We can no longer ignore the effects of the minimum wage and other bad laws

The minimum wage continues to haunt South Africa, as if the traumatic experience of 2020 with its lockdowns, which have now given us a 43.1% unemployment rate under the more sensible expanded definition, were not enough. The latest move comes courtesy of the National Minimum Wage Commission which was created by the National Minimum Wage Act. This body has the power to recommend National Minimum Wage (NMW) adjustments to the Minister of Labour.

When the NMW was first introduced, it was set at R20/hour. The Commission was created to recommend adjustments to account for inflation as well as gradually bringing up the minimum wage for domestic workers and farm workers into line with the NMW. The Commission has now issued a proposal as to how this should be done, recommending that the minimum wage for domestic workers increase from around R15/hour at the time the Act came into operation, to the NMW rate. This is a more than 33% increase in four years.

To be more precise, domestic workers would have their income increase at a compound annual growth rate of more than 9.66%. This is more than three times the current CPI inflation rate of 3%. Such an enforced increase is going to push many more people over the edge and into deciding to no longer employ a domestic. To make matters worse, farm workers are set to have their minimum wage equalised with the NMW as soon as next year, if the Minister approves these recommendations. These decision can only be characterised as insanity under present conditions.

The government, instead of embracing low-skilled jobs and the attendant pay to alleviate our specific problem in which we have much more labour than the market can absorb under the current regulatory and tax regime, chooses instead to punish people who offer these jobs and the people who would accept them. It is an act of cruelty and callous disregard for poor people who have been pushed further into poverty by government's lockdown. This is the time to abandon silly ideas like expropriation without compensation, fat civil servant salaries, government services that are provided inefficiently, SOEs, business regulation, and especially labour laws.

These are things we could scarcely afford with our perpetually high unemployment rate, when the world was going through good times. Now that governments across the world have unleashed on the rest of us the lockdowns and their economic devastation, we must now abandon all flights of fancy and focus on the well-being of South Africans. This can only be done by giving back the rights of South Africans to start businesses without government interference, and to sign employment contracts that suit their needs, not the government’s priorities.

On top of everything mentioned above, the Commission also recommended an above-inflation increase to the NMW, 1.5 percentage points above inflation to be exact. The Minister cannot accept these recommendations if the government cares at all about the poor people of this country. Failing that, a solution has to be found to the unemployment crisis independently of the government. Ultimately, this problem harms us and our communities, not the bureaucrats in Pretoria.

South Africa has endured enough economic devastation. Before calling the labour inspector on someone who gave you a job when no one else would, think seriously about what kind of world you are creating. Equally, before making people work under unsafe conditions, think about what you are doing when the country has so much unemployment that many people feel like they have no choice but to take any job.

There are too many cases where a factory burns down with the workers locked inside. It is a horrible way to die, and the factory owners who allow this are terrible, evil people. But we need to have enough nuance to be able to distinguish between an entrepreneur who cannot afford to pay a high salary and may never be able to because of their margins, and someone who maliciously allows people to be harmed (like locking people in, when they should be working voluntarily).

The answer to complex societal problems is not always to employ force. It really is a blunt and limited instrument – force can help you defend yourself at a specific time and place, but it often causes new problems for you, even if justified. The same goes for legislation, which is a formalised use of force, coming about as a result of state procedures and institutions. Now we have more than 74% of able-bodied 15-24-year-olds unemployed, because laws forbid them from accepting the jobs they can get.

This is immoral and might even lead to a bloody revolution. The government being beholden to the unions beyond all reason will destroy this country if we allow it.

This article was first published on City Press on 24 November 2020
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