The government's proposal to significantly increase the minimum wage will lead to much higher unemployment, warns Dawie Roodt.

THE government’s proposal to increase the national minimum wage, especially the large increases for domestic and farm workers, will lead to a jobs bloodbath in South Africa.

This is the view of Efficient Group director and chief economist Dawie Roodt, who was speaking to Business Day TV about the proposed changes.

The National Minimum Wage Commission, which reports to the Labour Minister, has recently published its annual review of the national minimum.

The commission proposed a national minimum wage increase of 1.5% above inflation as measured by the consumer price index (CPI).

It also proposed that the minimum wage for farmworkers be aligned with the national minimum wage in 2021, with domestic workers following in 2022.

This equates to a 16% minimum wage increase for farmworkers and a 20% increase for domestic workers.

The national minimum wage, which currently stands at R20.76 an hour would increase by around 93c to R21.69 if the proposal is accepted.

This adjustment of the minimum wage for domestic workers would amount to an increase of approximately R450 per month.

Farmworkers, in turn, are expected to earn around R350 more under the new proposal.

Roodt said the proposed increases to the minimum wage for domestic and farm workers are not well thought through.

“The recommendations of these increases in the current economic environment is really looking for trouble,” he said.

“The reality is that we are going to be losing around 2 million jobs this year and the South African economy is in a deep depression.”

In such a challenging economic climate the discussion should be around decreasing the minimum wage instead of increasing it, Roodt said.

Increasing minimum wages are likely going to lead to further job losses, especially with increased mechanisation in farming.

Commenting on trying to achieve a liveable wage for low-end workers, Roodt said there should not be a minimum wage when unemployment is as high as it is now.

Unemployment is also the biggest contributor to inequality in South Africa, which will increase with more people losing their jobs.

The best way to address this problem is to get the economy to grow which will lead to higher levels of employment.

“By increasing the minimum wage we are going to make it even more difficult for people to find jobs which will increase inequality further,” said Roodt.

(SOURCE: MYBROADBAND)

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