The National Minimum Wage Debate in South Africa: Not a Question of Better Wages at the Expense of more Jobs

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This paper reviews the debate on the introduction of a National Minimum Wage (NMW) in South Africa. It considers the literature on the employment effects of introducing the minimum wage system. It reviews some of the most prominent successful cases of a minimum wage, and highlights the challenges thereof. Drawing from the literature and selected country experiences, the paper concludes that a NMW can only be effective if it is part of broader social and economic policies and efficient labour market system. Specific to South Africa, it proposes that employers should pay a wage amounting to the standard minimum living levels, and/or appendage with some basic needs of the workers, based on the sectors. These costs and subsidies are to be carried by the employers.