicated that
establishments in rural areas were only profitable during holiday peaks. They
proposed that demarcation into various areas should be included in the determination.
Most employers proposed that new wages should be determined by using the CPI as
the economic indicator.
FEDHASA proposed that an annualized average CPI should be considered. They also
urged that the average income of the hospitality sector should be considered to
determine the level of the wage increase which the sector could absorb without any
negative effect on employment levels. They indicated that in 2009 the number of
visitors had declined by almost 20% and the sector has been battling to continue to
pay their employees the prescribed minimum wages.
Some Durban employers indicated that economic growth had declined and therefore
this should be taken into consideration by the Minister when dealing with wage
increases. They indicated that due to the economic situation their clients had no or
little money to spend on vacations and restaurants. Therefore, they argued, if wages
were substantially increased small businesses could be forced to shut down. They
mentioned that the Minister was supposed to review wages during the time the
country felt the effects of recession. In addition, they argued that the economic
climate of the country should to be taken into consideration and mentioned that the
sectoral determination had resulted in jobs losses since some employers could not
afford to pay the prescribed minimum wages and huge increases.
17
In addition, FEDHASA pointed out that their members were concerned that the
determination did not provide a minimum wage for trainees, who currently receive the
same wage as permanent and experienced employees. They recommended that the
determination should make provision for a reduction on the prescribed minimum
wage of between 10% and 15% for all trainees employed in the hospitality industry
whilst registered with THETA-approved service provider. They reasoned that this
would not only encourage employment, but would benefit trainees in their career
growth.
In the Northern Cape, employers were reluctant to specify a quantum for the new
minimum wage levels. This reluctance was based on the economic recession, with
most employers calling for a wage freeze to assist the sector to recover from the
devastating effects of the global recession. They argued that inflicting a substantial
minimum wage hike would lead to employers retrenching workers as this would result
in a lot of businesses becoming unsustainable. They argued that the inflationary
effect of the proposed 35% hike on electricity tariffs by Eskom, if granted, would
further undermine business sustainability.
Views of employees
In line with the call for job categories to be included in the sectoral determination,
SACCAWU proposed the following wages for different job categories and also wage
increases for the subsequent years:
Category
2010/2011
2011/2012
2012/2013
Chef
R4 000-00
CPIX + 3.50%
CPIX + 3.50%
Manager
Assistant manager
Supervisor
Trainee manager
R4 500-00
R4 200-00
R3 800-00
R3 800-00
CPIX + 3.50%
CPIX + 3.50%
Conference
ordinator
R3 900-00
CPIX + 3.50%
CPIX + 3.50%
Bartender
Assistant
Bartender
R3 500-00
R3 000-00
CPIX + 3.50%
CPIX + 3.50%
Cashier
Assistant Cashier
R3 000-00
R2 800-00
CPIX + 3.50%
CPIX + 3.50%
Co-
18
Head Cook
R3 500-00
CPIX + 3.50%
CPIX + 3.50%
Head Waiter
R3 500-00
CPIX + 3.50%
CPIX + 3.50%
R3 500-00
CPIX + 3.50%
CPIX + 3.50%
Receptionist
R3 500-00
CPIX + 3.50%
CPIX + 3.50%
Kitchen
Supervisor
R4 000-00
CPIX + 3.50%
CPIX + 3.50%
Counter Assistant
R3 000-00
CPIX + 3.50%
CPIX + 3.50%
Waiter
R3 000-00
CPIX + 3.50%
CPIX + 3.50%
CPIX + 3.50%
CPIX + 3.50%
Head
Steward
Wine
Motor
Vehicle
Drivers
Extra Heavy
Heavy
Light
Part-time Driver
R3 900-00
R3 700-00
R3 500-00
R3 300-00
House-keeping
R3 000-00
CPIX + 3.50%
CPIX + 3.50%
Baker
R3 800-00
CPIX + 3.50%
CPIX + 3.50%
Cook
R3 800-00
CPIX + 3.50%
CPIX + 3.50%
Catering Assistant
R3 000-00
CPIX + 3.50%
CPIX + 3.50%
Delivery
Employee
R3 000-00
CPIX + 3.50%
CPIX + 3.50%
General Assistant
R3 000-00
CPIX + 3.50%
CPIX + 3.50%
Security
R3 000-00
CPIX + 3.50%
CPIX + 3.50%
In most areas employees supported the proposal by SACCAWU. They indicated that
while employers complained about the effect of the recession on their businesses, it
was worse in the employees’ case because they were faced with transport and food
price increases. They also complained they could not afford to even pay school fees
and buy proper clothing for their families. Although the country faced economic
recession, the employees proposed a cost of living wage increase and CPI. A large
number of employees in both Rustenburg and Nelspruit argued that wages should be
increased by 10% - 15% based on increased food prices, school fees for children,
transport costs, rent, water, electricity and accounts for furniture and clothing.
