Research & Innovation 2015-16 - Page 36

A minimum wage needs to balance
risk and opportunity, says DPRU
The benefits of setting a national minimum wage at R2 447 per month
could, on average, outweigh the costs, but setting it at R3 400 could risk
far greater job losses, warns a research paper from the Development Policy
Research Unit (DPRU). Agriculture stands to lose a much bigger proportion
of jobs than a sector such as mining, as farmers might struggle to afford a
new minimum wage.  
Weighing up the costs and risks of setting a national
minimum wage at these two levels, the DPRU, in a
study led by Professor Haroon Bhorat, argues that
a baseline of R2 447 could result in job losses of up
to 281 000 people across the board. This is far more
palatable than the more than 500 000 low-wage
workers who might expect to lose their jobs should the
baseline be set at R3 400.
But when it comes to the bigger picture of
socioeconomic equity, a national minimum wage would
only be one – and perhaps a minor – component of a
broader social programme to reduce inequality, boost
employment and grow the economy.
How they got to those numbers
Bhorat and his fellow researchers attempted to provide
a three-part analysis. The first part was an international
review of the experience of minimum wages in mainly
developing countries. They explored the types of
minimum wages used around the world – whether they
were sectoral or national – including the reach, and
the type of enforcement used. They also looked at the
impact of minimum wages on employment in particular.
The second part of the study was an examination of
existing research on minimum wages in South Africa,
“because, of course, we do have an existing system

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