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We simply have to make it easier to be an employer in SA. And we have to be prepared to stand up to the unions when their interests threaten the interests of the unemployed and the low skilled, writes Mmusi Maimane.
For the first time ever, the number of unemployed South Africans has breached the 10 million mark. A staggering 10.2 million working-age citizens now don't have jobs. A third of them have so little hope of ever finding one that they've given up looking. Our official definition of unemployment doesn't even recognise these "discouraged jobseekers" and excludes them from the head count.
At the same time our government still holds a view on the relationship between the state, business and labour that was formed in the previous century, and should have remained there. It persists with labour legislation that treats the private sector as some kind of ideological adversary. And it maintains an unhealthy relationship with big unions in which the unwritten contract is to protect one another: government averts strikes and big unions get above-inflation increases.
Given our country's perilous situation, this approach makes no sense. Our only hope in stemming the jobs bloodbath lies in unlocking the job-creating potential of the private sector. We should be doing all we can to make South Africa a place where investors and entrepreneurs feel optimistic and undaunted about starting and running a business.
If we want to sell our country as an attractive market, then we have to be that. If there are obstacles which can be removed, we must do so. If government is such an obstacle, then government must change. And if this means making a significant ideological shift, then so be it.
First and foremost, we must recognise that the world has changed in the last half century. Today it is one big, connected marketplace. Our goods and services must compete with everything that's available out there, as must our labour. The days of believing in our own exceptionalism have long gone. No one cares for our backstory. All they want is the best chance to make their business work.
We have to be competitive or we will fail. Simply put, we have to make it easier to be an employer. And we also have to be prepared to stand up to the unions when their interests threaten the interests of the unemployed and the low skilled.
We come from a painful history of labour abuses in this country where many citizens had their rights taken away through unjust laws, and we have done well do undo these. We must continue to guard against exploitation in the workplace, but there is a fate even worse than being exploited, and that is being excluded.
Almost four in ten South Africans don't have jobs. When the labour laws are written in such a way that they advance the cause of the employed at the expense of the unemployed, we have a problem. And when these same laws actively discourage businesses from hiring or retaining workers, it becomes clear that the economic outsiders were never a priority. If we are to put a job in every home, we have to relook our labour laws.
There are many steps we can take in the medium to long term, but there are also things we can do right away, at the stroke of a pen, which will have a profound effect on employment – both in terms of staving off retrenchments and in creating new jobs.
To start with, we could abolish the extension of collective bargaining agreements to entities that weren't party to the agreement. Forcing industry-level agreements signed by bargaining councils onto small businesses that had no representation in the process is not only undemocratic, it is bad news for both the small business and its workers.
The cost of belonging to these bargaining councils is prohibitive to businesses with less than 100 employees. Once you add up all the mandatory costs like pension funds, provident funds and medical aid, it can increase the cost of each employee by as much as 15%. Most small businesses can't afford to meet these standards – often set deliberately high in order to eliminate competition – and have no choice but to either start firing or stop hiring.
Changing these regulations so that collective bargaining agreements only apply to entities that were party to the agreement won't require a lengthy process of drafting new legislation. It simply requires a change to the regulations, and this can be effected immediately. It is estimated that this alone could save up to a million jobs.
Another silver bullet would be to change the regulations around exemptions from the national minimum wage. Applying for such an exemption is extremely cumbersome and complex. If government is serious about assisting small businesses, they will have to make the criteria easier to understand and comply with.
But the process mustn't only be simplified, it also needs to be far more flexible when it comes to accommodating small businesses. As it stands, the maximum exemption any business will be granted is a mere 10% – or R2 per hour – off the national minimum wage. Despite commitments by then labour minister Mildred Oliphant at the end of last year to reconsider this clause, it remained unchanged in the final regulations.
A one-size-fits-all national minimum wage with no flexibility will most certainly lead to further job losses. Even National Treasury's own research has indicated that this will put 715 000 jobs at risk. This stubborn rigidity around exemptions will have dire consequences for thousands of small businesses and their employees.
In the longer term, we need to change the actual legislation around the minimum wage to allow for both sectoral and regional minimum wages, rather than one national wage whether you work on a farm in the Northern Cape or in a factory in Johannesburg. Our national minimum wage is set at 80% of the country's median wage, making it the highest of all developing nations. This is not realistic or sustainable.
Yes, citizens must be fairly remunerated, but we have a deeper problem in the 10.2 million unemployed South Africans. Our minimum wage needs to reflect the real-world situation of our economy, and it needs to actually protect the interests of workers, rather than threaten their jobs.
Then we also need to take a leaf from the Western Cape government's book on how to make it easier to do business. Their Red Tape Reduction Unit, which aims to streamline bureaucratic processes and remove blockages, has already made a significant impact on the local economy. There is a good reason why the broad unemployment rate in the Western Cape is a full 15 percentage points below the national average.
We now need to replicate this nationally. Currently it can take months to register a business. Just the process of registering for workmen's compensation and UIF is so frustrating than many small business owners simply give up, leaving their staff unprotected. I am sure Premier Alan Winde's administration will be happy to share their learnings with the Department of Labour so that we can begin to roll out the red carpet for investors and entrepreneurs nationwide.
We need to collaborate if we are to overcome this challenge. All of us – government, opposition parties, business and labour – need to get behind the singular goal of inclusive economic growth.
This means looking at all possible ways of incentivising people to create jobs, such as reducing corporate tax in the manufacturing sector. It means extending rights to all citizens – and particularly women and young people – to negotiate their wage and work conditions. It also means taking a red pen to our labour legislation, scrapping what needs to be scrapped, and rewriting what needs to change.
If we don't, this unemployment crisis will continue to drag our country backwards, and 10.2 million will soon be 11 million. We have run out of time to tinker around the edges. We need bold and decisive action, and we need it now.
- Maimane is leader of the Democratic Alliance.
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