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Minimum wage 'will cause unemployment'

Johannesburg - The AHi calls on all constituents who attended the Labour Relations Indaba held on Tuesday at Emperor's Palace to focus on the crisis at hand.

That is large scale unemployment, low levels of entrepreneurship and low economic growth.

Whilst consensus was reached in terms of the principle of a national wage and whilst a lot of emphasis was placed during the Labour Indaba on wage inequality, collective bargaining and the modalities underlying the considerations for a national minimum wage, too little engagement took place on the issue of unemployment and the structural factors that are at the heart of low economic growth, according to the AHi.

The organisation said the drive by organised labour to impose a national minimum wage across all sectors and its call for legislation to be enforced will however lead to higher unemployment, especially amongst vulnerable sections of the South African society.

"Vulnerable people face huge challenges such as high levels of illiteracy and lack of higher order skills. They also live in poverty stricken areas that often lack basic services and that are situated far from business hubs," said the AHi in a statement.

"A developing country such as South Africa must therefore prioritise job creation closer to these areas in order to ensure a sustainable income and a sustainable livelihood especially for developing and vulnerable communities. Without these basics, social instability and violence will continue to flare up and spiral out of control."

Recognising the critical role of business, its ability to employ people and to remunerate them accordingly as well as the importance for conducive circumstances for business to be competitive and profitable, should have been the core issues on the agenda of the Labour Indaba, in the view of the AHi.

"Unfortunately too much rhetoric and generalisations lacking properly researched data characterised this crucial engagements between government, labour and business. This is unfortunate, because it does not help much with creating job opportunities and growing the economy," the organisation said in a statement.

"For the South African economy to grow, all constituents must ensure that the building blocks are in place to attract more investment and to encourage entrepreneurship. That is quality education, skilling and professionalising our people, a culture of productivity and innovation, lowering the cost of doing business and quality, affordable and effective service delivery by all state agencies."

According to the AHi Burdening businesses with more and more costs contradicts the outcomes of the National Development Plan and discourages investment.

"A national minimum wage will, therefore, never materialise in the absence of an active layer of sustainable and profitable businesses in South Africa supported by government initiated incentives and pro-business policies," the organisation said.

"Consensus on what should be done to attract investment and what needs to be done to grow the economy is now more than ever required. Because it is largely through creating employment opportunities, South Africa will be able to overcome the triple challenge of unemployment, poverty and inequality."

- Fin24

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