S. Africa’s Top Labor Federation Said to Agree on Minimum Wage

(Bloomberg) -- The Congress of South African Trade Unions accepts a government-proposed minimum wage of 3,500 rand ($268) a month, a person familiar with the situation said.

Cosatu will announce conditions on its acceptance of the minimum wage later Thursday, said the person, who asked not to be identified because the information hasn't been made public. The government wants it to start on May 1 next year.

President Jacob Zuma's administration proposed the minimum wage for a 40-hour week and said businesses that aren't able to afford it will be able to apply for an exemption. Africa's most-industrialized economy, which has an unemployment rate of almost 27 percent, has 6.6 million people earning less than 3,500 rand monthly, Deputy President Cyril Ramaphosa said last month.

The minimum-pay level doesn't equate to a “living wage,” but forms a foundation to help reduce inequality, he said.

S&P Global Ratings, which has had a negative outlook on South Africa's BBB- assessment for more than a year, has said the country needs to reform labor laws to reduce protracted strikes and create certainty about black empowerment laws in mining to avoid a cut to junk. Fitch Ratings Ltd. also has South Africa at the lowest investment grade, while Moody's Investors Service rates the nation's debt one level higher.

To contact the reporter on this story: Sam Mkokeli in Johannesburg at mmkokeli@bloomberg.net.

To contact the editor responsible for this story: Karl Maier at kmaier2@bloomberg.net.