Mr Ramaphosa, like most South Africans I am relieved that you have ascended to the country’s highest political post. However, you of all people know that you start your Presidency with an economy in deep trouble – and one in which the unemployed have been almost completely ignored.
By first adopting an option for the “relief of the unemployed” through job seeker’s exemption certificates, you will ensure that when even more people become unemployed as the inevitable result of the impending implementation of the national minimum wage (NMW), there will be relief available to them.
Proof that unemployed South Africans are truly the forgotten people is contained in the Socio-Economic Impact Assessment (SEIA) attached to the NMW Bill circulated for comment by the Department of Labour. Shockingly, the “affected stakeholders” in the exercise are listed as being “Government Departments, Business, Organised Labour and Civil Society”. No mention is made of the interests of the most “affected stakeholders” of all, the 9.2 million unemployed who make up over 36% of SA’s potential workforce.
Costs of complying with the labour laws, including the costs resulting from inadvertent failure to comply with the letter of the law, amount to a potential R2 000 per month per worker. These compliance costs must be proportionally added to the proposed minimum wage of R20 per hour, or R3 500 per month, in arriving at the true cost of hiring an unskilled worker. Compliance costs significantly raise the barriers to entry into the job market for the unemployed and yet appear to have been entirely overlooked in evaluating the potential effect of implementing the NMW.
Another factor that has been ignored is the disproportionately harmful effect which the NMW will have on the relationship of workers and their employers in the rural areas.
The SEIA also reveals that economic researchers from the Cape Town and Johannesburg Universities predict potential job losses estimated at between 204 977 and 897 068 as a result of the NMW. If they are correct, the number of unemployed people will not only increase significantly, possibly to 10 million, but the NMW will make it even more difficult for the expanded mass of unemployed people to find employment. Moreover, it reveals that these poverty-stricken, unemployed stakeholders have had no say whatsoever in legislation that will descend on them like a veritable plague, in many cases destroying any chance they might previously have had of entering the job market.
Mr President, I submit to you that not only will the implementation of the NMW be economically unsound and harmful to SA’s forgotten people, but it will increase the unconstitutionality of an already unconstitutional situation. The mass unemployment we have in SA today is the direct consequence of the barriers to entry into the job market created by existing labour laws, which prevent the unemployed from exercising their constitutional rights to negotiate their own employment contracts, a situation that will simply be exacerbated by the NMW.
The Bill of Rights is intended to protect vulnerable people such as the unemployed from having their rights abrogated. Legislation and regulations imposed on employers that creates the indirect barriers that prevent the unemployed from accessing jobs makes these barriers no less real. The unemployed cannot get jobs because employers are prohibited from entering into employment contracts with them on terms and conditions that would be acceptable to all parties, a situation which conflicts with the constitutional rights of the unemployed.
Some self-explanatory illustrative examples from the Constitution show clearly that the unemployed are being denied their constitutional right to enter into mutually beneficial agreements with potential employers:
- Section 7(1) which “enshrines the right of all people of our country and affirms the democratic values of human dignity, equality and freedom”. There can be nothing more undignified than for a willing individual to be denied the right to work, to equality before the law, and to freedom of contract.
- Section 7(2) requires the state to “respect, protect, promote and fulfil the rights in the Bill of Rights”. Unemployed people also have constitutional rights, yet they have become the “forgotten people” as far as constitutional rights are concerned, a situation it seems that may well have to be rectified by the Constitutional Court itself.
- Section 9 deals with the right to equality and section 9(2) provides that “To promote the achievement of equality, legislative and other measures designed to protect or advance persons, or categories of persons, disadvantaged by unfair discrimination may be taken. SA’s forgotten people are clearly being discriminated against – why else would 9.2 million of them be unemployed?
- Section 9(3) provides that “(t)he state may not unfairly discriminate directly or indirectly against anyone “on one or more grounds”. The labour laws including the minimum wage directly or at least indirectly discriminates against the unemployed whilst unfairly protecting only the employed.
- Sections 10, 11, 12(1), 12(1)(e), 12(2)(b) provide further Bill of Rights provisions that are not protecting the unemployed as they should.
President Ramaphosa, for the sake of your own political integrity and that of the millions of SA’s forgotten people who will be detrimentally affected by the institution of an NMW, please do not sign the proposed egregious National Minimum Wage Bill into law, should it be approved by Parliament. You were last year directly involved in a decision to adopt a National Minimum Wage (NMW), which international economic experience predicts will substantially increase the number of unemployed people in the country. Apart from the false economic dogma that was presented to you to induce you to support the NMW, there are important economic, constitutional and human rights aspects of the issue that were obviously not brought to your attention. I therefore urge you to delay the institution of the NMW to avoid a calamitous further increase in the already huge number of the country’s forgotten people.
Fortunately, there is a simple solution: First adopt legislation granting exemption certificates to the long-term unemployed that release them from the labour laws which are causing them to be unemployed, allowing them to enter into employment contracts with employers on conditions that are acceptable to themselves, not just to the employed bureaucrats who lord it over them or otherwise ignore them as they have in the Labour Department’s SEIA. This is a low cost, workable option that will solve the economic, constitutional and social problems caused by unemployment. It will also rapidly reduce the rate of unemployment in the country.
First adopt this “relief of the unemployed” option to ensure that when people do become unemployed because of the implementation of the NMW or for any other reason, there will be relief available to them.
Author Eustace Davie is a director of the Free Market Foundation, the author of Jobs for the Jobless, and a co-author of 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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