NATIONAL MINIMUM WAGE
Dramatic change to pay structure will set off dangerous chain reaction
Advisory panel is willing to run the risk of job losses but has understated the likelihood and potential number, writes Ann Bernstein
This week, SA’s "social partners" agreed to a framework for the implementation of a national minimum wage. This reflects the recommendations of a panel appointed in 2016 to advise Deputy President Cyril Ramaphosa, which proposed a minimum hourly wage of R20, the equivalent of R3,500 a month. Though the panel pretends otherwise, its proposal is a high-stakes wager with the livelihoods of tens or even hundreds of thousands in play. It is a wager that is being made in a stagnating economy in which nearly 40% of the potential workforce is unemployed. There is little doubt that the South African economy needs game-changing interventions to achieve the growth we need. What is needed most urgently is a strategy to return the economy to more rapid, more inclusive growth. The panel’s proposals are far more likely to undermine this goal than to advance it. They are likely to deepen poverty and inequality by destroying existing jobs and reducing even further the demand for unskilled labour. By...