A spectre is haunting South Africa – the spectre of unemployment

Temba Nolutshungu is a director of the Free Market Foundation. 

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This article was first published by the Business Day on 20 January 2023

A spectre is haunting South Africa – the spectre of unemployment

The socioeconomic tragedy that government labour legislation inflicts on South Africans seems to manifest itself in terms that are not spectacularly visibly discernible. The unemployed are widely dispersed among communities throughout the length and breadth of the country, so, occasionally, one catches a glimpse of queues of people here, there, and everywhere. The majority of the nineteen million unemployed appear to have given up hope of ever finding a job and seem prepared to languish quietly in misery in their abodes or makeshift homes.
The unemployed have become a mere statistic! This suggests those insensitive words of Josef Stalin, the communist dictator of Russia who was personally responsible for the deaths of over 20 million of his own people, and who then, in addition, between 1932 and 1933, committed the Holodomor atrocities that resulted in the deaths of around 3.9 million Ukrainians from starvation. Stalin notoriously stated that “The death of one man is a tragedy. The death of millions is a statistic”.
Relevant to the South African unemployment cataclysm, this begs the question as to whether the insensitivity among policymakers could be subtly reminiscent of an unintended Holodomor because of the policies that they have been enacting.
In an article published in January 2022 , renowned economist Magnus Heystek notes that the number of working age unemployed exceeds that of those who are in actual employment.
Lest it be forgotten, over time, being unemployed exacts a devastating toll on one, psychologically, emotionally, and spiritually. It forces people to depend on the charity of family and even, in some cases, of neighbours and friends. This situation gradually erodes self-esteem and self-respect as the afflicted feel that they are an economic liability instead of being an asset to the family and society at large. In other words, being unemployed at some point becomes being condemned to perpetual misery. Relevant to this state of affairs it is noteworthy that the economist Joan Robinson (1903 – 1983) before she succumbed to the politically correct Keynesian ideology , poignantly stated that “The misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all”. 
To bring the whole issue of unemployment into sharp focus, consider the following statistics: the populations of Cape Town and Johannesburg in 2022 were respectively 4,801,000 and 6,065,000. The number of currently unemployed is officially 15.6 million but economists statistically show that the situation is far worse than that if those who have given up looking for work are included.
This means that the number of unemployed is more than the combined populations of Johannesburg and Cape Town! This is quite shocking, to say the least
Now let us move the Cape Town and Johannesburg populations (altogether 10, 866,000) to one metropolis also hypothetically named JOZICAPE. Visiting this megacity what would one find? – no businesses big, small, or informal, no factories, no electricity, no healthcare facilities, no food outlets, no schools. Instead in this horrific situation, one would find a Zombie living dead and dying scenario.
Yet this apocalyptic situation can be reversed at the stroke of the statutory pen in a relatively brief period. The point of departure of this initiative should be the acceptance of the self-evident that all the socioeconomic mess that engulfs the country is a direct consequence of statist, dirigiste government policies that are fueled by ideological underpinnings.
The following policy measures are clear to everyone who understands profoundly that the ONLY goose that lays the golden egg is the private sector (comprising big, small, and informal enterprises) as it is wholly and exclusively the creator of employment and wealth and NOT government which only consumes wealth and destroys jobs while pretending to create employment at the beleaguered taxpayers’ expense.

  • Government should nurture the golden goose with policies that will unleash the spirit of enterprise by bringing about a supportive policy environment thus lowering barriers to entry and lowering the cost of doing business in the economic arena.
  • Any policy of expropriation of property as with the Expropriation Bill should not find its way to the statute books of parliament. Put in explicitly blunt terms, such policies in whatever form should be removed and never ever again be considered let alone adopted. Empirical evidence abounds to the effect that such policies are counter-productive, precipitate capital and intellectual flight, deter domestic and foreign direct investment and undermine economic growth.
  • Abrogate the racially divisive affirmative action / BBBEE policies as they have demonstrably benefited a few politically connected black elites some of whom are conspiring with big business rent-seekers. I had predicted this long before the 1994 democratic elections. Anybody could have foreseen all this by just studying the futile and counterproductive affirmative action policies of America over 60 years of implementation of these policies in that country. So where are the blacks / African Americans now in comparison with other American ethnics? They occupy the lowest rung of the socioeconomic ladder. 
  • In South Africa, there seems to be a remote slight glimmer of light on this racially discriminatory policy with the Minister of Finance’s audacity to exempt State Owned Enterprises from Affirmative Action /BBBEE policies. It seems to have dawned on the minister that this policy has scant regard for the economic logic of the meritocratic right person for the job principle and market-oriented policies that are selfevidently compatible with fundamental economic principles. But what is sauce for the goose is sauce for the gander and so this principle should apply across the private sector.
  • Open electricity generation to market forces by allowing any firm or individual to generate or sell excess electricity without an artificial cap on price or profits via taxation for a period of say 5 years or even longer. That might be enough time for firms to recoup their start-up capital costs after investing in an electricity generating plant/firm. This scenario would see households even in such areas as Soweto, Bonteheuwel to invest in generators and sell excess capacity to neighbours on a cash basis or other barter arrangement. Overall, this means dismantling the Eskom monopoly or allowing it to compete on an equal and fair basis with private interests. This is quite clearly to be implemented on an expeditiously and extremely urgent basis. Energy powers the economy.
  • With superfluous inhabitable land that the state owns it should provide plots for dwelling together with legal freehold title deeds. This would be on a site and service basis for indigent families that would be identified subject to a rigorous means test. This would be across racial lines. The government’s role would be to lay out basic infrastructure such as water reticulation system and road street lighting. Consistent with Peruvian Economist Hernando de Soto thesis in his book (Mystery of Capital) dead capital when legally titled would be an economic asset with the owners becoming part of the economy.
  • Given that South Africa is an emerging economy, it is a labour-intensive country. This means that labour policies should stimulate labour employment. Minimum wage laws should be abrogated as they discriminate against the unskilled and inexperienced who tend to be mostly the young. Those enterprises that struggle with or cannot comply with government-mandated minimum wage laws will find that they must cease operations, shut down or exercise the option of progressively investing in capital equipment as opposed to labour. A direct consequence of this would be that the unskilled and inexperienced would be the first to be retrenched and the last to be hired, if at all. The stark reality is that this has been happening and no wonder that unemployment keeps getting worse.

While these proposed measures relaunch the country on a steep upward economic growth trajectory, other consonant policies would be a further injection into the economy.
In conclusion, it has to be boldly stated that the country needs business leaders of the calibre of the industrialist Robert Hersov (among so very few others) who actually does speak truth to power and not the tail-between-the-legs captains of industry and other executives who compromisingly engage government in half-baked measures and sometimes throw money at the created problems or projects that have been identified. From what I have read about him, the saying “cometh the hour, cometh the man” fits Hersov so aptly especially in the face of some few wayward journalists who go out of their way to pander to political correctness as they make it their business to prostrate themselves in front of the government in the process resorting to spurious criticisms levelled at him.

The country needs more business leaders of such calibre to engage government on the emperor has no clothes basis. The President of Business Unity, Bonang Mohale is quite clearly a cut above the rest in this regard. Read some of his articles and you will see what I mean.

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