Question 2

In its 2014 election manifesto, the ruling party (African National Congress in South Africa) identified the introduction of a national minimum wage as one of key mechanisms to reduce income equality. In line with with the manifesto, the president mentioned in his state of the nation address that social partners need to deliberate on wage inequality.

In this regard, use a diagram to illustrate and explain the theoretical effects of a minimum wage on the demand for labour and the supply of labour (20)