19
An example was given where an employee, who earns R2170.00, with 20 years of
experience in a restaurant, has two children aged 11 and 14. The employee’s monthly
budget is as follows:
School fees: R800 per month
Groceries: R1000 per month
Electricity: R200 per month
Transport: R350 per month
The salary that she earns every month does not meet her basic needs. Every month she
borrows from family and friends to cover the other needs such as clothing.
Furthermore, some employees in bigger establishments felt that there should be job
categories introduced due to the fact that different jobs have different levels of
responsibility and skill while some jobs require a certain qualification to be employed
in them. Some employees such as waiters have an advantage as they get a commission
or tips to supplement their salaries. Other employees felt that wages should be
categorized according to the experience a person had in the sector.
Although employees in general called for a higher wage increase, there were some
employees who cautioned that if wages were set at a higher level which employers
could not afford, job losses could result. They argued that it was better to give a
reasonable increase in order to retain staff instead of having a few people working
earning huge salaries.
Views of the Department
The Department acknowledges the impact of the economic downturn in the sector in
that the sector is dependent on the clients. During the period of recession the number
of visitors decreased due to the fact that people did not have extra money in order to
spend on holidays. Stats SA also confirmed the decrease in their report released in
February 2010. Although the recovery of the local and international economies and
tourism industries remains uncertain, in South Africa the situation could improve with
the hosting of the FIFA World Cup tournament which commences in June 2010.
According to TBCSA, accommodation sector in South Africa has given an indication
that its rates would be increased almost by 100% during the tournament and this
indicates that employers would be able to afford an increased minimum wage.
Considering the facts above, the Department is of the view that the new minimum
20
wage which will become effective in July 2010 should be set at 7,5% higher than the
current wage applicable throughout the sector for the first year. This represents an
increase of CPI + 2.4%. The Table below represents the proposal by the Department
on the new minimum wage levels:
Table 4: New minimum wage level proposal 10<
Table 1: Minimum wage for employers with 10 or less employees
Minimum rate for the period
Difference from the previous
wage
1 July 2010 to 30 June 2011
Monthly
Weekly
R1981.48 R457.30
Hourly
R10.17
1 July 2009 to 30 June 2010
Monthly
R138.25
Weekly Hourly
R31.87 R0,72
Table 5: New Minimum wage level proposal >10
Table 2: Minimum wage for employers with more than 10
employees
Minimum rate for the period
Difference from the previous
wage
1 July 2010 to 30 June 2011
Monthly
Weekly
R 2209.09 R509.83
Hourly
R11.33
1 July 2009 to 30 June 2010
Monthly
Weekly
Hourly
R154.13
R35.57
R0,80
Views of the ECC
The ECC acknowledges the impact of the economic downturn on the sector and also
the fact that employees are also affected by the economic conditions within the sector.
