How might a national minimum wage affect the employment of youth in South Africa?

Abstract

Labour market policies such as National Minimum Wages (NMW) are widely used in different countries to reduce poverty and inequality. Given the high and rising rate of youth unemployment in South Africa, we ask the question: how might a NMW affect the labour market outcomes of employed and unemployed youth? The perspectives of employed and unemployed youth aged 18–25 years were solicited through focus group discussions in five provinces. The findings suggest that a NMW could benefit youth engaged in formal employment, it could stimulate job-seeking for discouraged work seekers and is unlikely to crowd out investments in further education. However, the vast majority of unemployed youth will probably not benefit from a NMW. This is due to the multiple and complex needs of disadvantaged youth. Other social interventions are needed to address the youth unemployment crisis.