‘Minimum wage an obstacle to economic growth’
Johannesburg – Meddling with a country’s economy through fixing prices on everything - including setting a minimum wage - does not work, Effiicient Group economist Dawie Roodt warned on Tuesday.
“If you meddle with any price – the price of bread, beer or labour or fixing of the price of money, it will result in bubbles, which will burst eventually as we have seen in 2007 … because if you meddle with any prices, you will pay a price for that,” Roodt said during a presentation at the Free Market Foundation in Johannesburg.
He said politicians tend to set minimum wages at a certain level, and not above a certain threshold because they know people would be left jobless.
South Africa is considering the introduction of a national minimum wage, but there are concerns such a move could further shrink the limited jobs available.
Roodt said in order to reduce unemployment, people need to acquire skills.
“How do you fix a problem such as poverty? The answer is simply that you have to give people skills and access to jobs. Remove obstacles out of the way for employment, and minimum wage is one of these obstacles, and then grow the economy. These are the only things that can make people better off,” said Roodt.
“Just leave the economy alone, because in the end we need an economy that is rich because that is the only way we can sustain everything.”
Roodt said government could save money by cutting civil servants’ salaries. He said those employed by government were on average paid at least 37 percent more than those in the private sector.
“Today, if you include employees in public enterprises, government employs more than 3 million people. If civil servants were paid the same as in the private sector, government could save at least R220 billion, which can be used to improve the fiscus or even to help the private sector to create more jobs and employ more of those who are unemployed.”
Organisations such as the Congress of SA Trade Unions (Cosatu) have been advocating for a national minimum wage to cover all sectors of the economy.
The minimum wage was due to be announced last year, and Cosatu has blamed big business for “dragging its feet” on the issue.
African News Agency