NY Times Article: South Africa, a Nation With Sharp Inequality, Considers a Minimum Wage by Norimitsu Onishi
The article highlights inequality in South Africa, where workers, including factory workers, housekeepers, nurses aides, supermarket attendants, as well as many employees in the informal sector face the same predicament of working hard at jobs available in the country but can barely live comfortably. It is for this reason that the South African government is eying to implement an intervention plan, a strategy that has worked in most of the developing nations, which is implementing a national minimum wage, which is about $260 monthly or about $1.5 hourly. The amount is small even in South Africa, but it is close to the median wage, and could potentially reduce inequalities as South Africa has an unemployment rate of 27%, and almost half of the population lives in poverty. Even though Cyril Ramaphosa, South Africas deputy president, endorses the minimum wage recommendation stating that it would be implemented by May 2018, it has been marred with objections. Supporters, however, point out that the minimum wage will reduce poverty in the unequal society, thereby allowing for the dismantling of the apartheid era that was supposedly designed for provision of cheap labor in a white minority dominated country. Besides, adopting a minimum wages will be vital for the country because a government survey established that 80% of the population earns a fifth of what whites did in 2015, and most of the workers are in the formal sector, as opposed to other countries, for example, Ghana, Ivory Coast, and Cameroon, making it easier for it to enforced. Those objecting assert that the minimum wage is not enough because $260 is way below the poverty line of $325 a month, however, it should be noted that as the South African median income is $280, it would subsequently help in the reduction of inequality.
Ideas Tying to the Article
Income inequality is the unequal distribution of individual or household income across the various participants in a given country or economy and is usually expressed as a percentage. It s caused by a variety of factors. Education is one of the most important factors as certain socioeconomic groups of people may not have access to quality education. For instance, as Onishis (2017) article articulates, those who earn below the poverty line in South Africa have informal jobs, such as housekeepers, nurses aides, supermarket attendants, which pay less. Also, competition for talent also creates inequality where people without any talent are paid less compared to those with high-quality executive talents. Stagnant wages may also cause inequality where the median income for low-income earners does not increase while that for top executives increase. For instance, according to Onishis (2017) article, it is clear that top executives are paid highly compared to informal jobs where 80% of workers earn a fifth of what whites earned in 2015.
The inequality in South Africa can best be measured using Gini coefficient and can be used in explaining the differences between the incomes and adds up the absolute differences (Greenwood et al., 2014), and thus, can help map inequalities in the population. Besides, based on the Kuznets Curve, it is clear that as a developing economy develops, such as that of South Africa, people tend to move to the cities, making people seek for better-paying jobs. Kuznets curve hypothesizes that as an economy develops, the market forces increase and then decrease the income inequality (Baiardi & Morana, 2016). It is for this reason that people in South Africa move to Khayelitsha in masses in search of better jobs because South Africa is developing, which means more industries are coming up. In the long run, it can help decrease the income inequality. Therefore, according to the Kuznets curve, there is a likelihood that the income inequality will reduction in the future as more jobs will be created. Besides, the economy of South Africa is expected to grow significantly as there is labor, and the presence of inequality will mean that people will be willing to work and provide cheap labor, leading to more industrialization, and finally growth. As such, inequality in South Africa will pave the way for more growth as there is cheap labor, which can promote the emergence of new industries.
Baiardi, D., & Morana, C. (2016). The financial Kuznets curve: Evidence for the euro area. Journal of Empirical Finance, 39, 265-269.
Greenwood, J., Guner, N., Kocharkov, G., & Santos, C. (2014). Marry your like: Assortative mating and income inequality. The American Economic Review, 104(5), 348-353.
Onishi, N. (2017). South Africa, a Nation With Sharp Inequality, Considers a Minimum Wage. Retrieved from https://www.nytimes.com/2017/02/15/world/africa/south-africa-minimum-wage.html
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