The potential of the proposed minimum wage policy on income inequality and employment

Abstract

This research investigated the potential of the proposed national minimum wage on income inequality and employment. According to the International Labour Organisation (ILO), the purpose of minimum wages is to ensure wages are able to cover the basic needs of workers and their families, taking into account relevant economic factors (Gilad, 2016). In South Africa, a national minimum wage is also being explored as a tool to reduce inequality and transform the inherited apartheid wage structure (Gilad, 2016). The study used a qualitative research methodology and deduced based on the data obtained that indeed South Africa can introduce the national minimum wage but needs to be cautious of the level at which it sets the minima. Secondly the research deduced that minimum wage will have positive effects on income inequality and minimal effects on employment provided that it is set at a right level.