November 28, 2017 Print

In May 2018, the South African government plans to introduce a national minimum wage, claiming it will provide much-needed assistance to low-income earners. Free Market Foundation (FMF), an Atlas Network partner based in Johannesburg, has been leading a national dialogue about the probable negative outcomes that a national minimum wage would bring, especially the disproportionate harm that would be done to those with low incomes more than any other demographic. FMF’s efforts in this regard have made it the authoritative voice of opposition to the prospective national minimum wage in South Africa, and it has further cemented FMF’s leading role as an advocate for the economic well-being of all South Africans. FMF recently won a Platinum Award from the Impumelelo Social Innovation Centre for its Khaya Lam Land Reform Project. The Impumelelo Award recognizes social innovations and is awarded for changing society in a way that is unique, sustainable and replicable.

“There is [already] mass unemployment that is becoming worse, and bound to increase rapidly due to the looming National Minimum Wage [NMW],” said Jasson Urbach, FMF’s director. “As we expected, firms are not hiring low wage workers in anticipation of the implementation of the NMW. What is alarming is that firms are [now] also shedding low wage employees.”

The levels of unemployment in South Africa are already catastrophically high. In a recent commentary, FMF’s executive director Leon Louw even called for a declaration of a state of emergency in the country so that meaningful reforms that foster prosperity can be made.

“FMF strives to influence public opinion through a combination of public debate (mainly via ‘TV and radio interviews’) and direct advocacy (mainly via ‘Articles and letters to the editor’),” said Urbach. “We also influence the climate of opinion through our social media platforms on Facebook and Twitter. We have conducted a rigorous media and public relations campaign opposing the introduction of the NMW.” FMF additionally holds monthly media briefings on policy issues to, “…target a wide range of media outlets in order to efficiently and effectively disseminate [its] message across the country.”

Through persistent and effective outreach on the negative effects of a national minimum wage, FMF has been cited by most news outlets as the head of the movement to oppose its implementation.

There is no quick fix for the economic issues currently facing South Africa. While proponents of the minimum wage claim it will improve the lives of the worst off, the true effect will be disastrous to those in poverty. To improve South Africa’s economy and job market, there needs to be structural changes that make South Africa more competitive, discussed in detail in the recent FMF publication The market for jobs in South Africa – why it performs so poorly and what can be done to improve it by Brian Kantor.

Urbach explained that the goal of FMF is to “strive to educate the public about the implications of the proposed NMW [national minimum wage] and to provide alternative market-based solutions that do not involve the government interfering with private arrangements and the price mechanism.” FMF has championed the fight against a minimum wage to protect those most economically vulnerable.

FMF is a recipient of Atlas Network’s Liberating Enterprise to Achieve Prosperity grant, which supports think tanks with ambitious but achievable plans to improve the public policy and regulatory environment in their countries, particularly in relation to limits on enterprise and entrepreneurship as measured in the Doing Business Index.