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MINIMUM WAGE VIOLATION IN SOUTH AFRICA

Author
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.
Description
WP 2011-04 January 2011 JEL Classification Codes: J38 O55
Date Issued
2011-01-01Publisher
Charles H. Dyson School of Applied Economics and Management, Cornell University
Type
article