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Non‐compliance with the Minimum Wage Law when Completely New Minimum Wage Laws Are Established: The Case of South Africa
Author(s) -
Yamada Hiroyuki
Publication year - 2012
Publication title -
african development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.654
H-Index - 32
eISSN - 1467-8268
pISSN - 1017-6772
DOI - 10.1111/j.1467-8268.2011.00304.x
Subject(s) - minimum wage , government (linguistics) , compliance (psychology) , economics , wage , stochastic game , labour economics , government sector , law , economic growth , political science , private sector , microeconomics , psychology , social psychology , linguistics , philosophy
Using the case of South Africa, we study compliance with the minimum wage law when completely new minimum wage levels are established. By even the best estimate, the compliance rate in South Africa would not exceed 40 per cent for the agricultural sector and 30 per cent for the domestic worker sector. The compliance rates by subpopulation groups reveal that the compliance rate is low where the cost to comply with the minimum wage law is high, implying that government inspections are not done where they are likely to have the highest payoff. However, if the government tries to enforce the policy more strictly, the poor/less skilled would be adversely affected.