Economist Milton Friedman’s statement “A minimum wage law is, in reality, a law that makes it illegal for an employer to hire a person with limited skills” captures the truth about this devastating barrier to employment. The notion that a government-mandated minimum wage displays compassion for the poor and unemployed is a brutal lie.
If you are unemployed there are many hurdles to be overcome. One hurdle might be a poor education, a misfortune that millions of people have suffered and that young people continue to suffer in South African schools. You might have difficulty in reading, writing and doing calculations, the skills required for most better-paid jobs. And you might not yet possess the skills that are of immediate use to a potential employer such as a large firm. This severely reduces your employment options.
But, despite your lack of certain skills, you are bright, strong, healthy, and ready to work and learn on the job. All you need is a chance to show an employer what you can do. So you start knocking on the doors of people whom you think might employ you. You tell them straight out that you do not have experience but you want to work and learn the skills you need for the job. You promise to work hard, all you want is to be given a chance. You are willing and prepared to start at whatever wage is offered so that the employer can see that you are a good worker. If they are happy, then they can pay you more, but if they are not, they must just tell you and you will leave and go and look for a job elsewhere.
Unfortunately, life in the employment world is not that simple. It should be, but it is not. A kindly employer will tell you that they will have all sorts of problems if they decided to employ someone like you. Because of the minimum wage law they cannot accept your offer to start on a low wage and would have to pay you more, but because of your lack of skills and experience they cannot take the chance that you may actually not be able to do the job. Also, they cannot just tell you that things are not working out and that you will have to leave.
“But it’s my life,” you say, “Why can’t I decide for myself what wage I am happy to accept and how things will work between us? I have heard about freedom of contract, can’t we do a contract that spells out how my employment will work?” The employer will tell you that there are laws that have taken away contractual rights between willing parties and punish people who break those laws.
“What other laws are there?” you ask. The employer then tells you about the Basic Conditions of Employment Act that is mainly intended to protect employees from bad employers. Many employers, mainly small employers, are taken to the CCMA and the Labour Court by their employees. Because of this, small businesses have become afraid to take on staff. Some employers say that it is easier to get a divorce from your wife than to retrench an employee. So, what happens, is that the law protects those who have jobs and stops many desperate people from getting jobs. Bargaining Councils also make life difficult for small employers and their employees. Bargaining Councils were set up so that representatives of employers (mostly large) and labour unions can bargain about wages and conditions of employment, but unfortunately they have become instruments for punishing small firms and even driving them out of business.
If you are shocked by these revelations it will not be a surprise. “How will I ever get a job under these conditions?” you may ask. Sadly, today, this question is making life miserable for more than 8.1 million unemployed people in South Africa, a number that, appallingly, is greater than the total populations of Johannesburg, Durban and Pretoria combined.
“But this is not compassion, it is a way to stop me from getting a job!” you say.
Yes. Some people, such as labour unions that represent workers who have jobs, do not want you to compete for those jobs, especially anyone who is prepared to work for low wages to get a first job and gain experience.
“But don’t the labour unions care about us; don’t they have any compassion for the unemployed; how will it hurt them if we work for low wages? What about the Department of Labour, don’t they care?” you ask. It is a question you will have to ask them.
I can guess what your next question is going to be. Is there a way that the unemployed can get jobs from employers without the employers getting into trouble or affecting the protection that the law gives to people who already have jobs?
There is a way, which is to make a small change to the labour laws to allow the unemployed to make their own decisions about what wages and conditions of employment they would be happy with. The unemployed need to have their right to contract returned to them. People who talk about “decent” jobs believe that unemployed people are too stupid to look after their own interests – that they should be stopped by legislation from entering into contracts on conditions they think are “decent”. The truth is that no one knows better than unemployed individuals what conditions of employment will improve their lives.
If the unemployed are given official written exemption from the Labour Relations Act, in the form of a document called a Job Seekers’ Exemption Certificate (JSEC) or something similar, say for a period of two years, it would allow them to negotiate with employers on a totally different footing. Being exempted, the certificate holders would be able to relieve potential employers of their fear of the labour laws, and enter into contracts with them on mutually agreeable terms. This would give the JSEC holders two years to find jobs, build skills and a track record, and change jobs until they find jobs that suit them. The status of unemployed JSEC holders would change from “unwanted” to “wanted” and they will find jobs.
People with jobs will not lose any of their legal protections, labour unions should have no complaints (except if their real selfish intentions are to keep the jobless unemployed forever), and the government should be happy to see 8.1 million unemployed going to employers to write employment contracts with them.
“Where can I get a Job Seekers Exemption Certificate” you ask? “I am sure if I had one I would soon find a job, please can you help me to get one.” Sadly the government has not listened to my pleas on behalf of the unemployed. Exemption certificates have not been made available. But perhaps this time it will be different. Perhaps if enough people ask them they will listen. It is time to make it legal for an employer to hire a person with limited skills. It is time to show compassion for the unemployed.
Source: 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.