AP - Labour Productivity In South Africa

Research shows that worker output is not a constant and that labour productivity is internationally an important component of agricultural production. Labour productivity plays a prominent role in creating the competitiveness of a specific farming business and even the whole economy. This situation became a concern for farmers as the pressure to increase minimum wages escalated in recent times. In 2006, the South African Government announced a total increase in wages of 34, 59% over a three year period (2006–2008). It is basically impossible to increase productivity of labour to the same extent over this period. This paper examines labour productivity, the influence of increasing labour costs on profitability and sustainability, as well as how farmers must take this issue into account when production planning is done.

Keywords: Labour productivity, minimum wages, profitability, competitiveness.