Government imposed minimum wage laws may lead to 750 factory closures in Kwazulu Natal and up to 14,000 lost jobs, reports fin24. Apparently the National Bargaining Council will shut these businesses for failing to comply with government imposed minimum wage laws.
Basically, businesses could only afford to employ workers at a wage less than the minimum wage, and workers were willing to work for less than the minimum wage – seeing as they pitched for work each day. There was a mutually beneficial arrangement: employers would voluntarily give up present goods (cash) in exchange for the voluntary labour of employees. But now, government will swoop in and enforce its minimum wage laws and this will result in more unemployment in South Africa as these businesses are forced shut.
As I’ve said before, there is enough work for every single South African, but the government – through labour laws and minimum wage laws – prevent the jobs market from clearing, so unemployment will remain high forever.