vue - South Africa's Minimum Wage Cost 200,000 Agriculture Jobs

Haroon Bhorat, Professor of Economics at the University of Cape Town, discusses his study of the effects a 2003 South African law introducing minimum wages had on the country's agricultural sector employment and wages. Data gathered from before and after the law's introduction shows that employment actually fell by about 200,000 workers for a 17 percent decline after the minimum wage was introduced. But, at the same time, wages actually increased 20 percent on average across the country. To Bhorat, this shows that at the intensive margins of the labor force, like total hours of work, employers did not adjust by reducing hours of work to retain the overall workforce. One benefit to the law was that employers did start to offer workers written contracts, which provides greater job security than before the minimum wage was introduced.