Commentary on Bassier and Ranchhod, ‘Can Minimum Wages Effectively Reduce Poverty Under Low Compliance? A Case Study from the Agricultural Sector in South Africa’

This article refers to:

Can Minimum Wages Effectively Reduce Poverty under Low Compliance? A Case Study from the Agricultural Sector in South Africa

It is rare for anthropologists and economists to spend an extended period of time together, much less in daily cross-disciplinary conversations. The ‘Price of Wealth’ Wenner-Gren seminar held outside Milan in August 2022 set itself a difficult task: to keep us talking and to ask that we let our thinking and writing be changed by that dialogue. That we were well fed in a placid Italian countryside manor certainly helped. But it was clear that we spoke very different languages. To help, we maintained a running list of unfamiliar or jargon-laden terms from both disciplines on two large easel pads situated on opposite sides of the seminar room. The pages filled up quickly, anchoring our differences but also revealing a fundamental chasm. I left that week humbled, curious, and, at the same time, somewhat unconvinced regarding our collective project. Would there ever be shared ground — a common language — between anthropologists and economists? Or was the task to become better translators?

Reading the paper that followed Bassier and Ranchhord’s presentation at the seminar was a reminder that we have some way to go in this translation project. Even as an economic anthropologist with some basic background in economics, the language of the paper — to say nothing of the formula halfway through — felt daunting. I longed for our shared glossary to guide me through concepts such as a standard treatment effects framework or parameterized equivalence scales. However, once I began to feel a slight sense of ease with the terminology, and the paper’s arguments started to fall into place, it struck me how few economics papers I had properly read and how exciting it was to gain some basic proficiency in a new disciplinary discourse. The remainder of this essay offers some reflections on the paper’s main arguments, some questions it raised for me as an anthropologist, and what this process showed me about the dilemmas and possibilities inherent in interdisciplinarity.

Through painstaking data gathering and analysis, Bassier and Ranchhod demonstrate that implementing a large (52 percent) increase in the minimum wage for farm workers in South Africa resulted in large increases in wages and household incomes as well as a large decline in poverty in the short run for most workers. Contrary to general orthodoxy, the 2013 wage increase did not result in significant job losses (except, as the authors note, for the lowest paid workers) or increases in poverty (except, again, for the lowest paid workers, who were more likely to slip into poverty through job loss or noncompliance). Instead, the authors found evidence of a 5–7 percentage point reduction in poverty, leading to their tentative conclusion that greater positive effects may result from utilizing minimum wage laws in poverty reduction efforts than previously considered.¹

Especially significant for the authors is that these gains occurred in an environment of low enforcement and partial compliance that they suggest is ‘characteristic of developing country settings’ (p. 24). They note that South Africa’s agricultural sector is notoriously under-regulated: a startling 60 percent of farm workers were earning less than the pre-2013 minimum wage and 40 percent did not have written contracts. Why, then, the authors ask, was there any compliance with the minimum wage increase? Their answer, in brief, is ‘alternative enforcement mechanisms’, those extra-legal, social means through which so much of our lives operate. They name a few of these mechanisms: ‘enforcement through organized workers who could report non-compliant employers, the threat of damages to public image, the threat of worker retaliation that could reduce productivity’ (p. 11). In sum, workers and the relationships between workers and employers. Ethnographic, qualitative research is one way to better understand the contours of these relations.

The authors indicate as much in a fascinating footnote in which they offer the following ethnographic anecdote from a conversation with a conference participant:

As the child of a farm owner, he had grown up on a farm and periodically spent time working there. He thought that the main reason a farm owner would raise wages in response to the minimum wage law was not to do with legal enforcement, but rather that workers would expect an increase in wages, failing which the disgruntled workers would (in ways difficult to trace) damage tools and property. The wage increase need not correspond to the law, but rather to workers’ expectations. (Bessier and Ranchhod 2024, p. 11, emphasis added)

Here, a seemingly mundane detail mentioned in passing — the role of ‘workers’ expectations’ in producing employer compliance — reveals a vast, nebulous realm of obligations and responsibilities that binds workers and employers and, when breached, leads to acts of refusal. It is perhaps not surprising that this alternative enforcement mechanism is not just that which produces compliance but also that which gave rise to the wage increase in the first place.

The authors mention that the 2013 wage increase was a response to ‘sudden and widespread protests that occurred in November 2012 in the Western Cape with workers demanding a wage of R150 a day. R105 was the compromise set by South Africa’s Minister of Labour’ (2024, p. 7). Curious about these protests, I learned that they began in August 2012 as a farm workers’ strike, led by a group of female workers at Keurboschkloof, a for-export grape farm in the Western Cape (Washinyira 2012; SAHO 2015). The strike emerged in response to poor working conditions and lowered wages at the farm following the death of the farm’s owner and the subsequent takeover by a management company, South African Fruit Exporters (SAFE). SAFE ended the workers’ formal contracts, employing them instead as seasonal workers, and cut wages. From Keurboschkloof, the strike spread to other farms and locales and finally ended in February 2013, when the minimum wage increase was announced (SAHO 2015).

In digging up these details on worker militancy or dwelling upon a footnoted ethnographic shard, my argument is not simply that more qualitative research would have resulted in ‘better’ data and led to more accurate findings. In fact, it is not clear to me whether and how the authors’ conclusions regarding the relationship between minimum wage increases and poverty reduction would change in response to these details. Rather, it is to suggest that ethnography and anthropologically-driven questions could add something essential to conceptualizing economics research projects — and, undoubtedly, vice versa — and in the process transform both disciplines. The collective and messy work of translation begins here.

Acknowledgements

I am grateful to Akhil Sood and Sandra Harvey for their help with clarifying the ideas presented in this commentary. Donna Auston and Steven Pressman were instrumental in shepherding the piece to publication. Finally, my sincere thanks go to the organizers and participants of the ‘Price of Wealth' workshop for enabling such a meaningful dialogue.

Disclosure Statement

No potential conflict of interest was reported by the author.

Notes

1 In the paper’s final paragraph, the authors cite a 2013 study that ‘simulat[ed] the effect of dropping all social grants in 2008 [in South Africa]’. The authors of the study found ‘that the headcount poverty rate only increases from 70% to 71%’ in response to the reduction in welfare provisions. Bessier and Ranchhod write that this finding suggests that increasing the minimum wage may have a more significant impact on reducing poverty than would social welfare provisions. It could rightly be asked whether a smaller increase in poverty due to removing welfare provisions can be fairly used as evidence for the greater relative impact of increasing wages to reduce poverty.