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Minimum Wage Violation in South Africa

Author

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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.

Suggested Citation

  • Haroon Bhorat & Ravi Kanbur & Natasha Mayet, 2011. "Minimum Wage Violation in South Africa," Working Papers 11143, University of Cape Town, Development Policy Research Unit.
    • Handle: RePEc:ctw:wpaper:11143
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    File URL: http://hdl.handle.net/11427/7288
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    References listed on IDEAS

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    1. Lucas Ronconi, 2010. "Enforcement and Compliance with Labor Regulations in Argentina," ILR Review, Cornell University, ILR School, vol. 63(4), pages 719-736, July.
    2. Daniela Casale & Colette Muller & Dorrit Posel, 2004. "‘Two Million Net New Jobs': A Reconsideration Of The Rise In Employment In South Africa, 1995–2003," South African Journal of Economics, Economic Society of South Africa, vol. 72(5), pages 978-1002, December.
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    4. ArnabK. Basu & NancyH. Chau & Ravi Kanbur, 2010. "Turning a Blind Eye: Costly Enforcement, Credible Commitment and Minimum Wage Laws," Economic Journal, Royal Economic Society, vol. 120(543), pages 244-269, March.
    5. 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.
    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.
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    8. 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.
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    More about this item

    Keywords

    Minimum Wage Violation; South Africa;

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics

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