Minimum wage not solution - Agri SA

Johannesburg - Agri SA said on Tuesday that a national minimum wage would lead to job losses.

Agri SA president Johannes Möller said: "It would be extremely short-sighted if not inhumane not to acknowledge the desperate situation many fellow South Africans find themselves in.

"We most certainly cannot as individuals and as a country turn a blind eye on absolute poverty and worse even people not having enough to eat."

He said an increase of 52% in the minimum wage in 2013 applicable to the agricultural sector reinforced the already observable downward trend of employment in the sector.

Labour absorption capacity

"Apart from other unintended consequences a national minimum wage that is set higher than the current minimum wage in the agricultural sector will further decrease the labour absorption capacity of the sector for especially unskilled labour, violating against the noble aims of the National Development Plan for the sector to create one million jobs by 2030."

He said proponents of a national minimum wage seemed not to recognise that productivity set the level of prosperity and not demand stimulation through merely setting wages at higher levels.

"What we really need is a better skilled labour force, less rigid labour markets and a supply side approach to enhance economic competitiveness. Increased demand by effectively creating more money is at best likely in the very short-term. Eventually, however, it boils down to money illusion and no real gains," Möller said.