The ECC further notes the number of jobs lost due to the economic crisis. While
acknowledging that the country may be beginning to emerge from the economic
crisis, the ECC is mindful that setting the minimum wage or increases too high may
result in further job losses or non-compliance with the prescribed minimum wages,
21
both of which scenarios are not acceptable. In the circumstances, the ECC
recommends that the first year’s minimum wage should be set at 7.1% higher than the
current wage. The ECC recognizes that the proposed figure is higher that the current
level of CPI as reported by StatsSA, but this is justified in light of the fact that the
sector will derive some benefit from the FIFA World Cup.
Minimum wage increases for year 2 and 3
The current sectoral determination provided for an annual wage increase determined
on the basis of CPI plus an additional 2%.
Views of employers
Employers in their submissions indicated that although in the current determination
the 2% above CPI was appropriate, a number of things have changed in recent times,
requiring a review of this approach. They indicated that the position of employers
needed to be carefully considered particularly in the light of the global and local
economic recession and also the fact that the inflation rate is now nearing the target
range of between 3% and 6%. They argued that in such circumstances an increase of
2% above the CPI could be equal to as much as 33% to 66% increase above the
prevailing inflation rate. They also pointed out that over a three year period, such
increases in a low inflationary environment would deliver a real income improvement
to employees but would also place a significantly increased burden on employers and
the potential viability of their businesses. They therefore proposed that an increase of
1% above the CPI would be a less risky strategy while at the same time providing for
some real and meaningful income growth for employees. In addition, they cautioned
that the recovery of the local and international economies and tourism industries
remains uncertain at this time and a more cautious approach should be adopted.
On the other hand, FEDHASA mentioned that as a result of the recent changes to the
CPI calculations prepared and published by StatsSA, a majority of their members felt
strongly that all future minimum wage increases for the Hospitality Sector should
provide for the minimum wage plus CPI or, at the most CPI plus 1%. It is also
important to note that they strongly emphasized that it should be based on CPI and not
the CPIX (or the new version thereof which is currently also published by StatsSA).
22
They also suggested that the CPI be annualized as opposed to the “once off” reliance
on the May CPI figure, which could be severely distorted on a month to month basis.
FEDHASA also stated that the industry is currently under pressure as a direct result of
the global downturn and the strong rand. The World Cup 2010 would create a boom
for one to two months but would not provide answers to the industry after this event.
Views of employees
Apart from the submission received from SACCAWU, some employees proposed
rand value increases of between 9% and 10% for years 2 and 3. They indicated that
the wage increase should improve their living conditions. They also argued that the
CPI related wage increase for them would not add any value since they were already
paid low wages. SACCAWU, as indicated above in the table, proposed a CPI plus
3,5% for years 2 and 3.
Views of the Department
Considering the views and inputs received from the stakeholders the Department
maintains that annual wage increases should be determined by using CPI (excluding
owner’s equivalent rent) plus 2% for the two subsequent years.
Views of the ECC
With respect to the minimum wage increases for years 2 and 3, the ECC recommends
that wages should be increased by CPI plus 1%.
Accommodation
The current sectoral determination does not regulate accommodation and does not
stipulate the provision of accommodation.
Views of employers
Some employers proposed a deduction of 10% for accommodation and food. They
indicated that due to the location of their establishments, they are compelled to
provide for food and accommodation in order to ensure that employees are on the
premises on time for them to service their clients. These employers indicated that,
although they currently have arrangements for payment with their staff, it should be
regulated to ensure uniformity in the sector.
23
Views of employees
Some employees indicated that employers should pay and provide accommodation
free of charge since it is to their advantage that employees sleep at their workplaces.
Other employees, especially those who reside far from their workplaces, indicated that
the arrangement with their employers in providing accommodation should not be
tampered with since it would be costly for them to travel home every day.
Views of the Department
Considering the current escalation in food prices, electricity, and the cost of living in
general, the Department is of the view that if the proposal by the employers is
included in the determination, employees’ wages have to be improved tremendously
since at the moment employees’ wages are under severe pressure and cannot
accommodate another deduction. The Department therefore recommends that the
current status of the determination be retained.
