Allowing the labour market to work


(This policy bulletin is an extract from Jobs for the Jobless Special exemption certificates for the unemployed, first published in December 2003 by The Free Market Foundation)

The proposal

People who have been unemployed for six months or longer should be entitled to a special exemption (SPEX) certificate, which would a) grant them exemption from all labour legislation for a period of two years and b) protect any employer who hires them from prosecution under the labour laws.

This would allow the unemployed to accept work at less than the minimum wage, and to agree to less favourable employment conditions (such as longer working hours or less rigid employment termination procedures) than those mandated by the labour laws. They would then have the opportunity to acquire skills and build up an employment history. It is important to note that these individuals, while relinquishing statutory protections, would still have all the protections against abuse that are afforded by the common law.

Why create a two-tier system, with some workers subject to labour laws and others not? Why not simply allow freedom of contract between all employers and all employees? The simple answer is that neither the government nor the unions would agree to this. Most countries have, to a lesser or greater extent, sacrificed contractual freedom in labour markets in favour of worker protections. South Africa has embraced the global trend and appears unlikely, in the near future, to make fundamental changes to its laws. The solution offered here is one that will disturb the existing labour dispensation as little as possible, yet allow large numbers of extra jobs to be created.

If a SPEX (special exemption) certificate were available, it would reduce unemployment rapidly and dramatically, and accelerate economic growth. These results would all be quantifiable. A less tangible, but equally important consequence, would be the improvement in the psychological health and emotional outlook of millions of people. 

SPEX certificates would empower the unemployed, not the employer. Organised labour is likely to oppose any labour law reform that reduces demands on business. This factor can be removed from the equation by placing the benefits of the reforms in the hands of the unemployed – in other words, by empowering the unemployed rather than the employer.

Thus the SPEX certificates would be issued to the unemployed, exempting them for a period of two years from the Basic Conditions of Employment Act, the Labour Relations Act and all other labour laws that restrict their ability to determine their own conditions of employment. The SPEX holder would become a free agent, entitled to make any form of employment arrangement she/he wishes with an employer, who would in turn be protected by the SPEX certificate from prosecution under the labour laws.

Source: This policy bulletin 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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