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Minimum Wage Violation in South Africa

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  • Haroon Bhorat
  • Ravi Kanbur
  • Natasha Mayet

    ()
    (Development Policy Research Unit
    Director and Professor)

Abstract

Minimum wage legislation is central in South African policy discourse, with both strong support and strong opposition. The validity of either position depends, however, on the effectiveness of minimum wage enforcement. Using detailed matching of occupational, sectoral and locational codes in the 2007 Labour Force Survey to the gazetted minimum wages, this paper presents, we believe for the first time, estimates of minimum wage violation in South Africa. Our results give considerable cause for concern. Minimum wage violation is South Africa is disturbingly high. We find that 44% of covered workers get paid wages below the legislated minimum, whilst the average depth of shortfall is 35% of the minimum wage. Around this average, violation is most prevalent in the Security, Forestry and Farming Sectors. We hope that the quantifications in this paper will provide a more solid basis for discussion of minimum wage levels and their enforcement in South Africa.

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Bibliographic Info

Paper provided by University of Cape Town, Development Policy Research Unit in its series Working Papers with number 11143.

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Length: 12 pages
Date of creation: Oct 2011
Date of revision:
Publication status: Published in Working Paper Series by the Development Policy Research Unit, October 2011, pages 1-12
Handle: RePEc:ctw:wpaper:11143

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Keywords: Minimum Wage Violation; South Africa;

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  1. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
  2. Strobl, Eric & Walsh, Frank, 2003. "Minimum Wages and Compliance: The Case of Trinidad and Tobago," Economic Development and Cultural Change, University of Chicago Press, vol. 51(2), pages 427-50, January.
  3. Sara Lemos, 2006. "Minimum Wage Effects in a Developing Country," Discussion Papers in Economics 06/1, Department of Economics, University of Leicester.
  4. William Maloney & Jairo Mendez, 2004. "Measuring the Impact of Minimum Wages. Evidence from Latin America," NBER Chapters, in: Law and Employment: Lessons from Latin America and the Caribbean, pages 109-130 National Bureau of Economic Research, Inc.
  5. Haroon Bhorat & Ravi Kanbur & Natasha Mayet, 2011. "Estimating the Causal Effect of Enforcement on Minimum Wage Compliance : The Case of South Africa," Working Papers 11145, University of Cape Town, Development Policy Research Unit.
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Cited by:
  1. Haroon Bhorat & Ravi Kanbur & Natasha Mayet, 2011. "Estimating the Causal Effect of Enforcement on Minimum Wage Compliance : The Case of South Africa," Working Papers 11145, University of Cape Town, Development Policy Research Unit.
  2. Haroon Bhorat & Ravi Kanbur & Natasha Mayet, 2013. "The impact of sectoral minimum wage laws on employment, wages, and hours of work in South Africa," IZA Journal of Labor & Development, Springer, vol. 2(1), pages 1-27, December.
  3. Chatterjee, Urmila & Kanbur, Ravi, 2014. "Regulation and noncompliance : magnitudes and patterns for India's factories act," Policy Research Working Paper Series 6755, The World Bank.
  4. Araceli Ortega Diaz, 2013. "Definining a Multidimensional index of decent work for Mexico," Remef - The Mexican Journal of Economics and Finance, Instituto Mexicano de Ejecutivos de Finanzas. Remef, September.

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