Why the World Bank and ILO are at odds over minimum wage
Labour experts have criticised a World Bank report that, among other things, suggests that the introduction of a national minimum wage in SA would shift labour demand towards skilled labour. The conclusions are contained in the 11th edition of the South Africa Economic Update released in April. In it, the bank writes that the implementation of the minimum wage, to be set at R20 an hour, would also deepen the intensity of capital at the expense of unskilled labour and disproportionally affect the price of goods consumed by the poor. While the bank said the effect of the legislation on inequality was not clear-cut given poor enforcement, its microeconomic analysis suggested "that the introduction of the national minimum wage would have a positive, but marginal, impact on reducing inequalities, depending on its negative effect on employment". Business Day understands that local labour institutions are planning to challenge the report and other suggestions shared by the World Bank in a ...
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