Views of the ECC
The ECC supports the proposal by the Department that the current status in the
determination be maintained in relation to accommodation.
Sunday Work
The sectoral determination currently stipulates that an employer must pay an
employee who works on a Sunday at double the employee’s wage for each hour
worked, unless the employee ordinarily works on a Sunday, in which case the
employer must pay the employee at one and one-half times the employee’s wage for
each hour worked or grant paid time off.
Views of employers
Employers indicated that the nature of the hospitality sector requires them to work 24
hours and 7 days a week. They indicated that prices paid by their clients during
weekdays are similar to the price paid on Sunday. They argued that should they be
forced to pay double the rate on a Sunday, they would be forced to stop their
operations and this would have a negative impact on the hospitality or tourism sectors
24
in South Africa. Employers also indicated that workers get weekly rest periods, which
sometimes include a Sunday. Furthermore, they proposed that the current provision in
the sectoral determination around Sunday work should be maintained. FEDHASA
indicated that the restaurant, guest house and hotel industry differs from other
industries, in that the nature of the sector is inherently based on the availability of
guest services which they provide for 7 days per week and 365 days per year. They
indicated that the hospitality industry, which is in a much more invidious position
than the retail industry as far as the need to be open on Sundays is concerned, does not
have the option of working a 40 hour week with no Sunday overtime, as in the retail
sectoral determination, and therefore urge that this provision be included in the
hospitality sectoral determination.
Views of employees
Some employees indicated that Sunday is meant to be a day to attend church service
and also the time for family due to the fact that long hours are spent at work during
the week and this day is an opportunity to be with their families. They therefore
proposed that Sunday should be paid at a double rate irrespective of whether they
ordinarily work on a Sunday or not. Employees indicated that there should be
recognition for working on a Sunday and the current 1.5 is not sufficient. SACCAWU
proposed that the current regulation is sufficient apart from the fact that employees
should be rotated to avoid consecutive Sundays being worked.
Views of the Department
The Department recognizes the operational requirements in relation to the fact that
establishments within the hospitality sector are required to be open 7 days a week, 365
days a year. The Department proposes that the current provision in the determination
should be maintained. This means that Sunday should be remunerated at one and onehalf times the employee’s wage for overtime worked. If an employer requires an
employee who does not ordinarily work on a Sunday to work on a Sunday, that
Sunday should be remunerated at double the normal rate.
25
Views of the ECC
With respect to the Sunday pay, the ECC supports the proposal by the Department
that Sunday be remunerated at one and one-half times the employee’s wage for
overtime worked. And that if an employer requires an employee who does not
ordinarily work on a Sunday to work on a Sunday that Sunday shall be remunerated at
double the normal rate.
Night work and provision of transport
The current determination stipulates that if the transport cost is more than the daily
cost to the employee who is required to perform night shift, an employer who requires
such an employee to perform night work must subsidize such an employee for
transport expenses.
Views of employers
Some employers, especially those employing more than 10 employees, indicated that
they do arrange and subsidize transport for the shifts which finish late. Other
employers indicated that, although they pay for transport, employees should have the
choice of either sleeping on the premises or traveling home everyday.
Views of employees
Some employees felt that employers should pay for transport, but a large number were
of the view that employers should provide transport as public transport is not reliable
and it is difficult to get transport at night. An example was given of an employee who
uses two different modes of transport to get to work, when working night shift, the
employee knocks off at 11pm catches a bus to town but struggles to get a taxi to the
township which means most days she has to sleep in a police station.
The employee then catches a taxi home at 3am but after all that trouble has to be at
work at 6am.
Employees employed by bigger establishments indicated that employers do arrange
and subsidize transport for night shifts. They also indicated that their arrangement
with employers should not be tampered with as it was more beneficial to them.
