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Possible Minimum Wage Policy

  • Temba A. Nolutshungu, Director of the Free Market Foundation discusses the effect of minimum wage policy.
  • He states the minimum wage policy is not reasonable in economic terms.
  • There is empirical evidence to the effect that wherever minimum wages have been implemented, they have had the consequences of the unskilled young inexperienced people being unemployed.
  • The issue is not just being minimum wage, the main issue is when the minimum wage policy is made a law. This means it will become mandatory on the part of businesses that they should pay their employees at over/above the stipulated minimum wage.
  • The South African unemployment crisis in around a region of 45% and mostly is young persons.
  • There is a need to adopt policies that will help absorb unemployment.
  • The minimum wage prices the unemployed out of work.
  • The other effect is that the minimum wage will force many businesses to contemplate investing in capital at the cost of labour, says Nolutshungu.
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The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.

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