Minimum Wage Violation in South Africa

University of Cape Town Development Policy Research Unit Working Paper No. 11/143

12 Pages Posted: 3 Dec 2012

See all articles by H. Bhorat

H. Bhorat

University of Cape Town (UCT) - Development Policy Research Unit

Ravi Kanbur

Cornell University; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Natasha Mayet

University of Cape Town (UCT) - Development Policy Research Unit

Date Written: October 1, 2011

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.

Keywords: Minimum wage legislation, South Africa, Labour Force Survey, enforcement

Suggested Citation

Bhorat, Haroon I. and Kanbur, Ravi and Mayet, Natasha, Minimum Wage Violation in South Africa (October 1, 2011). University of Cape Town Development Policy Research Unit Working Paper No. 11/143. Available at SSRN: https://ssrn.com/abstract=2184228 or http://dx.doi.org/10.2139/ssrn.2184228

Haroon I. Bhorat (Contact Author)

University of Cape Town (UCT) - Development Policy Research Unit ( email )

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Ravi Kanbur

Cornell University ( email )

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Centre for Economic Policy Research (CEPR)

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IZA Institute of Labor Economics

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Germany

Natasha Mayet

University of Cape Town (UCT) - Development Policy Research Unit ( email )

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Rondesbosch, 7700
South Africa

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