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Minimum wage opposes right to work - Free Market Foundation

Dec 29 2017 06:00

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).

"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.

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