Inequality in the South African labour market: The political economy of the national minimum wage

Abstract

In 2019, South Africa implemented a national minimum wage (NMW) for the first time. This is an important intervention, given that the South African labour market continues to generate some of the highest levels of income and wealth inequality in the world. The minimum wage is intended as a structural intervention to transform the labour market by setting a wage floor, while highlighting larger issues that continue to reproduce inequality in the labour market. The process raises interesting questions about the role of social dialogue in the policy making process, especially at a time when the roles of experts and evidence are contested in political economy. This article reviews the national minimum wage process from two angles: assessing the economic evidence and examining the political economy of minimum wages in South Africa. We take this approach in order to better understand the roles of evidence and politics in the policy making process. While both processes were contested, important differences emerge from the analysis: the economic lens highlights the intersection of evidence and ideology, while a political economy review identifies important lines of contestation in the policy making process itself. The national minimum wage process shows that institutionalised social dialogue continues to be a central part of the policy making process, but that it cannot be taken for granted: the particular configuration of the social dialogue process and the roles assigned to each player matter.

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“…In South Africa, the labour market presents with a number of inequalities. Executive salaries are some of the highest in the world; however, low‐spread pay dominates over half of those working full‐time (Francis & Valodia, 2021). According to South Africa's national minimum wage (NMW), those in low‐paying jobs such as domestic work earn approximately ZAR 26.76 per hour ($1.39 per hour) and ZAR 214.08 per day ($11.12).…”

“…In South Africa, the labour market presents with a number of inequalities. Executive salaries are some of the highest in the world; however, low-spread pay dominates over half of those working full-time (Francis & Valodia, 2021).…”