Wage Strategies and Minimum Wages in Decentralized Regions: The Case of the Clothing Industry in Phuthaditjhaba, South Africa NICOLI NATTRASS Introduction During the apartheid era, millions of South Africans were relocated through forced removals, slum clearances and the end of labour-tenancy on white farms. This, together with influx control to limit African people’s access to metropolitan areas, resulted in substantial ‘displaced urbanization’ (Simkins, 1983) in the ethnically defined ‘bantustan’ (or ‘homeland’) areas. One of the enduring legacies of this apartheid social engineering is large concentrations of people living in decentralized and peripheral areas with little independent economic base. Despite belated attempts by the apartheid regime to encourage labour-intensive industries to these areas by providing selective incentives, unemployment and poverty remained endemic. Since the transition to democracy in 1994, the last vestiges of the bantustan and decentralization policies have been removed. The old bantustans have been reincorpo- rated into South Africa, and area-specific industrial decentralization incentives have been abolished. The only advantage that these areas can now offer industry is low wages. Minimum-wage regulations, which had previously applied only outside of the bantustans, have recently been extended to the former bantustans, raising the possibility that even this advantage may be eroded. It may thus be the case that, having had their communities and livelihoods destroyed by apartheid, the people living in the marginalized areas will have their situation made worse by the end of apartheid. Given that the vast majority of unemployed people are not eligible for any welfare benefits, a significant decline in employment will translate into rising poverty. This article explores the relationship between wages and employment in such areas through a case study of the clothing industry in Phuthaditjhaba, the old capital of the QwaQwa homeland. 1 The clothing industry is the largest industry and source of employment in these old decentralized areas, and has recently been covered by minimum wages. The trade-off between wages and employment is examined from three perspectives: that of employers when considering their wage-setting strategies, that of workers in the factories, and that of unemployed people waiting outside the factory gates. Unstructured interviews were conducted amongst managers, 2 and 187 workers and 102 unemployed ß Joint Editors and Blackwell Publishers Ltd 2000. Published by Blackwell Publishers, 108 Cowley Road, Oxford OX4 1JF, UK and 238 Main Street, Malden, MA 02142, USA. 1 The complete research results are available in Nattrass (1998). 2 In-depth interviews were conducted amongst twelve managers, and a further five provided limited information on a narrower range of issues. International Journal of Urban and Regional Research Volume 24.4 December 2000