News in South Africa 21st December:
1. Minimum wage changes:
Early in 2023, South Africa could have a new medium-term target for what the minimum wage should be. But it will not be a rand amount. Instead it will be a statement of intent – and a guarantee that minimum-wage earners will never fall behind other workers.
The idea of a medium-term target was built into minimum wage legislation passed in 2018, but delayed by three years to allow the system to settle down, and for its impact on jobs to potentially be discernible.
Last week, the National Minimum Wage Commission published for comment what it believes the medium-term should be. It is contained in two sentences:
“All wage-earning workers must earn enough to maintain a decent standard of living, defined as sufficient to support themselves and their families at a level that is both socially acceptable and economically viable. The target should ensure that the value of the national minimum wage does not decline relative to the median wage.”
Measuring the minimum wage in terms of the median national wage is a popular way of measuring the minimum wage within a country over time, and of comparing the minimum wage across different countries.
The phrase “socially acceptable and economically viable” is popular in policies dealing with environmental matters and sustainable development, where there may just not be the resources to implement plans generally agreed to be moral imperatives.
What the minimum wage should be, in order to balance the needs of the unemployed to find jobs with the dignity of those at the bottom of the wage pyramid, remains subject to fierce debate, with various groups and parties arguing that it is already either too low or too high.
After much research, a panel set up to consider the implementation of a minimum wage in South Africa reported its belief that “there is a benign range for a minimum wage level”, and as long it is within that range, it would not cause job losses.
The National Minimum Wage Commission is accepting public submissions on its draft stance until the end of January.
2. Top performing shares:
Recent data from investment firm Nedgroup revealed investment insights into South Africa’s top-performing shares, with some surpassing a 50% increase over the period of 2022.
Nedgroup Investments is an asset management business based in South Africa with over R350 billion of assets. The group said that major global central banks have embarked on one of the fastest monetary policy tightening cycles in recent history this year.
“As a result, the rise in long-term interest rates has been both broad and steep,” said Nedgroup.
Global political instability, paired with rising inflation and interest rates alongside supply chain disruptions and domestic rolling blackouts, has made 2022 an unstable year for investors – with little opportunity to predict the market’s movements and many playing it cautious.
Nedgroup’s latest Pulse Report noted that Absa Group, the company behind Absa bank, was the top performing stock of 2022 with 53.1% change, followed by Glencore at 51.2% and energy firm Exxaro with 48.8% change in third.
According to the investment publication DailyInvestor, Absa is a preferred stock among South African banks due to its strong position in the local market, lower price-to-earnings ratios, a history of offering good dividends and a fresh leader as CEO.
Banks have managed to navigate global financial uncertainty within the sector when compared to other companies, said DailyInvestor.
“Higher interest rates benefit banks as their main source of revenue – interest payments on loans – is advanced and profit margins bolstered. Since 2021, all listed South African banks have experienced an increase in earnings per share. It is in contrast to lows in 2020 due to the low-interest rates at the time. ”
Based on the Shareholder Weighted Index Top 40 JSE listed stocks (SWIX 40) as of 30 November 2022, Nedgroup reported the following performances:
Yearly shares
Top 10 shares over 2022
| Company | Percentage change |
|---|---|
| Absa Group | 53.1% |
| Glencore | 51.2% |
| Exxaro | 48.8% |
| Investec Plc | 39.6% |
| Standard Bank | 38.8% |
| Nedbank | 38.3% |
| Investec Ltd | 37.1% |
| Bidvest | 28.4% |
| Woolworths | 28.3% |
| Shoprite | 27.9% |
Bottom 10 shares in 2022
| Company | Percentage change |
|---|---|
| Aspen | -40.5% |
| Mr Price | -15.0% |
| Prosus | -14.8% |
| Mondi | -14.5% |
| MTN | -12.9% |
| Northam | -11.7% |
| Anglo gold | -10.7% |
| Old Mutual | -8.6% |
| Sibanye | -7.5% |
| Richemont | -6.5% |
3. Nersa tariff decision delayed:
Embattled consumers will now have to wait until the new year for news of what is expected to be a substantial electricity tariff increase.
Energy regulator Nersa has been given a reprieve from the pressure to determine Eskom’s tariffs for 2024/25 – it now has until 12 January to do so.
The High Court in Pretoria earlier ordered Nersa to make a decision “on or before 24 December 2022”.
Whether the utility will still make its long overdue financial results for 2021/22 public before Christmas was not yet clear on Tuesday.
Asked about reports that Eskom will hold its AGM on Friday (23 December), with a media and stakeholder briefing thereafter, the group’s CFO Calib Cassim said this is yet to be confirmed.
Eskom restated its results for 2020/21 following the appointment of new auditors, increasing its loss by 38% to more than R25 billion. It has missed the end-September legislated deadline to submit its results for the year ended 31 March 2021 as well as its self-imposed extended deadline of 30 November.
This was extended further, to December 30, but Cassim previously told reporters he hopes to finalise it before Christmas.
Eskom COO Jan Oberholzer has disclosed that Eskom has already spent double its upwardly adjusted diesel budget in an effort to keep the lights on, and this is expected to weigh heavily on the numbers to be announced.
Tariff increase
Eskom has applied for a tariff increase of 32% for 2023/24 and a further one of about 10% for the year thereafter.
Included in this amount is a R15 billion court-ordered refund of a part of the R69 billion over three years Nersa earlier unlawfully deducted from Eskom’s allowable revenue in lieu of a government equity injection of the same amount. It further included R1.7 billion, which is part of a claw-back in terms of the Regulatory Clearing Account (RCA) mechanism meant to mitigate the risk for Eskom and customers should the assumptions underpinning the revenue decision play out differently in reality.
4. Ramaphosa anti-corruption stance:
In his closing speech at the ANC’s elective conference at Nasrec, Johannesburg, on Tuesday, ANC president Cyril Ramaphosa said the party was determined to take all necessary action to end corruption and patronage within the party. In light of this, the ANC had decided to form an anti-corruption body to deal with criminality and State Capture.
“We have recognised that corruption within the ANC is a dire threat to the continued existence of our organisation and to the future of the National Democratic Revolution. We have recognised the great progress that has been made over the last five years in tackling corruption within our ranks, within the state and across society.
“But we have also acknowledged that we have not done enough to end corruption, to reverse the effects of State Capture and to deal with its corrosive effects on the ANC and institutions across society. We have said that the government should consider the establishment of a vibrant and independent anti-corruption agency as a structure to address issues of corruption across the country,” he said.
Corruption throughout government:
The Public Service Commission (PSC) released its Pulse of the Public Service quarterly report on Tuesday and it confirms what most South Africans already know: that corruption and waste are shot through the public sector.
“Corruption has become endemic across three spheres of the South African government and has permeated across all spheres of government. It undermines democracy and public trust in government and negatively impact state services and thus community and social development,” says the report.
It echoes the Zondo Commission’s findings, detailed in eight volumes, of state capture and institutionalised corruption in the public sector.
5. Goodbye public enterprises:
The ANC conference has closed for the year and will reconvene in January 2023 to handle outstanding policy issues.
The party hasn’t adopted any policies but has given an indication of where it stands on some: it wants the R350 social grant to continue as a basic income grant, and it wants the Department of Public Enterprises scrapped with SOEs moved into their respective line portfolios.
All information sourced from articles posted by: Business Insider, BusinessTech, Moneyweb, Daily Maverick, and Fin24.
