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Should there be a national minimum wage?

By Jessica Anne Wood

The University of the Witwatersrand (Wits) held a symposium this week discussing the pros and cons of a national minimum wage. The topic is nothing new. In December it was reported that a national minimum wage would be established, however, an amount was yet to be determined.
 
But there is concern about what a national minimum wage will mean for the country.
 
However, there are already minimum wages established for various sectors. For example, the minimum wage for domestic workers is calculated according to the number of hours worked per week and per month, and the area where they are employed. For more on domestic worker wages, click here.
 
CSID, part of the School of Economic and Business Sciences at the University of Witwatersrand, launched the National Minimum Wage Research Initiative. It explained: “The issue of a instituting a national minimum wage is currently under debate in South Africa. If agreed upon, the South African government will initiate the process of finalising the policy and passing legislation. A national minimum wage would set a single wage floor for all sectors of the economy, subject to any agreed exceptions.”
 
What should it be? 
 
While no formal national minimum wage has yet been determined, there are estimates. The National Minimum Wage Research Initiative has suggested an amount of R4 125 as a working-poor line, or poverty line.
 
However, it highlighted: “The working-poor line of R4 125 is a way of combining information about individual earnings, household size and poverty into a single number in order to estimate the wage needed for an average poor household with at least one earner up to the poverty line. It does not necessarily serve as a recommendation vis-à-vis the level of the national minimum wage.”
 
There is concern that a national minimum wage will not be sustainable and may result in job losses. However, in an interview with radio station 702, Gilad Isaacs, researcher at the Wits School of Economic and Business Sciences, noted that according to economic models, there will be a statistically minor impact on unemployment.
 
“The potential impacts of a national minimum wage are far reaching. Current minimum wage coverage through the sectorial determinations is uneven, often low, and frequently unable to meet the basic living needs of most workers. Moreover, minimum wage legislation is regularly violated. The persistence of apartheid’s cheap labour legacy means that despite significant changes to South Africa’s labour market (both positive and negative), the vast majority of South Africans remain in poverty. A national minimum wage may be able to play a central role in the restructuring of the labour market (and economy more generally) and requires careful attention,” added the National Minimum Wage Research Initiative.
 
Following the Wits symposium, it was suggested that a national minimum wage could assist in boosting the country’s GDP. In recent months credit rating agencies around the world, together with the South African Reserve Bank have downgraded South Africa’s GDP forecast. Experts agree that a change is needed in order to improve the country’s GDP outlook.

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