Which textbook did our Government officials and Minister of Labour use when they were studying? Definitely not "Economics for South African students" by Mohr, Fourie and Associates (2008). There it clearly sates (p. 294): "One of the basic conditions for perfect competition is that there be no government intervention in the labour market. In practice, however, governments intervene in various ways. Such intervention inhibits the functioning of the market mechanism and is often regarded as an important potential cause of unemployment and other labour market porblems."
One of the major drivers of unemployment and youth unemployment in particular is the rigidity of the South African labour market. Because of various restrains the labour market (salaries and wages) cannot respond to the prevailing economic conditions as rapidly as it should to ensure full employment. Employers face avoidable and unknown costs and therefore do not enter into agreements with suppliers of labour and make use of labour brokers to minimise the risk of employing staff. There are also cost considerations that push employers towards mechanisation, wheras if the labour market was less regulated, staff and in particularly unskilled staff would be in demand and we would have a more vibrant and growing economy that would maximally employ its human resources and make us more competitive on world markets.
When one discusses minimum wages it is sometimes argued that since wages are the most significant form of income and therefore constitute the largest source of demand for goods and services, an imposition of a minimum wage will raise the demand for consumer goods. This is however a fallacious argument since it does not take in account he unseen - that the money now paid out on wages would have been either used to compensate the other factors of production and therefore have also been available for spending on goods and services or been available for the investment in capital goods that would have helped to increase the ability of the economy to absorb more labour (both skilled and unskilled).
Want to learn more about minimum wage laws? Go here.
C.M. Heydenrych 2013