Basic wage talks sideline jobless youths
Little attention has been paid in the national debate to what young people know about minimum wages, their expectations and who stands to benefit most from it. This is unfortunate as the labour market needs of young people are complex, with only one in five youths between the ages of 18 and 25 years employed, down from almost 30% in 2008.
Research by the Centre for Social Development in Africa at the University of Johannesburg (UJ) fills this gap through extensive discussions with youths in this age group i n urban and rural areas in five provinces.
Young people, unemployed and employed, were found to have limited knowledge about minimum wages, what their purposes are and how the system of collective bargaining and sectoral determination works.
Many of those who were employed reported wages below current sectoral determinations. They spoke frequently of uncertain and erratic pay, and of the absence of employment contracts. Many doubted employers would abide b y a n a t i o n a l mi n i - mum wage, and others thought their pay would be frozen indefinitely or that their wages would be reduced.
In our sample of working youths, their median earnings were R2 000 a month. The national median for 18- to 25-yearolds is R2 500, based on Statistics South Africa’s 2014 quarterly labour force survey.
Many said they would, and do, work for wages below those perceived to be fair. Most would also work for less than their perceived cost of living.
A national minimum wage is likely to benefit the 20% of young people who are employed, especially those not covered by existing wage legislation. It will also be considerably simpler to implement than the current sectoral determination system. A national minimum wage could also reduce the exploitative pay practices uncovered by this research. But for the majority of youths who are unemployed, the benefits are not obvious. On a positive note, the prospect of higher earnings may stimulate job-seeking, especially among those who have become discouraged (762 000 in this age group nationally).
But, if a minimum wage is set too high, it could lead to job losses or reduced working hours for some youths, which would be particularly devastating for this group, 3.5-million of whom are not in education, employment or training.
Young women in particular could be negatively affected because they have a lower labour absorption rate than young men of similar age.
Data on the possible effects of a national minimum wage are contradictory. Economic modelling con- ducted by the Development Policy Research Unit at the University of Cape Town predicts that if it is set at just R2 447 a month about 281 000 jobs will be lost.
But the National Minimum Wage Research Initiative at the University of the Witwatersrand does not foresee significant employment losses if it is set between R3 500 and R4 600 a month.
Neither of these models addressed its effect on the youth specifically, but international literature on the issue shows that, when significant employment losses do occur, the youth often suffer disproportionately. Additionally, about 68% of South African youths are employed by small businesses, which often cannot afford higher wages.
Complementary programmes that take into account unemployed youths must be considered. A youth “opportunity or a training wage”, for a specified time while they gain skills and experience, might be a way to include them in the labour market.