“On November 26, 2018, South African President Cyril Ramaphosa signed into law the National Minimum Wage Bill (now the National Minimum Wage Act), which the National Assembly and the National Council of Provinces, the two houses of the country’s Parliament, passed on May 29 and August 21, 2018, respectively. (South Africa’s Ramaphosa Signs Minimum Wage Bill into Law, REUTERS (Nov. 26, 2018); National Minimum Wage Bill (B31-2017): Bill History, PARLIAMENTARY MONITORING GROUP (last visited Nov. 26, 2018); National Minimum Wage Act (NMWA), Act No. 9 of 2018, GOVERNMENT GAZETTE (Nov. 27, 2018).) According to the memorandum accompanying the Bill, the “main object of the Bill is to provide for a national minimum wage in order to advance economic development and social justice by improving the wages of lowest paid workers, protecting workers from unreasonably low wages and promoting collective bargaining and supporting economic policy.” (National Minimum Wage Bill, B 31B—2017, Memorandum on the Objects of the National Minimum Wage Bill, 2017, at 11.)” (Hanibal, 2018). Use this scenario to answer the following question. Which of the following is correct about the demand for labour?

Question

Answer

The demand for labour remains the same because the change in the price of wages does not change the production cost of the firm.

Answer

An increase in the wage rate will cause firms to demand a greater quantity of labour

Answer

A rise in the wage rate reduces the quantity of labour demanded, ceteris paribus.

Answer

The increase in wage has no effect on the demand for labour

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“On November 26, 2018, South African President Cyril Ramaphosa signed into law t...

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