National minimum wage not enough to reduce inequality and poverty
A national minimum wage will not make a difference in inequality and poverty in South Africa, according to Ayabonga Cawe. Cawe was speaking at a policy dialogue hosted by Young Economists for Africa last night at the Wits Origins Centre which focused on the need for a national minimum wage policy.
A “national minimum wage should be accompanied with other social protection measures,” explained the Rethink Africa chairperson. These include a social wage subsidised by government to provide free housing, free health care and free education. These measures would then affect savings, investments and consumption.
Asset transfers are another option through the restoration of the ownership of land, the economy and access to markets in the economy for the previously disadvantaged.
“People can’t build (their) lives without assets,” Cawe said.
He also said that the national minimum wage will never be effective unless backlogs in development are dealt with and productivity is increased. He stressed that people need an incentive, possibly even a stake in profits, to be productive.
Despite arguments that a national minimum wage would give the country a bad image and may deter investments, Cawe defended the proposal. “People are employed but they are still caught in a poverty trap”. A national minimum wage will allow for social reproduction he said.
Jane Barrett, policy research officer at the South African Transport and Allied Workers’ Union also supported the proposed national mimumum wage and told Wits Vuvuzela, it is necessary “to bring simplicity and regularity to the regulation of wages at the bottom.”
According to Barrett, a national minimum wage is more effective in reducing inequality, than reducing the high pay for executives.
Taku Fundira, senior researcher at Studies in Poverty and Inequality Institute, suggested that “social protection policies should be strengthened.”
He told Wits Vuvuzela that South Africans should consider a basic income grant as an option.
In South Africa there is an “unemployed generation aged between 18 and 59” that will never receive a certain or reasonable income until the age of retirement, when they would qualify for a pension grant. He explained that a minimum wage could absorb unemployment.
Fundira also encouraged good infrastructure, a powerful labour force and a flawless trade flow to attract investment. “This is a redistribution policy, we take away from business to empower lower income earners. The policy should be clear and transparent and enforceable.”
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