Vavi: Higher wages boost economy

2014-12-04 17:16

A national minimum wage will result in economic growth, says Cosatu secretary general Zwelinzima Vavi.

While individual businesses would feel the impact, the economy as a whole would benefit, he said at the 2014 Commission for Conciliation, Mediation and Arbitration indaba in Durban today.

“By putting more money in the pockets of the poorest, the national minimum wage will increase demand for goods and services, thus leading to more sales, greater production to meet the new demand and therefore more jobs, which will in turn put more money into circulation.”

While it would help to reduce poverty it would make those workers that were currently poverty-stricken contributors to the tax base.

A national minimum wage should not replace collective bargaining, but rather be a springboard for improved wages.

“We don’t want to demobilise workers, who must be free to battle in the sectoral bargaining structures to improve on the national minimum wage and ensure that recognition is given to factors like qualifications, skills, experience, and danger,” he said.

He cited Brazil as an example of a country where growth had taken place after the introduction of a minimum wage.

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