We've got news for you.

Register on BusinessLIVE at no cost to receive newsletters, read exclusive articles & more.
Register now

The framework agreement from the jobs summit endorses the monitoring and enforcement of the new national minimum wage. Ignoring the trade-off between wages and employment, it argues that this will "stimulate aggregate demand in the economy through wage-led growth", implying that such growth will also create jobs. This is a dangerous fantasy. Believers in job creation through wage-led growth make three dubious assumptions. The first is that employers can remain competitive by improving efficiency without shedding jobs. In "tradable" sectors that are exposed to international competition, firms are already under pressure to increase efficiency - they don't need to be prompted by higher wages to do so. Much more likely, a rise in the minimum wage will result in labour-saving technological change and some firms will go out of business. The result will be job destruction, especially in labour-intensive sectors where labour costs account for a large proportion of total costs. The second du...

BL Premium

This article is reserved for our subscribers.

A subscription helps you enjoy the best of our business content every day along with benefits such as articles from our international business news partners; ProfileData financial data; and digital access to the Sunday Times and Sunday Times Daily.

Already subscribed? Simply sign in below.

Questions or problems? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now