Question

Minister of labour, Thulas Nxesi, has gazetted South Africa’s new minimum wage which will take effect from 1 March 2020. The gazette states that the new national minimum wage is R20.76 – an increase of 3.8%”.

Provide a discussion on the welfare effect of the above, that illustrates the case for when the above results in unemployment in the market for domestic workers as well as a case for when the above has no effect on the market for domestic workers. Use a diagram to support your discussion.

Minister of labour, Thulas Nxesi, has gazetted South Africa’s new minimum wage which will take effect from 1 March 2020. The gazette states that the new national minimum wage is R20.76 – an increase of 3.8%”.

Provide a discussion on the welfare effect of the above, that illustrates the case for when the above results in unemployment in the market for domestic workers as well as a case for when the above has no effect on the market for domestic workers. Use a diagram to support your discussion.

Minister of labour, Thulas Nxesi, has gazetted South Africa’s new minimum wage which will take effect from 1 March 2020. The gazette states that the new national minimum wage is R20.76 – an increase of 3.8%”.

Answer 1

Labour market policies such as national minimum wage are widely used in different countries to reduce poverty and inequality.

*Let us see how might a NMW affect the labour market outcomes of employed and unemployed youth.

*The findings suggest that a NMW could benfit youth engaged in formal employment, it could stimulate job seeking for discouraged work seekers and it unlikely to crowd out investments in further education.

*The vast majority of unemployed youth will probably not benfit from a NMW.This is due to the multiple and complex needs of disadvantaged youth.

*The increase of 3,8% brings the minimum wage for farm workers to R18,68 per hour ,but is far below the 12,5%

*The unemployment rate for the fourth quarter in 2019 stood at 29,1%.Around 40%of south Africans between the age of 15 and 34 are unemployed.

*A minimum wage system can only be a useful tool for upliftment in a stable economy. With the current south African policies and economy,it only contributes to unemployment and dependency on social grants.