LABOUR REGULATION
BRIAN KANTOR: Setting a minimum wage shows lack of faith in market forces
The panel of experts on the national minimum wage seems to have no doubts that it will increase growth, reduce inequality and help the poor in SA. Yet it had to strike a balance between a higher prescribed minimum level (presumed so desirable in principle) and its consequences for unemployment, of which SA already has an unfortunate abundance. Aggregate employment losses, using an assumed range of negative trade-offs of increases in wages for lower levels of employment, were estimated to range between an extra 100,000 and 900,000 jobs lost at the recommended minimum wage of R3,500 per month. However, the panel did qualify its judgment. It noted correctly that "… there is no research or data that can accurately predict the outcome of any policy intervention…. That future changes to the level of R3,500/R20 per hour should be based on solid evidence of the impact of the national minimum wage...." Another argument for breaking eggs to make omelettes, with little consolation to those who...
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