FMF’s Response to Cosatu on Labour Brokers

The FMF rejects Cosatu’s attempt in its article, Cosatu’s Response to FMF and DA on Labour Brokers, to link it with a political party. The fact that Cosatu graciously hosted the debate between our director, Temba Nolutshungu and Zwelinzima Vavi on the economics of minimum wages in COSATU House, has as little implication about the nature of our Foundation as the fact that the DA happens to put forward an economic argument similar to that of the FMF.

COSATU is well aware that the FMF is totally non-partisan and does not get involved in party politics. The FMF has been promoting economic freedom for 38 years and will continue to do so. We are happy to engage with any political party, labour union, or any other kind of organisation to discuss the benefits the entire nation would reap with greater rather than less economic freedom. Economic freedom, simply defined, is voluntary exchange between individuals, free of force, coercion or fraud.

Nowhere in the FMF statement, Unemployed people need the services of labour brokers, was it suggested, as contended by Cosatu, that labour brokers create jobs. The final sentence reads, “Job seekers, who need the services of labour brokers, should raise their voices in defence of the brokers”. The statement was clear that labour brokers provide a valuable service to the unemployed and that it will be a disservice to the most vulnerable and needy people in the country to prevent or curtail their access to the service provided by labour brokers.  

The reason why we have been involved in the debate over how to end mass unemployment in South Africa is because we are convinced that greater economic freedom, including a free market in labour, would rapidly reduce unemployment so that our country would no longer have one of the highest unemployment rates in the world. Our statement on the proposed changes to the labour laws is based on the view that free markets bring about rapid economic growth, which, in turn, increases the demand for labour and reduces unemployment.  

Economist Walter E Williams said, “People who denounce the free market and voluntary exchange, and are for control and coercion, believe they have more intelligence and superior wisdom to the masses. What's more, they believe they've been ordained to forcibly impose that wisdom on the rest of us. Of course, they have what they consider good reasons for doing so, but every tyrant that has ever existed has had what he believed were good reasons for restricting the liberty of others.”

The FMF opposes labour legislation that restricts the peaceable, voluntary exchange between intermediaries (in this case labour brokers) and job-seeking unemployed people who freely enter into contracts with such intermediaries. In other words, it opposes regulation that infringes on the economic freedom of the participants.

Critics of the labour broker system tend to be more concerned about the fees of labour brokers rather than the interests of the unemployed. Do they “believe they have more intelligence and superior wisdom” than the unemployed and therefore “have good reasons for restricting the liberty” of labour broker workers? Or, are they merely, at any cost, looking after the interests of the already employed? They criticise labour brokers for paying workers “poverty wages”. This implies that workers do not have the ability to decide for themselves whether the wages they receive are better than all other available alternatives. In many cases the alternative to what Cosatu describes as “poverty wages” is “zero wages”.

Cosatu has every right to attempt to persuade unemployed people not to enter into contracts with labour brokers. Cosatu could run courses for the jobless on alternative ways to find employment and even assist them to find jobs. However, they are not entitled to claim that they are acting in the interests of the unemployed when they use their political power, as members of the tri-partite alliance in government, to bring about regulations that, according to every objective standard, will reduce the job opportunities of more than 7 million out of work and destitute people. Regulations that will unavoidably add a large percentage of the currently employed labour broker workers to the numbers of South Africa’s unemployed.

Labour unions are a free market phenomenon where employers and employees are free to enter into voluntary contracts with each other on agreed terms. The FMF and Cosatu are therefore on the same side of the economic fence on condition that all union activities take place on a voluntary basis and there is no force or violence involved.

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.


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