Perceptions of local businesses on the newly proposed national minimum wage in South Africa

Abstract

As a country faced with many socio-economic challenges government intervention prompting protests are not unique to South Africa. In light of these confining circumstances, requests from various economic agents, especially labour unions have been directed towards the implementation of a national minimum wage (NMW). Although theory advocates negative effects from minimum wages, international evidence regarding these labour market interventions shows conflicting outcomes. The main aim of the study was to analyse business owners' perceptions regarding the impact of the implementation of a NMW. A qualitative research approach was adopted to collect data with a total of 10 in-depth interviews conducted with business owners in the Vaal Triangle region, Gauteng. The results of the study showed that participants acknowledged the advantage of implementing a NMW, perceiving the intervention as a much needed step towards greater equality. Other perceived advantages involved the security a NMW provides job-seekers and the possible impact on improved demand for goods and services as higher wages stimulate the economy. Concerns however were raised regarding small firms' ability to cover these wages and the capability of the legislation to account for inherent skill differences in various sectors. The findings of the study provide valuable insights especially in the South African context and even more so from a demand side perspective regarding the possible impact of these labour market interventions.