Johannesburg - While a national minimum wage will not lead to massive economic growth in South Africa, it will dent the country’s soaring poverty rates, says Wits researcher Gilad Isaacs.
“This is not a silver bullet. This is not going to solve South Africa’s economic woes. But it will have a positive impact on poverty and inequality,” said Isaacs, who is the co-ordinator for the National Minimum Wage Research Initiative at the university.
He was speaking at an event co-hosted by Independent Media’s Independent World of Work supplement and the Industrial Development Corporation on Monday night. It forms part of seminars the African Programme on Rethinking Development Economies is currently having.
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Isaacs said that while a minimum wage would close the gap between lower- and mid-income earners, this would not be the case between wealthy and poor workers, as the super rich earned money in other ways besides salaries.
He suggested that if South Africa was serious about closing its inequality gap between the rich and the poor, which is the highest in the world, the country should start a conversation around macro wages, which is the most that someone could earn.
Currently, the top 10 percent richest in the country earn 82 times more than the lowest 10 percent.
Some companies have started restricting what their top earners can take home. At cement company PPC, the highest-paid bosses may not earn more than 40 times of what the lowest-paid staff get paid.
Isaacs said that scenarios released by the Wits project earlier this year on what the impact would be from a minimum wage depending on how much it was, showed that in some cases company profit margins would be negatively impacted, but this would be minimal.
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Many in business are opposed to the national minimum wag, threatening that it will result in mass job losses and companies will have to shut down or leave South Africa because they will be unable to afford it.
But Isaacs scoffed at this, saying that studies, especially more recent ones with modern methodology, had shown that a minimum wage had a negligible impact on employment and companies could afford it.
“According to the IMF (International Monetary Fund), South African businesses have above-average profit margins compared to other emerging markets,” he said.
Besides reducing the country’s inequality gap, the introduction of the wage was likely to increase productivity as it had been shown in many studies that the more workers earned, the harder they worked.
The National Economic, Development and Labour Council is currently deciding how much the national minimum wage should be. A team of experts has been assembled to provide input.
While the ANC gave the country five years to discuss the wage’s modalities and introduce it, the government hopes that it can happen this year.
LABOUR BUREAU