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Minimum Wage Violation In South Africa

Author

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  • Bhorat, Haroon
  • Kanbur, Ravi
  • Mayet, Natasha

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 45% of covered workers get paid wages below the legislated minimum, whilst the average depth of shortfall is 36% 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.

Suggested Citation

  • Bhorat, Haroon & Kanbur, Ravi & Mayet, Natasha, 2011. "Minimum Wage Violation In South Africa," Working Papers 126534, Cornell University, Department of Applied Economics and Management.
  • Handle: RePEc:ags:cudawp:126534
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    File URL: http://purl.umn.edu/126534
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    References listed on IDEAS

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    1. 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.
    2. Lucas Ronconi, 2010. "Enforcement and Compliance with Labor Regulations in Argentina," ILR Review, Cornell University, ILR School, vol. 63(4), pages 719-736, July.
    3. Lemos, Sara, 2009. "Minimum wage effects in a developing country," Labour Economics, Elsevier, vol. 16(2), pages 224-237, April.
    4. Haroon Bhorat & Ravi Kanbur & Natasha Mayet, 2012. "Estimating the Causal Effect of Enforcement on Minimum Wage Compliance: The Case of S outh A frica," Review of Development Economics, Wiley Blackwell, vol. 16(4), pages 608-623, November.
    5. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
    6. 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 427-450, January.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Ravi KANBUR & Lucas RONCONI & Leigh WEDENOJA, 2013. "Labour law violations in Chile," International Labour Review, International Labour Organization, vol. 152(3-4), pages 431-444, December.
    2. Lucas Ronconi, 2015. "Enforcement and the Effective Regulation of Labor," IDB Publications (Working Papers) 7296, Inter-American Development Bank.
    3. Araceli Ortega Diaz, 2013. "Definining a Multidimensional Index of Decent Work for Mexico Definiendo un Índice Multidimensional de Trabajo Decente para México," Remef - The Mexican Journal of Economics and Finance, Instituto Mexicano de Ejecutivos de Finanzas. Remef, September.
    4. 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;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-27, December.
    5. Sabina Dewan & Lucas Ronconi, 2014. "U.S. Free Trade Agreements and Enforcement of Labor Law in Latin America," IDB Publications (Working Papers) 87253, Inter-American Development Bank.
    6. Haroon Bhorat & Ravi Kanbur & Natasha Mayet, 2012. "Estimating the Causal Effect of Enforcement on Minimum Wage Compliance: The Case of S outh A frica," Review of Development Economics, Wiley Blackwell, vol. 16(4), pages 608-623, November.
    7. repec:spr:jlabre:v:38:y:2017:i:3:d:10.1007_s12122-017-9241-z is not listed on IDEAS
    8. repec:spr:ijlaec:v:60:y:2017:i:1:d:10.1007_s41027-017-0077-0 is not listed on IDEAS
    9. Ronconi, Lucas & Zarazaga S.J., Rodrigo, 2015. "Labor Exclusion and the Erosion of Citizenship Responsibilities," World Development, Elsevier, vol. 74(C), pages 453-461.
    10. Urmila Chatterjee & Ravi Kanbur, 2013. "Regulation and Non-Compliance : Magnitudes and Patterns for India's Factories Act," World Bank Other Operational Studies 16717, The World Bank.
    11. Haroon Bhorat & Tara Caetano & Benjamin Jourdan & Ravi Kanbur & Christopher Rooney & Benjamin Stanwix & Ingrid Woolard, 2016. "Investigating the Feasibility of a National Minimum Wage for South Africa," Working Papers 201601, University of Cape Town, Development Policy Research Unit.
    12. Haroon Bhorat, 2014. "Compliance with minimum wage laws in developing countries," IZA World of Labor, Institute for the Study of Labor (IZA), pages 1-80, August.
    13. Haroon Bhorat & Ravi Kanbur & Benjamin Stanwix, 2015. "Partial minimum wage compliance," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-20, December.
    14. Lucas Ronconi, 2015. "Enforcement and the Effective Regulation of Labor," IDB Publications (Working Papers) 91777, Inter-American Development Bank.
    15. Andrés Ham, 2015. "Minimum wage violations in Honduras," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-19, December.

    More about this item

    Keywords

    Minimum Wage Violation; South Africa; Labor and Human Capital; Public Economics; J38 O55;

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics

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