South Africa’s National Treasury has voiced its opposition to any national minimum wage over R3,000, saying that the current propositions will likely lead to 715,000 job losses and shrink the economy by over 2%.
In a recommendations report currently being reviewed in the national minimum wage debate (NWM), Treasury said that, based on a NMW of R3,125 in 2014, its projections see a massive loss of jobs, and a major knock to the economy.
It has been widely accepted that any minimum wage would lead to some job losses; however, various models have been put in place to determine at which level the a NWM would be a greater overall benefit to the economy, countering any job losses.
According to a research paper compiled by the Wits School of Economic and Business Sciences, the NMW could fall between the range of R3,500 to R5,500and still have an overall positive effect on the economy at a level that’s economically sustainable.
Job losses would be kept low in this band, the paper said, where job numbers would likely be a small bump (a loss of around 45,000 jobs), in line with what has been seen internationally where a minimum wage is introduced.
However, National Treasury disagrees.
Economists, too, have been pessimistic about the national minimum wage, with many saying that the move to have a blanket wage would kill jobs and destroy the economy.
Deputy president Cyril Ramaphosa has put forward the recommendation that the national minimum wage be set at R3,500 – however, he has said that this is just the starting point, and that the matter is still very much open for debate.
Policy makers will be looking at all feedback and reports coming from various sectors on the subject, with a flexible implementation date currently targeted for July 2019.