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Noncompliance with national minimum wage rate rising, study finds

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earningsBL Premium reports that noncompliance with SA’s national minimum wage (NMW) regime has gone up, according to a study conducted by University of Cape Town academics. They warn that the policy runs the risk of becoming merely an “aspirational” measure.

The study, conducted on behalf of the National Minimum Wage Commission, examined the short-term labour market effects of the March 2024 increase in the NMW, which was the largest adjustment in real terms since the introduction of the policy in 2019. The NMW was set last year at R27.58 per hour. The study found evidence of partial compliance, where some employers responded to the higher NMW by increasing wages towards but not all the way up to what the law required. Employers also responded to the NMW by reducing working hours of staffers. But, the study found that the 2024 minimum wage increase resulted in a relatively small degree of job loss. The researchers noted: “Relying too heavily on the national minimum wage as the primary tool for improving the economic welfare of workers does contain a level of inherent risk. More specifically, consistent above-inflation increases may not be able to consistently raise wages without some form of trade-off. An obvious concern in SA is around the potentially negative effects on employment and employment growth, but there is also the possibility of increasing noncompliance, where higher minimum wages do not translate into equivalent increases in workers’ wages.” For 2025, the NMW Commission has recommended an increase of consumer price inflation plus 1.5%.

  • Read the full original of the informative eport in the above regard by Kabelo Khumalo at BusinessLive (subscriber access only)


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