On the other hand, SACCAWU indicated that an employer should be compelled to
provide and pay for transport for hours beyond 18h00. They also indicated that the
26
sectoral determination should prohibit employees from working more than three days
beyond 18h00 as this has a negative social impact. Lastly, they also proposed that
pregnant employees should not be scheduled to work shifts beyond 16h00 and before
09h00.
Views of the Department
During the site visits conducted, it was indicated by employees that employers do
provide accommodation to those employees who sleep at work. Transport is also
subsidized by employers in the event employees have to sleep in their respective
establishments. The only concern which was picked up during the consultation
process was Spur Restaurants where the waiters do not get transport subsidies and
also work until late without any form of compensation. Employees indicated that they
suspect that this occurs because they get tips from customers and therefore can afford
the transport and also not get paid for overtime.
Due to the fact that employers have already initiated the process of granting
accommodation and also are required by Law to subsidize transport, the Department
is of the view that the current regulation in the determination is sufficient and
therefore no changes are proposed.
Views of the ECC
The ECC proposed that this matter is dealt with appropriately in the current
determination and the status quo should remain.
Additional issues raised
Additional issues raised by SACCAWU

An appropriate definition of workers classified as domestic workers

Temporary workers should be given a clear definition with defined regulations
in terms of hours of work, duration of contracts.

Introduce a full-time permanent and temporary employee ratio

Prohibit sub-contracting with linkages to core business functions

Prohibit Labour Broking
27

Prohibit casualisation beyond school vacations

A ratio should be introduced between internships, trainees and learnerships vs.
full-time employment to avoid the substitution of full-time employment by
internships.

That retrenchment should be prohibited as a response to the implementation of
SD 14.
Views of the Department on the issues raised
In relation to the definition of domestic workers definition, the Department is of the
view that the determination as it stands does define its applicability in terms of the
scope of application. The matter raised here is an interpretational one and also an
enforcement issue which needs to be taken up with the inspectorate division.
Regarding temporary workers, the Department wishes to indicate that the
determination and the BCEA do not provide for temporary workers and therefore it is
not possible to define.
Introduction of full-time permanent and temporary employee ratio is also another
issue which the Department cannot regulate. It is beyond the scope of a sectoral
determination. Labour laws also do not prohibit employers from employing
employees for less than 45 hours.
With regard to labour broking, this cannot be prohibited under a sectoral
determination. Any changes would need to be made in the enabling legislation,
including BCEA.
This issue also forms part of the NEDLAC’s Labour Market
Review, which is currently ongoing.
Regarding the issue of prohibition of retrenchments, the Department is of the view
that this matter cannot be regulated in the determination. This issue is adequately
provided for in the Labour Relations Act.
Views of the ECC
On the additional issues raised by SACCAWU, the ECC is of the view that some of
the issues raised relate to the implementation and enforcement of the determination
and cannot be addressed at its level. Other issues would be addressed within the
current labour law review process, which makes it premature for the ECC to
deliberate on them at this stage.
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Additional issues raised by employers
1.
Overtime
Employers indicated that the hospitality industry has fundamental problems with the
re-negotiation of the agreement to work overtime in terms of Clause 10(2) one year
after the commencement of the employment relationship. Due to the very nature of
the hospitality industry, it is operationally exposed to the need for reasonable overtime
to be worked within reasonable terms (i.e. an hotel or restaurant could typically be
overrun with a conference or a few busloads of tourists over two to three days and be
entirely quiet the next week). Employees who, after a year of employment, simply
refuse to work any overtime during these short pressure peaks pose serious challenges
on management of businesses as well as spreading an unreasonable workload on their
colleagues.
Views of the Department
The Department feels that the issue of overtime was appropriately dealt with when the
sectoral determination was established. In terms of Section 50 of the BCEA,
employers can apply for a ministerial determination in the event that their operational
requirements require deviation from the conditions specified in the sectoral
determination. It is therefore proposed that this matter could be dealt with in terms of
the Ministerial determination process.
