The truth about South Africa’s mass unemployment

06 December 2017
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I have a vision of millions of people, with new hope in their hearts, knocking on doors, saying “I am exempt from the labour laws. Here is my exemption certificate to prove it. Forget about the labour laws they don’t apply to me. Just give me a job, any job, just let me work!”

This message is for my unemployed fellow South Africans who are frustrated because they cannot get jobs. Mass unemployment does not happen by accident. South Africa has 9.4 million unemployed people. Six million are 34 years old or younger. Our unemployment rate is one of the highest in the world and the reason for it is the serious barriers to employment created by government. There are laws and regulations that were adopted to protect employed people from potential abuse by employers but which, sadly, have had the consequence of making it more and more difficult for unemployed people to get a job.

I know what you are thinking. You want to ask “What’s wrong with you? Don’t you care what happens to the unemployed and poor people earning low wages? Isn’t it right for government to make employers pay their workers a decent wage?” You want to say “The government is doing this because they care about us. It is you who doesn’t care! You just want us to have low wages because you’re on the side of big business”!

I only ask you to hear me out. It is because I care that I write this message! Judge for yourself. It is a complicated story so please have some patience.

Of course, the government did not sit down and say, “What kind of laws and regulations can we think up that will make 9.4 million people unemployed and how do we make sure that two out of three of them are 34 years old or younger?” What they wanted to do was to make strict laws that would set rules for the way employers treat their employees. Rules such as how many hours they must expect their workers to work per day or week, how many days holiday they must give them in a year, how many paid days sick leave they can have, and, most importantly, how, why and when they can ask their workers to quit the job. There are strict rules about firing people, and there are rules about the minimum wages that employers must pay their workers.

This sounds good, doesn’t it? The trouble is, it turns out, that it is good for people so long as they have jobs. It is terrible for those who do not. It protects the people who have jobs, but it stops the people who do not have jobs from getting them.

Because of these labour laws, larger companies have to set up whole departments, called Human Resources (HR), and hire lawyers to make sure that they follow all the legal rules and regulations in the Labour Relations Act, minimum wage laws, Bargaining Council laws, and all the other laws that employers have to comply with relating to their employees. When it comes to the owners and senior managers in small firms, to comply with these laws, instead of just running their business, they have to spend a lot of their time on HR matters and CCMA cases, or, if they can afford it, pay outside labour lawyers to do the work for them. After all, if the employers do not stick strictly to the rules, their employees can take them to the CCMA or Labour Court which will make them pay fines and compensation for whatever it is the employee claims they have done wrong, for instance, a “wrongful dismissal”. Making sure that employers stick to the rules, what is called “compliance costs” can cost big and small firms as much as R2,000 per month per worker.

It is these costs, and the danger for the employer of being dragged in front of the CCMA or Labour Court that makes employers very careful about employing workers, especially unskilled workers and those with no or very little work experience. The average pay of many workers in small towns and rural areas is about R2,500. Add to this the compliance cost per worker of R2,000, the total cost to the employer is about R4,500.

And then government wants to change the rules by introducing a National Minimum Wage (MNW) of R3,500 per month from 1 May next year. Add the compliance cost to this, it means that every employee will cost the employer a total of about R5,500. There are many employers and companies that just do not make enough money to be able to increase wages by such a large amount. And the only way they will be able to deal with the added cost, is to have fewer people to pay.

And that is what my message is all about! It is because I do care. It is because I care about the thousands of people who now earn R2,500 per month or less and could lose their jobs, and the millions who will find it even harder to get jobs. It is because I want to see every single unemployed person who wants to work get themselves a job. And I am also writing this message so that other people who do care about the unemployed will perhaps understand why so many of you cannot find jobs.

I have been wrestling with this problem for many years. I worked with the Malamulela Social Movement for the Unemployed, who walked the 70 kilometres from the Johannesburg city centre to the Union Buildings in Pretoria more than 10 years ago to hand a petition to President Mbeki. The petition pleaded with the President to grant the unemployed a simple request. They asked him to exempt the unemployed from the labour laws and give them the right to negotiate employment contracts with employers, free of the restrictions of the labour laws.

They asked in their petition that unemployed people should be given a Job Seekers Exemption Certificate (JSEC) that would exempt them from the labour laws for two years. This would put the full contracting power in the hands of the person looking for a job. A JSEC holder would be able to say to an employer, “Give me a job, let me show you what I can do, if you are not happy with my work, or I am not happy with you, we can give each other 24 hours’ notice. We can write this into our contract. You see, with me as a JSEC holder you don’t have to worry about the CCMA and minimum wage laws, or any of the other labour law issues you are afraid of. It is just you and me. What do you say, have you got a job for me?” I wrote about these proposals in 2003, in a booklet called Jobs for the Jobless. If you want a copy I will email it to you.

I see signs going up all over that say “JSEC holders welcome”. I see doors no longer being slammed in your face but open and employers saying, “Let’s talk!” And then I, and millions of South Africans, will sleep better at night, because our fellow citizens will no longer be suffering as they do now!

Author: Eustace Davie is a director of the FMF and author of Jobs for the Jobless and a contributor to the book Jobs Jobs Jobs. This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Free Market Foundation.

 

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