The Poverty Trap
How the National Minimum Wage Perpetuates Poverty
The Harsh Reality of the National Minimum Wage
The National Minimum Wage (NMW) was introduced in 2019 to alleviate poverty and income inequality in South Africa. However, recent data reveals that the NMW is, in fact, perpetuating poverty among workers.
A Wage That’s Below the Poverty Line
According to the Pietermaritzburg Economic Justice & Dignity Group (PMBEJD), the maximum wage of R4854.08 in January 2025 translates to a mere R1213.52 per person for a family of four. This is below the upper-bound poverty line of R1634 per capita per month.
The Poverty Trap: How it Works
So, how does the low minimum wage perpetuate poverty? Here’s a step-by-step explanation:
- Low wages: Workers earn a wage that’s below the poverty line, making it impossible for them to afford basic necessities.
- Limited disposable income: With a low wage, workers have limited disposable income, which means they can’t afford to save, invest, or spend on non-essential items.
- Debt trap: To make ends meet, workers may resort to debt, such as payday loans or credit card debt. This creates a debt trap, where workers are forced to pay high interest rates, further reducing their disposable income.
- Limited economic mobility: With limited disposable income and debt, workers have limited economic mobility. They can’t afford to invest in education, training, or entrepreneurship, which means they’re stuck in low-wage jobs.
- Perpetuating poverty: The low minimum wage perpetuates poverty by creating a cycle of limited economic mobility, debt, and limited disposable income.
The Human Cost of Poverty
The human cost of poverty is devastating. Workers who earn a low minimum wage are forced to make impossible choices between basic necessities, such as:
- Food or transport?
- Rent or healthcare?
- Education or clothing?
These choices have long-term consequences, including:
- Malnutrition and poor health
- Limited education and economic opportunities
- Increased stress and mental health problems
A Call to Action
It’s time to rethink our approach to wages and job creation. We need to prioritize policies that promote decent work, fair wages, and sustainable economic growth. This includes:
- Increasing the minimum wage to a living wage
- Implementing policies to reduce income inequality
- Investing in education, training, and entrepreneurship programs
By working together, we can break the poverty trap and create a more equitable society for all.