Views of the ECC
The ECC supports the views of the Department relating to the request by employers to
increase overtime. The ECC recommends that the current status in the determination
be maintained with respect to overtime.
2.
Averaging of the hours of work
Some employers suggested that sections 13(3) and 13(4) should be removed from the
provisions of the Determination. They argued that the averaging of hours of work
should not lapse and that it should only be subject to a written agreement as provided
for in section 13(1). They indicated that a written agreement would protect the rights
of both the employee and the employer. They also indicated that the hospitality
industry in South Africa, especially areas that are seasonal such as the Western Cape,
Kwazulu-Natal and Mpumalanga, would benefit from the change to this clause. In
29
particular the Game Lodges with unique shift systems rely on this clause for the shift
systems to work (where employees live on the premises and work for extended
periods on a trot in order to have longer periods off, which enables them to travel out
from the isolated areas and have a meaningful time with their families).
Views of the Department
The Department feels that this matter is appropriately addressed in the determination.
Section 50 of the BCEA allows employers to apply for a ministerial determination in
the event that their operational requirements require deviation from the sectoral
determination. It is therefore proposed that this matter could be dealt with in terms of
the Ministerial determination process.
Views of the ECC
The ECC supports the proposal by the Department that employers can utilize section
50 of the BCEA if they cannot comply with certain provisions of the determination.
The ECC therefore recommends that the current measure in the determination is
sufficient.
30
CHAPTER FOUR
EVALUATION IN TERMS OF ECC CRITERIA
Section 54(3) of the BCEA lays down the criteria which the ECC ought to consider
when setting conditions of employment and minimum wages for a particular sector.
The ability of employers to carry on their business successfully
The total number of travellers who visited South Africa through all its ports of entry
during November 2009 declined -4.3 year-on-year after rising 4.6% year-on-year in
October, according to Statistics South Africa (Stats SA). A total of 2.273 million
travellers (arrivals and departures) passed through South African ports of entry in
November 2009, made up of 654,713 South African residents and 1.618 million
foreign travellers. There were 332,355 and 322,358 South African resident arrivals
and departures respectively. The corresponding volumes for foreign arrivals and
departures were 864,808 and 753,416 respectively. Stats SA said a comparison
between the movements in October and November 2009 indicates that there was a
decline in all movements. There was a decline of 11.1% from 373,807 in October
2009 to 332,355 in November 2009 for South African arrivals and a decline of 7.6%
from 348,809 in October 2009 to 322,358 in November 2009 for South African
departure.
Foreign arrivals decreased by 2.8% from 889,529 in October 2009 to 864,808 in
November 2009. A comparison between movements in November 2008 and
November 2009 indicates that there was an increase in all movements. Foreign
arrivals increased by 4.5% from 827,605 in November 2008 to 864,808 in November
2009. In November 2009, road transport was the most common mode of travel used
by 68% of travellers. The number of travellers who used air transport was 704,673
(31.0%). In November 2009, overseas tourists came mainly from Europe (70.6%);
followed by North America (11.3%); Asia (9.3%); Australasia (4.6%); Central and
South America (2.6%); and Middle East (1.6%). Virtually all tourists from Africa
came from the SADC countries (96.8%), followed by East and Central Africa (1.6%);
West Africa (1.3%) and North Africa (0.2%). In November 2009, an overwhelming
majority (97.6%) of tourists came into South Africa for holidays compared with those
who came to study (0.6%) and those on business (0.6%)
31
The operation of small, medium and micro-enterprises
According the President of the National Accommodation Association (NAA-SA) it
appears that the last six months of 2009 was financially challenging especially to
those establishments that rely entirely on clients from overseas and South Africa. He
further indicated that they are hoping for a boom during the period of the World Cup
and beyond which may well result in a need for extra staff. The NAA-SA however
indicated that the challenge is to keep the interest in South Africa maintained for
financial reasons and their commitment to create employment. This statement
therefore suggests that the proposed wage increases will not have any negative impact
on the operation of small, medium and micro enterprises.
