JOHANNESBURG, Nov 2 (Reuters) - The South African cabinet has approved draft legislation to introduce a minimum wage of 20 rand ($1.43) per hour from May next year, the Ministry of Labour said on Thursday.
Credit ratings agencies have said a minimum wage could help stabilise the labour market and reduce the number of costly strikes in Africa’s most industrialised economy.
Deputy President Cyril Ramaphosa said in February that the new minimum wage would come into force next year, and cabinet’s decision brings its introduction one step closer.
The National Minimum Wage Bill must still be approved by South Africa’s parliament before it becomes law, the ministry said in a statement.
The ministry said the new wage legislation, as well as bills on basic employment conditions and labour relations, would help address labour instability and wage inequality.
More than two decades after the end of apartheid in 1994, South Africa’s economy is still characterised by deep inequality and high levels of unemployment.
Supporters of a minimum wage say it can reduce inequality and stimulate growth as workers can spend more. But critics say it could lead to increased unemployment as some employers will be unable to afford higher wage bills.
$1 = 13.9736 rand Reporting by Alexander Winning; Editing by James Macharia