Wages and productivity

Beyond all the theorising and generalising about wages inherent in the discussion arising from the proposed national minimum wage, I suggest that there lies a simple reality. Sadly, Prof Imraan Valodia, the free-market tomato world does exist at the level of wages for unskilled workers. How much will an employer pay to put or keep an employee in work? The rational answer is a sum that will reflect as a minimum the value of the overall economic contribution of that employee to the employer. That is why 47% of workers earn less than R3,500/month.

In the Western Cape, there have been job losses due to recently determined minimum higher wages payable in the viticulture industry.

Machines will also be increasingly substituted for unskilled labour elsewhere in the economy, or marginally productive labour simply released or not employed in the first place. It is only a government spending tax money that can employ people who do not contribute their quantum to the general wellbeing of the nation.

Only time will tell whether Valodia or Ann Bernstein is correct. My “modelling” predicts that Bernstein is. What should be done is to make those alterations to the basic inputs to our productive economy that will foster growth in real wages and productivity and not hinder it with proposals drawn from Marxist-Leninist claptrap based on the labour theory of value.

Robert Stone Linden