GOVERNMENT INTERVENTION
The intervention of government in the market to balance the inefficiency and efficient optimal market .resources are available for those who are in need of them but on the inefficiency marked its turned around, some might have enough resources and some might have limited resource. The Government meet this inequities by regulation, taxation and subsidies. The Government uses four strategies to intervene the market, maximizing social welfare, macro-economic factors and socio-economic factors
Public goods.
On the free market, public goods such as law and order and national defence would not be given because there is no fiscal incentive you can enjoy without paying them. Therefore, to give public goods like lighthouses, police, roads .it is a need for a government to pay for them and out of general taxation.
Merit goods.
Goods such as education and health care, they are often referred to as public goods but they are not. In free market, provision tends to be patchy and unequal .education is produce by the government ensures that everyone has the opportunity to gain knowledge, which has a strong social benefit.
Supply and Demand in the labour Market
The point where labour supply and demand meet creates market equilibrium
In labour market, supply and demand pressure is at work, because they are in the product market. When supply and demand for labour is equal, the market is in equilibrium at the intersection between the supply and demand curves.
The Minimum Wage
When the labour market is in equilibrium, it simple means that wages are currently at the same market rate, or the going rate that firms are willing to pay and workers are willing to agree to when they take on new jobs.
Increasing the minimum wage causes a drop in labour demand
How various economic agents (firms, labourers, households, etc.) Are
Likely to suffer or benefit should the proposed national minimum wage of R3500 be implemented
South Africa came to the point that there should be a national minimum wage and it should be R 3,500 a month, as little under $250 US a month. And the problem with this is that it was not a logic decision and the reason is that this wage is simply much too high.
This of course puts south Africa among the capitalist oppressors ready to grind the faces of the poor into the dust .this minimum wage will make the poor to be poor and the rich being more rich, this will limit the household n labours because setting a minimum wage is setting a line of non-increase over a long period of time that put firms on advantage of making profit
In such circumstances insisting upon higher wages for a large portion of the workforce is simply going to mean even more people not able to get a job. But that’s what they’re going to do, in short the minimum wage will make lots of people suffer and high unemployment rate.
HOW WILL IT IMPACT ON THE OVERALL ECONOMY?
The will be sectors affected and other respective control groups which will experience statistically in nominal hourly wages except the taxi sector. As long as real wages are concerned significant changes were increasing in other sectors. The domestic work sector experienced an upward trend in the hourly wages and other three sectors have experienced changes in hourly wages which are not statistically significant.
While there is no evidence of a decline in the number of people employed in the affected sectors therefore it appears that the minimum wage has had a deployment in terms of the unusual number of hours worked per week. Declines in the hours of work occurred in retail and wholesale by 5% decline and in the security sector also by 5% and domestic sector by 7% and employment numbers continued to increase in this sectors this suggest that may have reduced the work hours in order to afford higher hourly wages.
While minimum wage can be efficient and ineffective it depends on the type of market the minimum wage is implemented on.it can also be good for a society and workers if a minimum wage is able to secure a higher wage and an employment level in a market. Other studies show that a minimum wage can reduce labour turnover and improve organizational efficiency, with just a slight rise in labour costs and no change in employment rate
VIEWS AGAINST MINIMUM WAGE
With an increasing rate of unemployment and many low paying jobs, South Africa is facing a dilemma if national minimum wage is introduced. Higher wages are a necessity for higher living standards but wage growth can potentially exacerbate already high unemployed can reduce living standards. Economic models predict that minimum wages destroy employment. Existing evidence on the potential costs and benefits of minimum wages in South Africa are mixed.
THE EFFECT OF MINIMUM WAGE ON FARMERS
Research show that employment on commercial farms grew after agricultural minimum wages were implemented in 2004. In contrast substantial farmers bore the brunt of minimum wage legislation whose employment levels declined. Hence evidence show that minimum wages displaced workers from vulnerable farms to those that were already doing well.
The success of the minimum wage will depend on setting the minimum wage at a high level to close the wage gap, yet not so high that businesses can’t afford it or decide to automate rather than hire. Hence government has taken a cautious stance setting the initial minimum wage at R20 per hour.
This practical approach, aimed at limiting the potential economic damage of an unrealistically high minimum. It was not the intention to pay a minimum wage at the level of a living wage. The national minimum wage was meant to be wage that certain individuals could live on it was implemented in order to reduce poverty and to close the wage gap
Hence economists predict that wage restrictions can have advantages and disadvantages in the South African economy and further argue that wage growth is a hindrance to employment creation in South Africa
Sources:https://www.forbes.com/sites/timworstall/2016/11/21/south-africas-bad-decision-on-the-r-3500-minimum-wage-its-too-high/2/#3361a4896230
Read mor Source: Boundless. “Why Governments Intervene In Markets.” Boundless Economics Boundless, 27 May. 2016. Retrieved 24 Apr. 2017 from https://www.boundless.com/economics/textbooks/boundless-economics-textbook/introducing-supply-and-demand-3/government-intervention-and-disequilibrium-49/why-governments-intervene-in-markets-182-12280/
e: http://www.businessdictionary.com/definition/government-intervention.html
http://www.economicshelp.org/blog/5735/economics/should-the-government-intervene-in-the-economy/
https://www.boundless.com/economics/textbooks/boundless-economics-textbook/introducing-supply-and-demand-3/
http://www.fine24.com/finweek/bussines-and-economy/the-national-minimum-wage-were-to-from-here/
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