Effects Of Minimum Wage In Africa

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’‘THE PROPOSED NATIONAL MINIMUM WAGE HAS A POSITIVE SOCIAL AND ECONOMIC IMPACT IN SOUTH AFRICA’’ SMALL BUSINESSES The Minimum wage is a contentious issue. It enables those below the poverty line to meet their needs, however raising the minimum wage also costs jobs. The most common concern against the minimum wage is that it has a major impact in causing unemployment. The economy is largely governed by small businesses. Controllable costs like wages, benefits and business operating costs comprise of a large portion of operating expenses of the business. There are small start-up businesses unable to keep wages high. When businesses pay workers more_ wage costs increased will cause a reduction in the number of workers employed. Small businesses…show more content…
Since labour costs are high, employers will put pressure on the workers by increasing work productivity, imposing that duties and tasks be completed faster also creating additional tasks for workers hence only a few employees are needed. When a fresh graduate from university applies for her first job as a bakery technologist at a bakery, the owner knows she won’t be able to work/produce as a more skilled experienced worker therefore she won’t bring in more money but less considering she will need training_she is awarded a low hourly wage. So the owner rather than paying graduate the high minimum wage, hiring her is out of the equation as it will not make sense financially if the business is undergoing financial crisis but the more experienced worker will be paid the high minimum wage_so then she will be…show more content…
Already some small businesses are struggling to survive because of burdensome regulations imposed by the government, as they are at a disadvantage, high overhead costs and more margin on products sold to survive. Potential small businesses will close because of poor profit expectations some can be bankrupt if they are struggling financially. There is a casual relationship between technological changes and shifts in the distribution of wages. Major driving force behind changes in the wage structure is technology. Technical changes supports a skilled labour and replaces tasks previously performed by the unskilled labour (there will be a need for skills) Seems like the minimum wage is raised every few years. A minimum wage of R15 remains a minimum wage of R15 so if higher labour costs increase the price, the rand will be weakened-this means no progress has been made, a sustainable economic growth is needed for people and businesses to progress. It is good for a short term but not enough for the long

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