Exemption could save jobless
Labour laws mean well but stop smaller businesses from employing millions
THE DA's campaign for a youth wage subsidy compounds the unemployment problem in that it requires taxpayers' money, which will destroy jobs elsewhere.
Cosatu, on the other hand, pursues its main objective of protecting the 2million fortunate workers in jobs at the expense of more than 7million who are unemployed. The debate has turned needlessly vitriolic and violent.
There is an alternative but nobody is listening.
It is crisis time in South Africa.
When 7.7million of a total potential workforce of 21.2million are without work and have little hope of obtaining any, when almost one-third of the potential workforce is unemployed, the government is sitting on a ticking time bomb.
Unhappy people are complaining about a lack of service delivery and the failure to provide them with housing. Many of these complaints would disappear if only they could get jobs; any job where they could learn skills and recover their self-esteem and dignity.
Being without work and being unable to get a job, month after month, year after year, destroys the self-worth of a human being. The people know instinctively that something is badly wrong but can't understand why there is zero demand for their labour.
Government policies aimed at addressing the problem include increased government spending to create pseudo-jobs in the government sector at taxpayers' expense.
Proponents of "make-work" programmes fail to recognise that the extra money the government takes from taxpayers to pay for such projects reduces the potential for real jobs to come into being in the productive sector of the economy. There is a better way of solving the problem without spending scarce budgetary resources.
In December 2003 the Free Market Foundation published Jobs for the Jobless, a book that contains a proposal that would lead to a massive increase in the demand for labour at minimal cost to taxpayers. The publication has since won an international award (Templeton Freedom Award for Promoting Liberty) for its potential for alleviating poverty.
Sadly this groundbreaking idea has not been implemented, or even put to the test in SA, thought we now have a jobless rate of 36.6% when discouraged job seekers are included.
Jobs for the Jobless proposes that people who have been unemployed for six months or longer should be entitled to a job seekers' exemption certificate, which would grant them exemption from all labour laws for two years and protect any employer who hires them from prosecution under the labour laws.
The exemption would place decision-making entirely in the hands of the job seeker - allowing certificate holders to contract with employers on whatever conditions and wages the job seekers find acceptable.
Their exemption certificates and mutually agreed written contracts would provide evidence that their employers are acting within the law. No fear of being hauled before the CCMA or the Labour Court.
Being free to negotiate, the unemployed would be able to exercise their right to work and legally accept employment at terms mutually agreed on with the employer, and with more flexible employment conditions (such as longer working hours or less rigid employment termination procedures) than those mandated by the labour laws.
They would have the opportunity to acquire skills and build up an employment history. This does not mean that these individuals are unprotected in the workplace.
While they might be relinquishing statutory protections, they would still have all the protections against abuse that are afforded by common law. But why create a two-tier system, where some workers remain subject to labour laws and others not? Why not simply allow freedom of contract between all employers and all employees? Because neither the government nor the unions would agree to this.
Most countries have sacrificed contractual freedom in labour markets in favour of job security. SA has embraced the developed world trend and seems unlikely to make fundamental changes to its laws. The solution offered here is one that will disturb the existing labour dispensation as little as possible, yet allow a massive number of real jobs to be created.
It would defuse the unemployment bomb. It would radically reduce the number of men and women who are forced into resorting to crime or the shame of prostitution out of desperation as the only means of maintaining themselves and their children.
If the 7.7million jobless were each earning R1000 per month, they would annually take home R92.4bn to support their families. Low-paid jobs with long hours might not be regarded as "decent" work but they would be better than what SA's jobless have to do to stay alive. Once they have their feet on the employment ladder they can demonstrate their abilities and steadily increase their pay.
The fundamental solution to the problem is to increase the demand for labour in the private sector, especially in small and medium-size firms (SMEs). Two-thirds of all jobs in the European Union, and almost 50% in the US are in SMEs that have fewer than 250 employees. If we use the same classification of small firms as the EU, employment in SA's SME sector is more than 50%. But why is the labour market not growing? Why are employers not hiring our 7.7 million unemployed job seekers?
Because they estimate that the total cost of employing the unemployed, including labour law compliance costs, is greater than the value of their productive work.
Under SA labour law today, the risk of employing long-term unemployed people includes the possibility of having to face the CCMA or Labour Court over termination disputes, should they prove to be totally unsuitable for the job.
Long-term unemployment generally involves low skills, poor work habits, potential discipline problems and no track record - not an attractive prospect for an employer. The potential disruptive risk is just too great for the average small employer or householder to take.
Small employers do not have human resources departments to deal with the complexities of the labour laws. They respond to the hazards of falling foul of our labour laws by refraining from taking on risky new recruits - the 7million people who desperately need jobs.
If the government would give the long-term jobless the power to eliminate the risk by exempting them from the laws that deter employers from employing them, their lives would improve significantly.
The government's compassion for the unemployed is misdirected when it sets excessively high employment standards for employers. Millions are rendered unemployed and unemployable, especially if they are unskilled, old, young, without experience, or have no recent employment records.
- Davie is a director of the Free Market Foundation and author of the book Jobs for the Jobless