Die invloed van minimumlone op indiensnemingsvlakke van huiswerkers in die groter Bloemfontein-area

Abstract

The enactment of legislation creating a mechanism for the establishment of minimum wages in South Africa has paved the way for the establishment of a minimum wage for domestic workers. The possible implementation of a minimum wage for domestic workers that exceeds existing market-related wages has led to uncertaintly among policy makers about how employment levels will be affected. The lack of comprehensive research on the influence of such a measure on employment levels of domestic workers necessitated an in-depth study. Consequently a study with the following objectives was undertaken: 0 To establish how the levels of employment in the Greater Bloemfontein Area will be affected if a minimum wage is implemented. 0 To illustrate to policy makers how labour market theory and empirical research can be utilized to restrict the loss of job opportunities to a minimum. A study of available related literature was made initially. The perfect labour market model was taken as point of departure. It was endeavoured to find a theoretical raison d'etre for the low wages paid to domestic workers. Theory proves that, if the supply of labour exceeds the demand, the wages become lower. Lack of labour skills and labour force discrimination are also contributing factors. The labour market is characterized, not only by imperfections, but also by heterogeneous workers and heterogeneous job opportunities. These characteristics ensure that a uniform rate of remuneration is seldom applied. Rather, the labour market is characterized by a series of remuneration rates distributed around the average rate of remuneration. How many workers will actually lose their jobs will ultimately depend on the level on which the minimum wage is determined. The higher the minimum wage level is above the free market wage level, the more workers will be dismissed. A theoretical scrutiny of the influence of a minimum wage on levels of employment of domestic workers is not sufficient. An empirical investigation was undertaken to determine the current remuneration rates of domestic workers and to compile a profile of the domestic worker. A follow-up study was undertaken three years after the first survey to establish the degree to which the remuneration rates of domestic workers had changed. The follow-up study revealed that levels of employment had decreased by 15,1% since the previous survey. The average cash wage per hour had shown an annual increase of 12,5% and the remuneration per hour had risen by 8,5%. In addition, it was found that there is a correlation between the monthly remuneration rate of domestic workers and the combined monthly gross earnings of employers. It follows that domestic workers benefit from improvements in the financial status of employers. The remuneration of domestic workers consists of cash wages and in natura payments and appear in a wide range of bands. The fact that wage bands do exist is proof that it is an almost perfect labour market - in such a market there is a greater possibility that levels of employment will be negatively influenced by minimum wages than in an imperfect labour market. This spreading of remuneration per hour within wage bands in each category of domestic work, complicates the determination of a minimum wage. In determining a minimum wage the focus should not be on wage bands alone, but should also be on the wage elasticity of the demand for labour. By means of an econometric model, the market wage levels of each category of domestic worker was compared to the proposed minimum wage levels and it was concluded that even at this minimum wage level a significant percentage of domestic workers may lose their jobs. It is estimated that, if a minimum wage of R3,00 per hour is instituted, employment of domestic workers who work at specific households for 6 and 7 days per week at R2,00 per hour, may decrease by 25,39%. From the labour market theory and from empirical research it appears that minimum wages should be fixed along the inelastic section of the demand curve in order to confine the decline in employment rate to a minimum. In addition, the results show that it is not possible to implement one single minimum wage for all categories of domestic workers. Consequently it is suggested that a uniform minimum wage for part-time domestic workers - those working at specific households for 1, 2 and 3 days per week - and a differentiated (regressive) minimum wage for full time domestic workers be implemented. The study is concluded with general guidelines for policy makers and specific guidelines for the Greater Bloemfontein area.