In his response to my article on the dangers of a national minimum wage, Imraan Valodia calls me an "ideologue" and accuses me of holding views he admits are not contained in my article! (Potential disemployment effect of minimum wage carefully weighed, February 14) He then dismisses my and the Centre for Development and Enterprise’s argument without responding to its substance.
People who have nothing to sell but their labour should be protected from exploitation by employers. However, the basic principles of economics still apply.
The past 20 years have demonstrated that artificially raising the price of labour will mean fewer people are employed. We should all be concerned that 47% of workers earn less than the proposed minimum wage, but changing the pay structures of so many people by decree is potentially dangerous.
Who will pay for it? What are the implications for nearly 9-million unemployed?
Valodia disagrees with my assessment that his panel’s reliance on international evidence is irrelevant because SA has far more unemployment than other countries. He points to four developing countries that have a national minimum wage and, in his view, "much in common" with SA. Is this true?
The four countries he names – Brazil, Costa Rica, Mexico, Indonesia – have adult employment rates of between 57% and 63%, much higher than SA’s 40% or so.
Many workers in these countries do not qualify for protection from exploitative employers because they are self-employed, with figures ranging between 25% (Brazil and Costa Rica), 54% in Indonesia, and 67% in Mexico. In this country, the figure is 15%.
If these are the best examples of countries on which Valodia and the panel have based their judgments, I would suggest that I am not the one cherry-picking evidence to support an ideologically favoured outcome.
Head, Centre for Development and Enterprise