SA's minimum wage could hurt small firms and rural workers

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Cape Town - South Africa will formally adopt a national minimum wage of R20.00 per hour on Worker’s Day next year. There are questions as to whether this is enough to be termed a victory for the country’s working poor. If historical trends continue, our research shows that this might be beneficial for some workers. Others, especially those in small firms and rural areas, may not be so fortunate. The Conversation

Workers in rural areas and those currently working in small enterprises could be particularly susceptible to job losses as a result of the national minimum wage. The policy framework acknowledges these vulnerabilities. Its recommendations provide temporary exemption for small employers in particular, but none for rural jobs. That means that workers in rural areas could be adversely affected.

We found that most retail jobs were secure after minimum wages were introduced in that sector in 2003. But when we broke this down, we traced many job losses in rural areas. Similarly, many rural farm jobs were destroyed. In addition, if minimum wages continue to be poorly enforced many workers may still be paid wages below acceptable poverty lines.

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