Labour, wages and minimum wage compliance in the Breërivier valley six months after the introduction of minimum wages

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Centre for Social Science Research

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University of Cape Town

In August 2003, six months after statutory minimum wages came into effect in South African agriculture, wine farmers in two Western Cape districts were surveyed to establish the initial employment impacts of the sectoral determination. The data suggest universal compliance with legal requirements for most labour classes. Specified wage rates required almost no wage increase in one district, and wage increases of between 16% and 25% in the other district, especially for workers at the bottom end of the wage scale. Price elasticity of demand for farm labour is estimated to be between –0.28 and –0.30. No evidence was found that tractors and labourers are substitutes in the production of wine grapes, but the data support a substitution hypothesis for labour and grape harvesting machines, although the relationship was not statistically significant. Job losses during the past year were limited to about 1% of permanent staff, and were in line with the estimated labour elasticity.