The cost of living
Considering the current escalation in food prices, electricity, and transport, the
proposed 7.1% increase and also the annual increase pegged at inflation rate plus an
additional two percent will attempt to address concerns faced by those earning low
wages which reduces their standards of living.
The alleviation of poverty
This is a long- term process and cannot be addressed overnight by a wage adjustment
only. However, the survey by Stassa in 2005 showed that hospitality employees on
average had 3 financial dependents. This means that an adjustment in the minima will
impact on the lives of people other than the employees themselves.
The likely impact of any proposed condition of employment on current
employment or the creation of employment
Due to the global economic down turn employers have experienced challenges in
affording to effect wage increases. Although this has been across all sectors of the
economy, with the hosting of 2010 FIFA World Cup employers will be in a better
position and will also require additional staff during the tournament. As the
employment creation in the sector is highly dependent on the demand for services, it
is expected that more jobs will be created within the sector.
32
CHAPTER FIVE
SUMMARY OF THE RECOMMENDATIONS BY THE ECC
The following are the recommendations of the ECC:
5.1
Job categories
The ECC supports the proposal by the Department that this matter is appropriately
addressed in the determination and no further changes are proposed during this time.
5.2
Demarcation
The ECC supports the proposal by the Department that this matter is appropriately
addressed in the determination and no further changes are proposed during this time.
5.3
Minimum wages
The ECC acknowledges the impact of the economic downturn on the sector and also
the fact that employees are also affected by the economic conditions within the sector.
The ECC further notes the number of jobs lost due to the economic crisis. While
acknowledging that the country may be beginning to emerge from the economic
crisis, the ECC is mindful that setting the minimum wage or increases too high may
result in further job losses or non-compliance with the prescribed minimum wages,
both of which scenarios are not acceptable. In the circumstances, the ECC
recommends that the first year’s minimum wage should be set at 7.1% higher than the
current wage. The ECC recognizes that the proposed figure is higher that the current
level of CPI as reported by StatsSA, but this is justified in light of the fact that the
sector will derive some benefit from the FIFA World Cup.
5.4
Minimum wage increases for year 2 and 3
With respect to the minimum wage increases for years 2 and 3, the ECC recommends
that wages should be increased by CPI plus 1%.
5.5
Accommodation
The ECC supports the proposal by the Department that the current status in the
determination be maintained in relation to accommodation.
33
5.6
Sunday Work
With respect to the Sunday pay, the ECC supports the proposal by the Department
that Sunday be remunerated at one and one-half times the employee’s wage for
overtime worked. And that if an employer requires an employee who does not
ordinarily work on a Sunday to work on a Sunday that Sunday shall be remunerated at
double the normal rate.
5.7
Night work and provision of transport
The ECC proposed that this matter is dealt with appropriately in the current
determination and the status quo should remain.
5.8
Additional issues raised by SACCAWU
On the additional issues raised by SACCAWU, the ECC is of the view that some of
the issues raised relate to the implementation and enforcement of the determination
and cannot be addressed at its level. Other issues would be addressed within the
current labour law review process, which makes it premature for the ECC to
deliberate on them at this stage.
5.9
Additional issues raised by employers
The ECC supports the views of the Department relating to the request by employers to
increase overtime. The ECC recommends that the current status in the determination
be maintained with respect to overtime.
5.9.1 Averaging of the hours of work
The ECC supports the proposal by the Department that employers can utilize section
50 of the BCEA if they cannot comply with certain provisions of the determination.
The ECC therefore recommends that the current measure in the determination is
sufficient.
5.9.2 Overtime
The ECC supports the views of the Department relating to the request by employers to
increase overtime. The ECC recommends that the current status in the determination
be maintained with respect to overtime.
34
35