Minimum wage opposes right to work - Free Market Foundation

Cape Town - People should not oppose the right to work by proposing "cost-raising measures" like a national minimum wage, according to Leon Louw, executive director of the Free Market Foundation (FMR).

In his view, a low wage is better than no wage - for the unemployed and for everyone.
 
"SA’s unemployment rate is so catastrophic that a state of emergency should be declared. Things are worse than anyone realises. During the state of emergency every employment disincentive should be suspended," Louw said in a statement.

"The unemployed should be free to be employed or self-employed on whatever terms they wish."
 
Apart from the economic cost of unemployment, he describes the impact of its social, health and human cost as "traumatising".
 
"Global unemployment averages 6%. SA averages nearly 40% (officially 36.4%). That’s more than 9 million people with families," said Louw.

"Unemployment in the worst province, Northern Cape, is at 44%. Most youths aged 20 to 24 are unemployed. Young women endure 55% unemployment. Most unemployed youth have never had a job. Without a state of emergency, they may never be employed."

According to Louw, experts he asked calculated that without employment, each generation foregoes six times SA’s current gross domestic product (GDP).

• READ: Cabinet approves minimum wage bill
  

"The most rigorous analysis suggests that the GDP is between 8.7% (R356bn) and 25% (R1trn) smaller due to unemployment, depending on what the unemployed might earn. The lowest estimate (R112bn) could build 1 million RDP houses," said Louw.

"In a few years, infrastructure backlogs could be eliminated, student fees abolished, the police force doubled, or first-world clinics built in all communities."

Louw called for government to suspend what he terms "anti-employment policies".

"By doing so, it could double tax revenue and return wealth-consuming welfare to wealth-producing investment. It could reverse political instability and its own decline," said Louw.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER