Latest labour stats no consolation for NMW proponents

The first evidence of the 'brave new world of a much-improved national minimum wage (NMW)', through Stats SA's Quarterly Labour Force Survey for the first quarter of 2019, provides no consolation for proponents of the new policy. Brian Kantor, chief economist and strategist at Investec Wealth & Investment, writing in the Business Day, says the survey shows the unemployment rate (narrowly defined to include only those actively seeking work) increased to 27.6%, and when broadly defined to include discouraged workers, the unemployment rate has increased by a further percentage point to 38%. He says most poor South Africans are not employed despite, rather than because of, low wages. Given social grants and the issue of extended families, it makes little sense to seek or accept very low-paid work, which is regrettably all that may be available to those without skills and strength. Kantor adds. He says we now have a situation where the government is taking away with the one hand – discouraging low-wage employment – and encouraging it with the other by providing significant wage subsidies to reduce the minimums actually paid by employers. Kantor writes: ‘Given the wishful thinking about the benefits of “decent jobs” – political more than economic – while conveniently ignoring the costs to the many workers not employed, this sleight of hand is regrettably as much as we should expect as a remedy from economic policy.’

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