Estimating the wage and employment effects of the 52% increase in the minimum wage in 2013

A new paper by Vimal Ranchhod and Ihsaan Bassier associated with the Research Project on Employment, Income Distribution and Inclusive Growth is based at SALDRU at the University of Cape Town reviews the effects of the minimum wage increase on the income and employment of farm workers.
The paper finds that  find that the sectoral determination had a substantial effect on the earnings of farmworkers who remained employed after the law came into effect, but that there was also a small and gradual decrease in agricultural employment. Evidence suggests "an increase in mean income per month of 17.9% about a year after the law came into effect. However this coincided with a mean decrease in adult employment by this industry of about 8.2% over the same time period". The paper notes however that attributing causality for the decrease in employment is statististically challenging.

The paper observes that

In South Africa, agriculture has historically accounted for a substantial amount of employment of relatively low skilled workers. This continues to be the case, but over the past three decades agriculture has become increasingly commercialized and mechanized, while agricultural output is increasingly being sold in highly competitive global markets. At least to some extent, these factors may explain why the long run trend in agricultural employment has been negative. An interesting and difficult policy question arises as to how a government might protect workers’ well-being in such an environment, where agricultural workers have amongst the lowest mean wages in the economy. In particular, is it possible to maintain both wages and employment in agriculture as the sector evolves in response to global pressures?

You can access the paper here

Reference:
Ranchhod, V. and I. Bassier (2017). Estimating the wage and employment effects of a large increase in South Africa’s agricultural minimum wage, REDI3x3.