It’s the cost of labour that keeps 8.7 million South Africans unemployed

The high price of labour is the cause of mass unemployment in South Africa. The shocking truth is that labour law compliance costs form a substantial percentage of that price. Remove those costs and employment would increase substantially. If all minimum wage requirements, which further raise barriers to entry for job seekers, were to be removed, unemployment would reduce dramatically.

South Africans have become so used to seeing the massive unemployment figures that they no longer relate them to living, breathing, human beings who are being prevented from earning a living. Desperate people who would do anything to have a job – any job – that allows them to take some money home to their families, or, in the case of young people, to sustain themselves honestly through their own efforts.

Housing the 8.7 million unemployed people all together in this country would require the total space of cities with populations the size of Cape Town’s 3.4 million, Johannesburg and Soweto’s 3.7 million, and Pretoria’s 1.6 million. These numbers are shocking, yet all we hear when real solutions are proposed to allow the victims of the entry barriers to find themselves jobs, is that what the advocates of solutions wish to do is “exploit” unfortunate people. A ridiculous accusation. The defenders of barriers to entry posit the argument that they want people to have “decent” jobs.

The word ‘decent’ has such kindly connotations, and, of course everyone wants workers to have decent wages, working conditions, hours of work and contractual arrangements with employers. Dictionary definitions include ‘respectable, good enough, tolerable, proper, modest and moderate’. Words have different meanings for different people, however. For instance, 19th century novelist Thomas Peacock wrote that, ‘Respectable means rich, and decent means poor. I should die if I heard my family called decent.’

When applied to jobs, ‘decent’ has a variety of meanings, depending on who does the interpreting, for example, a highly qualified university graduate would reject ‘physical labour’ whereas a farm worker or road repairer would expect it to be the main part of their working conditions. The standards for ‘decent jobs’ set by labour unions are based on wages, working conditions and other minimum criteria they have negotiated for their members with employers and have had written into the country’s laws and regulations: anything less is regarded as not ‘decent’.

A desperate person, especially one who has been unemployed for a long time, will have an entirely different perspective of decent work. Money to buy food for the family is likely to be a first objective, then clothing, shelter and so on, along the scale of their priorities. As long as the job is tolerable, desperate people are prepared to accept any job that enables them to make progress in obtaining as many of their priority items as possible.

Understandably, union leaders are determined to set the highest standards they can achieve for their members when defining what constitutes a ‘decent’ job. Around bargaining tables they hammer out the details: minimum wages, working conditions, hours of work, overtime pay, leave periods and a great deal more, mainly with large employers, who generally prefer to negotiate with unions rather than with individual workers. Workers have every right to establish unions, appoint representatives, and have them enter into agreements on their behalf. No right-thinking person can have any objections to such activities.

Problems arise, however, when the arrangements between large labour unions and large employers spill over and affect non-parties to these agreements. Obviously it is in the interests of union members that the same conditions should apply to everyone in their particular industry to avoid the possibility of non-party firms out-competing their own employers and jeopardising their jobs. Parties to such agreements overcome the difficulty of potential competition by persuading governments to make these agreements applicable to everyone in their industry, whether or not they participated in the negotiations.

Unsuspecting small employers find themselves subject to terms and conditions to which they have not agreed and which in extreme cases can force them to close down their operations. In such cases, their employees who believed that they had ‘decent jobs’ find themselves with no jobs at all. Small employers should have the right to refuse to have such agreements foisted on them, especially if they can obtain the support of their employees to reject the agreements.

Labour unions and employers are not to blame for the negative consequences. They may be morally culpable for bringing pressure to bear but the legal responsibility lies with government. Parties to such agreements may lobby for them to be extended to non-parties, but governments can and should refuse to comply with such requests. If they do not, they must take full responsibility for jobs lost in the non-party firms.

The current labour laws and regulations have raised a veritable ‘brick wall’ between potential employers and the unemployed. Potential employers are not prepared to wade through and bear the costs of all the compliance requirements in respect of someone with no skills, no track record, and most probably a badly eroded ‘will-to-work’ approach caused by long-term unemployment. They are certainly not prepared to face the prospect of having to appear before the CCMA or the Labour Court for failure to follow some prescribed procedure. Instead they are being forced to hang out ’No Jobs’ signs.

The most tragic consequence of the current labour dispensation is that unemployed people cannot apply their conception of what constitutes a ‘decent job’ to one that others do not consider to be ‘decent’. They cannot do that because employers face prosecution if they employ them on the basis of the applicant’s conception of ‘decent’ terms.

For several years, the FMF has been lobbying for all parties to allow people to make their own decisions about their own lives. This can be done by exempting the unemployed from the elements in the labour laws that are causing unemployment. The purpose is not to disempower the jobless but to empower them – to give them full contractual rights over their own employment.

Small firms and individuals are the most likely potential employers of the exempted jobless. Stripped of compliance costs and minimum wage requirements these employers will probably pay wages that reasonable people would consider to be a ‘decent’ wage, given the circumstances. We are talking about ‘decent jobs’: an income, the promise of a future, the chance to feed and clothe a family. A ‘decent job’ that may not be everybody’s conception of the term but what a particular unemployed person would consider to be ‘decent’. A job that a jobless person thinks is ’decent’ is surely better than no job at all.

Author: Eustace Davie is a director of the Free Market Foundation and author of Jobs for the Jobless: Special Exemption Certificates for the Unemployed. 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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