Answer to Question #111615 in Microeconomics for Luvuyo

Question

DOMESTIC workers will no longer adjusted the minimum wage for domestic workers, with effect from December last year.

The announcement was made by the Department of Labour Minister Mildred and Oliphant and it coincided with the signing into law of the National Minimum Wage Bill by President Cyril Ramaphosa.

According to the Department of Labour's new rates, domestic workers working in Area A(bigger metropolitan areas) who work more than 27 ordinary hours per week, must be paid minimum of R13, 69 per hour.

Workers who work fewer than 27 hours per week, must be paid a minimum of R16, 03 per hour.

This will mean that a domestic worker who works 45 hours per week will now earn a minimum of R2 669,24 a month.

Gardeners, drivers or people who look after children, the aged, sick, frail or disabled in a private household, all qualify as domestic workers.

Answer 1

If the minimum wage is established above the equilibrium, the supply exceedes demand and less warkers will be employed.

But if the minimum wage is established below the equilibrium, then there will be no impact on the labor market equilibrium.