Why minimum wage is only half an idea

What do you do when things are unaffordable in your country? Revert to labour law, implement a minimum wage that can be circumnavigated through desperation and claim you’ve done a good thing as all other good things become more expensive? Seems like that was the plan and I’m not sure how beneficial it has been.

Working studies claim that minimum wage makes labour unaffordable while those who saw a spike in pay after being financially abused would claim direct benefit. Some may be getting the same pay but working less as a result. Whatever the effect of the minimum wage, you’re going to get several opinions on it.

One thing we can all agree on is that R27.58 doesn’t buy you a whole lot. In a couple of years, that could be one kilowatt hour of electricity, or a cup of water. What would be the natural reaction in that case? Raise the minimum wage obviously. What a wonderful idea. As things get more expensive, give people more money. It’s especially easy when it’s not your money and you make it a condition of doing business in South Africa.

Problem solved? Uhhhmmm kinda, though it does have a small qualifier; in order for the idea to work, you need businesses to actually do business in South Africa. The solution is only effective if the businesses can continue to afford paying the people you’re trying to protect with minimum wages. If they can’t, then the plan has very little impact since a wage, no matter how big or small, can only be paid by an employer who has the finances to pay it.

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One could be lazy and start chanting phrases about how minimum wages kill business but that’s just disingenuous. It’s particularly upsetting to hear that when employment abuse is so rife in the country. If the state has to step in to prevent abuse, then that’s a fair conversation to have.

If, however, the state abuses the notion that there was abuse to get out of doing its own work then that’s a more important conversation. A minimum wage only goes so far in making life affordable. One cannot keep raising it in perpetuity and expect all to be right with the world. We need some skin in the game from those commanding the minimum wage too.

Give us economic growth, keep prices low, make public services effective and efficient and there would be more money for a minimum wage. A functional post office would avail so much money spent on couriers. Flat roads would save millions in tyres and had the rail system not gone into the sunset, a trip on the highway could give us fewer hours on the road.

ALSO READ: SA employer organisations oppose national minimum wage hike

The responsibility of sound economic reform doesn’t operate by an executive telling us what to do and sitting back to enjoy the results. It takes some teamwork and the minimum wage notion is the work of only one team; team business. It’s not like team business gets any credit for abiding the minimum wage. It’s not like it team government feels any pain that business has to endure.

If the minimum wage is going to work, it cannot be an exclusive solution to our economic issues and we cannot simply pretend that we can plug the hole so easily. The plug will have to continuously increase and eventually the whole thing will cave.

Protect against abuse of labour by all means. It’s an important thing to do in a free and fair society. But abusing business is probably not the way to fix your problem.