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In the face of an unemployment pandemic ... can South Africa still afford minimum wages and suffocating labour laws?

In the face of an unemployment pandemic ... can South Africa still afford minimum wages and suffocating labour laws?

Almost all South African workers are regulated by minimum wages, be it the controversial sectoral minimum wages negotiated in bargaining councils, and often undemocratically extended to non-parties, or minimum wages prescribed by the Government.

These minimum wages are aimed at preventing the exploitation of workers and enable employees to at least earn a living wage.

Although the prevention of exploitation is laudable and should be supported, firstly, one needs a reasonable comprehension of what the term ‘exploitation’ encompasses. For instance:

  • if a domestic worker employs somebody to look after her child while she is at work, and she cannot afford to pay that person the statutory minimum wage, does this constitute exploitation?;
  • is it exploitation if an upcoming farmer in a rural area cannot pay seasonal workers the statutory minimum wage, in a situation where an extra R1000 (per individual) for a hundred workers, amounts to an additional R100 000 per month for the farmer?;
  • or is it actually exploitation if the worker, desperately trying to find a job, instead of queuing for a temporary R350 per month hand-out, simultaneously sacrificing his self-respect, is denied the opportunity to be employed due to the overregulation of the labour market?; and
  • are the millions of South Africans who are in danger of never finding a job, not being subjected to the worst kind of exploitation - the loss of dignity and exposure to rejection and humiliation?

How can anyone argue that it is better for a person to be unemployed, rather than being ‘exploited’ in a job for which less than a minimum wage is paid?

Given the challenges in our education system and the criticism of the employability of the youth, being the sharpest edge of South Africa’s unemployment crisis, our times now demand innovative action to develop skills and incentivise job creation.

A carrot will now be endlessly more effective than a stick. Forcing employers into skills programs has had limited success. However, few skills programs have proven more efficient than on the job training, where practical experience can be gained.

On-the-job exposure is currently hamstrung by minimum wages and a suffocating labour dispensation which forces small and medium enterprises, among others farming and enterprises in rural areas, to reduce their labour forces rather than to expand them. It is so difficult, and risky, to dismiss a worker who does not fit into the ethos of an enterprise, that the employer would rather not take the risk of employing a new staff member at all.

It seems that this type of governmental interference by way of legislation is more suitable to developed countries where almost all employers have the resources to comply with it and business ethos is predominantly shared by both employers and employees.

In a developing country, such as South Africa, where the unemployment rate is among the highest in the world, it is simply not appropriate to enforce the type of measures South African employers are subjected to. This argument finds even more application in certain industries, such as agriculture or in areas outside of the economic hubs.

In these areas or industries, minimum wage measures and overly strict labour laws have one of two consequences:

  • either employers simply flout the legislation, operating under the radar, which prevents any growth of the business; or
  • they simply refrain from employing new staff, at least not to the extent that would otherwise be possible.

The fact that an employer may not appoint a person at a rate below the minimum wage, even with the consent of such a person, robs a potential employee from earning at least some sort of living and condemns him to a life of abject poverty. This most certainly denies him his constitutional right to work and also impacts on his constitutional right to human dignity and sentences him to a life of dependence on an already overburdened social grant system.

The unemployment crisis in South Africa is inevitably bound to cause increased future social instability. Unfortunately, there are political opportunists who see their opportunity in this very instability. Consequently, if there is any real desire to address the unemployment disaster facing South Africa, the fallout from the lockdown will require an entirely different approach from the one which, until now, largely contributed towards unemployment. This will require:

  • economic policies which will instill confidence and thereby unlock the economy’s potential, which in itself will create more and better paying jobs; and
  • in the interim, we have to find a way to make it easier for the unemployed to access the labour market.

Measures through which this can be addressed is to:

  • relax the law on dismissal, especially in respect of the first six months of employment;
  • to suspend all minimum wage requirements; or
  • as a less dramatic alternative, as per a proposal from the Free Market Foundation, to allow for an unemployed individual to apply for a certificate exempting him (and therefore the business employing him) from any statutory minimum wage requirements, even for a limited period. In this manner a prospective employee may at least get a foothold in the job market, gain experience and, in doing so, become a productive and respected member of society.

The cost in terms of lives lost as a result of the Covid-19 health issue will fade into absolute insignificance compared to the eventual dramatic impact of the cancer of unemployment, which not only kills people, but destroys the very fabric of society.

This is a press release by Gerhard Papenfus, Chief Executive of the National Employers’ Association of South Africa (NEASA) and Theo de Jager, Board Chairman of the Southern Africa Agricultural Initiative (SAAI) and President of the World Farmers’ Association.