I address this article to Cyril Ramaphosa, the newly elected President of the ANC en route to the Presidency of South Africa. One of the critical issues facing you is the mass unemployment in the country. I strongly entreat you to attend, without delay, to the plight of the unemployed! You dare not continue to walk the path of vested interests in dealing with this matter. As President of the country you will be everyone’s President and you cannot wait for 2019 to implement policy reforms that are so desperately needed.
What makes the matter even more urgent for you is that you have been at the helm of fashioning the National Minimum Wage (NMW), which is already increasing unemployment because businesses are preparing themselves for its implementation. Savvy employers have stopped employing low wage employees and are doing their best to eliminate workers earning less than R3,500 per month. Many small businesses and individual employers, who generally employ most of the low-skilled workers, will possibly not understand what is about to hit them and could find themselves in the CCMA, which is apparently gearing up to receive them.
It is not an unwillingness to work that is keeping 9.422 million people unemployed in SA. It is the artificial but real legal barriers to entry into the job market. If the unemployed had the option to find themselves jobs free of those artificial barriers, the jobless numbers would plummet. The main barriers are the hiring and firing and minimum wage laws.
The author of South Africa’s War Against Capitalism, US economist Walter Williams, described how minimum wages were used to exclude blacks from jobs during the apartheid era:
“… white unionists argued that ‘in the absence of statutory minimum wages, employers found it profitable to supplant highly trained (and usually highly paid) Europeans by less efficient but cheaper non-whites.’ One South African union leader said, ‘There is no job reservation left in the building industry, and in the circumstances I support the rate for the job (minimum wages) as the second best way of protecting our white artisans.” I am sure, Mr Ramaphosa, that you will remember how this strategy was used to keep blacks from out-competing whites in the jobs market. You must then also be aware of the consequences of the laws that have been adopted to give employed people high levels of job security and what the consequences are of implementing minimum wages. In case you have forgotten may I remind you of the consequences of minimum wage laws:
– The lowest-skilled people in the country lose their jobs or are unable to find jobs.
– Opportunities for on-the-job training decline, as do the fringe benefits offered by employers.
– If a significant differentiation is not made between wage rates in rural and urban areas and between other existing high-wage and low-wage areas of the country and sectors of the economy, unemployment in the poorer areas will rise, further increasing their poverty levels (the unavoidable consequence of implementing a NMW).
– Skilled workers replace unskilled workers, part-time workers replace full-time workers, and machines replace people.
While it was necessary for me to point out to you that over-regulation is the major reason for the shocking level of unemployment in South Africa, that is not my primary purpose. My purpose is, for the sake of the unemployed, to help you dig yourself out of a hole, which could be politically destructive of you if you do not quickly find a solution to mass unemployment. Your comrades would find it very trying to publicly oppose you if you were to implement the JSEC solution.
The country is waiting with bated breath to see if the unemployed can be rescued from the abyss of progressive soul-destroying despair, starvation, loss of self-esteem and self-respect as they have become dependent and burdensome on those who support them. Just Let Them Work!
Author: Temba A Nolutshungu is a director of the Free Market Foundation. 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 Foundation.
PS: R1 Million Challenge – The FMF is currently running a R1 million challenge, in which a generous sponsor will add 50% to all donations received by 15 January. What is more, the FMF is a registered Public Benefit Organisation and your donation is tax-deductible. To learn more about the challenge or to donate, click here.