When the government imposes a minimum wage, firms are not permitted to pay less than the amount that the government mandate
we see that the workers who supply labor would like to sell more hours of labor to the market at the set minimum wage—that is when the wage increases from R1369 to R1613 But firms wish to purchase only fewer hours of labor—firms want to hire fewer labour hours. In a market with voluntary trade, no one can force firms to hire workers. This is represented by the surplus in the graph
If we set a minimum wage that is binding above the market equilibrium wage, we could create a gap between the quantity of labor that firms will demand labor demanded and the quantity of labor that workers will want to supply. This surplus is known as unemployment. At the high minimum wage, we would have more workers wanting to work than we would have firms wanting to employ them.