Business Unity South Africa (Busa) says the signing into law of the National Minimum Wage (NMW) Bill is a “positive step” towards stabilising South Africa’s labour relations environment and signals the country’s commitment to social reform.

This is against the backdrop of South Africa’s labour relations environment having been previously constantly flagged by three credit ratings agencies, namely Moody’s Investors Service, Fitch and S&P’s Global Ratings, as a potential negative because of its volatile and adversarial nature, Busa said in a statement issued on Monday.

The negotiations around and subsequent agreement on the NMW Bill and associated regulations has, however, shifted this narrative, with the process being cited by the three agencies as a positive framework for social reform, Busa pointed out.

Although S&P’s this week kept South Africa’s foreign and local currency denominated debt ratings at non-investment grade, the country’s outlook remains stable.

S&P’s has noted the government’s commitments to undertaking economic, social and fiscal reforms, with the NWM Bill falling within the category of much-needed social reforms, said Busa.

The coming together of social partners, which include business, organised labour, the community and the government, demonstrates what can be achieved when the collective works towards a common social framework, the organisation said.

It further stated that the organisation was particularly pleased about the introduction of the new labour relations stability provisions, which comprise the default picketing rules, the secret strike ballots, the provision for extended dispute resolution prior to strike action and advisory arbitration.

“The new advisory arbitration provisions are a clear signal the National Economic Development and Labour Council constituents agree that violent and protracted strike action is no longer regarded as acceptable,” said Busa CEO Tanya Cohen.

The organisation also noted the exemption provisions in the NMW laws, particularly targeted at small and medium-sized enterprises, which would provide some relief for those employers that cannot afford the NMW.

“We are pleased that we were able to reach an agreed outcome on the NMW and urge all businesses to put plans in place to ensure compliance or go about official channels to seek exemptions,” Cohen commented.