What we learnt from young South Africans about minimum wage and employment

The national minimum wage could benefit young people who have jobs and could stimulate others who have given up.
The vast majority of unemployed young people probably won’t benefit from a national minimum wage, due to circumstances which prevent them from finding work. Picture: Shutterstock

National minimum wages are used in many different countries to reduce poverty and inequality. But there are many unanswered questions, such as what their impact might be on youth employment and unemployment. This is a pertinent question in a country like South Africa where joblessness of people aged between 18 and 24 years stands at a staggering 54.7%.

In the 1990s researchers in the US began to challenge the dominant view that national minimum wages had negative effects on employment. Since then, there has been an upsurge in their popularity. But the impact in developing countries is under-researched. Existing research suggests that overall employment is unaffected and where negative results are seen, these are small and limited to unskilled workers.

There is some limited data about the effects of minimum wages on youth unemployment in South Africa. This stems from evidence following the introduction of minimum wages in some sectors, starting in about 2000. Earlier research found a negative – but small – impact on youth employment in agriculture; with some increases in the retail and taxi sectors, and no negative effects in the other remaining sectors. They also found significant levels of noncompliance with the law, with between 40% and 50% of young people earning less than the applicable minimum wages.

The country introduced a national minimum wage across the board in 2019 with the aim of reducing poverty and unemployment. But little is known about what its impact might be on youth employment and unemployment.

We set out to establish young people’s views on the subject.

For our research we conducted 16 focus groups with employed and unemployed youth. Ten were in urban areas, two were in semi-urban areas and four in rural communities. The conversations were conducted in four languages.

The research focused on young people’s experience of unemployment and work-seeking, their understanding of the national minimum wage and how the national minimum wage might affect those looking for work or those in low-wage jobs.

The findings suggest that a national minimum wage could benefit young people who have jobs and that it could stimulate those who have given up trying to find work to do so.

But, the vast majority of unemployed young people probably won’t benefit from a national minimum wage. This is because disadvantaged young people face a range of challenges that prevent them from finding work. Other social interventions are needed to address the youth unemployment crisis.

What young people told us: 

The most interesting findings were that:

  • Many respondents expect employers to try to sidestep the minimum wage. This points to the urgent need for better enforcement of the minimum wage by government.

  • Many participants felt powerless to bargain for higher wages which they believe makes it unlikely they would be able to claim their rights.

  • There was evidence that the guarantee of a higher wage would encourage job-seeking among unemployed youth, and that it would not affect a young person’s decision to study further. An unemployed respondent from Hillbrow in Johannesburg said:

For me it’s an opportunity to advance myself. Maybe at home I’ve got no shoes, no toiletries. Sitting at home doing nothing, being hungry the whole day and no food… for me the minimum wage is a way out of that

  • Unemployed and employed youth have very different ideas of the lowest wage at which they are willing to work (reservation wage). But all indicated they would be willing to work for a lower wage than their reservation wage, even if it was unfair or below the cost of living. 

Challenges young people face: 

Young people face multiple challenges when looking for work. These need to be taken as seriously as the wage issue.

The main challenges include a lack of both hard and soft skills as well as work experience. Hard skills are technical skills in, for example, computers and entrepreneurship, while soft skills relate to social skills that are important in the work place.

Other key problems include a lack of jobs and social networks that can link them to jobs. A majority of respondents indicated that the cost of seeking work was exorbitantly high.

At this stage it’s not clear whether these issues form part of the broad remit of South Africa’s National Minimum Wage Commission. This is important because more than just a minimum wage is needed to create opportunities and safeguard the long-term job prospects of half of South Africa’s young population.The Conversation

Leila Patel, professor of Social Development Studies, University of Johannesburg.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

COMMENTS   9

Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in and an Insider Gold subscriber to comment.

SUBSCRIBE NOW SIGN IN

R20 per hour will lead to more unemployment with small businesses laying off workers or simply closing. No business can afford paying R3600 pm to a person not being productive and contributing.

I am amazingly confused that this country with their “on the job trainee” government employees don’t see what is really happening outside the borders of this country. Look @ America where the minimum wage has gone up substantially. There are people losing their jobs and hours are being cut. One day, I hope. this country will stop thinking third world. Don’t forget to vote!!!!!!!!!!

Zokey : google US unemployment stats

Transformation of economies globally through tech is spiralling

Banks here are shedding jobs where tech can take over

Robots are evolving to complete ever increasing complex tasks

Locheed martin / Boeing / Google have collaborated to develope software that can write software systems. Other firms will catch up

Every facet of life is changing through tech and Leila Patel thinks South Africa will sail through it with uneffected consequences

Conscription for ALL school leavers could be a way of alleviating some of the unemployment issues and also become a vehicle to give untrained people some guidance and training to help them in the future. Give them work in community projects, hospitals, clinics, at game parks, at SOE’s in meaneal jobs, but keep them occupied and off the streets. There has to be hundreds of places where young people can make a meaningful contribution and funded by government with the money they would be pilfering instead.After a year of conscription and learning to do tasks which could help them in future life, they will also feel that they have made a contribution.

All wages paid out, be it for a gardener, a domestic employee, etc. should be tax deductible for the payer, then people will feel more comfortable with the minimum wage.

“the vast majority of unemployed young people probably won’t benefit from a national minimum wage”
It is interesting that the researchers find the same as most people said before the minimum wage was introduced. One more failure of the ANC’s social engineering programme.
When I was growing up in Hungary I had summer jobs every year from the age 12 until I graduated from university. The most important things I learned from this was not the what the author calls “hard skills” but the soft ones like arriving to work on time, learning about the hierarchy in a company, etc. Unfortunately thanks to labour laws in Hungary kids today can not do such summer jobs from such young age. I never felt that I was exploited, just the opposite, I was proud that I earned my own pocket money and that I could be relied on to do a job however simple it might have been.

If we for a moment ignore the fancy jobs and focus on hordes of unskilled youngsters.

Part of their problem is skill & experience. They have neither right now and no way to get it.

As a client often doing electrical, construction, plumbing, cooling system etc type work I’d be willing to pay extra per month for that contractor to use three or four youngsters extra. They will pick up skills even if at first they do the crappy stuff and later technical stuff. The contractor gets extra hands and might for a change finish on time.

If a scheme needs the client, contractor and youngster to collude in defrauding government of their contribution, there should be less fraud.

“The country introduced a national minimum wage across the board in 2019 with the aim of reducing poverty and unemployment”.

You must be smoking your sox if you believe that minimum wages reduce unemployment. All they do is outlaw low-paying jobs. These are typically from labour intensive industries. Employers can then switch to automation (capital intensive) or close shop. The low paying jobs then move underground or the ex employee goes freelance … typically earning less than the minimum wage.

Mankind did not make the laws of economics. These were discovered the hard way. It is only the ANC that is so arrogant and obtuse that they refuse to learn.

The ANC is trying to buy votes with the minimum wage.

Why do away with jobs that pay less than the minimum wage? It is not ideal but better than nothing. R100 a day amounts to R2 000 a month, which is way better than nothing.

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
BTC / USD

Subscribe to our mailing list

* indicates required
Moneyweb newsletters

Instrument Details  

You do not have any portfolios, please create one here.
You do not have an alert portfolio, please create one here.
INSIDER SUBSCRIPTION APP VIDEOS RADIO / LISTEN LIVE SHOP OFFERS WEBINARS NEWSLETTERS TRENDING

Follow us:

Search Articles:
Click a Company: