Govt’s R4,000 Minimum Wage Will Only Destroy Employment And Make Us Poorer


An economic analyst, Dawie Roodt has condemned government’s findings and decision to introduce and be committed to a national minimum wage of R4,000.

He said this will only plunge citizens into deeper poverty and destroy employments.

The SA government had months back vowed to introduce a national minimum wage significantly to help reduce inequality in the society.

Report by the National Minimum Wage Research Initiative at the University of the Witwatersrand which supported the introduction of the payment, stated that  a national minimum wage can be instrumental in reducing the inequality gap and poverty, and can support economic growth.

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The research claimed that a minimum wage can be implemented without having any significant effect on employment. The National Minimum Wage for South Africa report also revealed that the level of economic output would be 2.1% higher with a national minimum wage, beginning at levels between R3,500 and R4,600.

Responding to these findings, Dawie Roodt, Chief Economist at Efficient Group said, this new introduction will in no way move the country forward. It will rather take the country back to what its supposed to have far left behind.

He disputed the findings, arguing that a minimum wage will lead to more job losses added to the current rising unemployment rate and increased poverty in South Africa.

Roodt who was speaking on Business Day TV, argued that  moving money from “bad capitalists” to give it to workers who will spend more to stimulate the economy is a bad idea.

He said: This approach is a way to stimulate demand in the economy, which is not needed. “I would argue that we do not need stronger demand in the economy,”

“We have excessive demand in South Africa, which is shown by the country’s very large current account deficit,”

Roodt also dismissed the argument that a minimum wage will decrease inequality. He pointed out that the reason for inequality in South Africa is because so many people are unemployed and the fact that the state is a large employer, and that it overpays its employees.

“A minimum wage of R4,000 will lead to huge levels of unemployment, which the country simply cannot afford,” said Roodt.

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Furthermore, the report put forward that higher salaries will lead to higher productivity by workers, which compensates businesses for the higher costs. But Roodt disagreed saying “a major reason for low productivity in South Africa was the “terrible state of our education system.”

He said if you want to improve productivity levels, improve education and skills development in South Africa, businesses would love to pay their workers more, as long as this was accompanied by higher productivity.