Freedom Front Plus
Freedom Front Plus

Increase in national minimum wage does not bode well for unemployment rate

The increase of 6,9% in the national minimum wage, recently announced by the Department of Employment and Labour, that will come into effect on the 1st of March this year will send the already devastating unemployment rate though the roof.

The principle of reasonable compensation for work done is a given and must be implemented in practice, but rigid and prescriptive labour legislation stifles the private sector, especially small business enterprises.

Employers and employees ought to be given the opportunity to negotiate and agree on wages while taking various factors, like affordability, working hours, the type of work, etcetera, into account. When fixed wages are imposed, employers have no choice but to retrench those employees that they can no longer afford, which contributes greatly to the country's unemployment crisis.

Greater unemployment will inevitably also result in more social problems, like an increase in crime, more pressure on the government as well as other abuses.

It is tragic that it is the vulnerable workers, like domestic and farm workers to whom the new minimum wage of R23,19 also applies, who will suffer the most.

At present, many households are under increasing financial pressure due to the Covid-19 pandemic and related factors.

Many businesses could not afford pay raises and many households' debts have increased, and so any further pressure on households will lead to retrenchments or reduced working hours, thus, less income for domestic workers in general.

Likewise, the increase of the minimum wage for farm workers is also untimely and ill-advised seeing as states of disaster have been declared in various places all over the country due to flooding and other natural disasters.

The agricultural sector has already suffered immense damage due to these disasters and as a result, the number of job opportunities in the agricultural sector has decreased significantly. More financial pressure will only make matters worse.



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