fbpx

Could South African Minimum Wage Reduce Power Of Unions?

Could South African Minimum Wage Reduce Power Of Unions?

South Africans are considering what impact a proposed national minimum wage could have on the country’s economy, EyewitnessNews reports.

The ruling African National Congress says a minimum wage will reduce inequality in the country. The South African Chamber of Commerce is not enthusiastic about it. Others say most workers already have minimum wages within different sectors.

President Jacob Zuma said the African National Congress would look at establishing a national minimum wage as a way to reduce inequality. He spoke during the launch of the African National Congress’s election manifesto in Mbombela over the weekend. This is an election year in South Africa.

Wits University Economics Professor Christopher Malikane agrees. A national minimum wage will make South Africa more equal, Malikane said.

“I think it’s long overdue given the scale of inequalities and the low wages that are earned by the vast majority of people,” Malikane said.

The Congress of South African Trade Unions said it supports the introduction of a national minimum wage and is pleased the ANC has promised to discuss the issue.

But Peter Attard Montalto, emerging market economist at Nomura International, said a minimum wage wouldn’t make much difference because most workers are already in sectors that have minimum wages.

“In some ways a national minimum wage simplifies the structure as it removes some of the power of individual unions to adjust minimum wages,” Montalto said.

Around 80 percent of workers are already covered by minimum wages, but the impact of a national minimum wage on the economy could depend on how high or low it’s set, Montalto said.

“Too high, and it will cause further problems around employment growth going forward. If it is too low it would arguably be politically challenging for the ANC,” he said.

Neren Rau with the South African Chamber of Commerce and Industry warned the ANC to tread carefully.

“The key issue remains the relationship between productivity and (pay),” Rau said. “A national minimum wage may send the wrong signal.”