ZAKHELE MTHEMBU: The state is to blame for SA’s unemployment

The unemployment figures always encouage talk of how the government “must do something”. Yet understanding the nature of government and the state is essential in showcasing the folly of what most understand as the solution to the unemployment crisis we face. 

SA sits with one of the highest rates of unemployment in the world; an official unemployment rate of 34.6% and the expanded definition of employment, which includes discouraged work seekers, at close to 50%. South Africans, in their millions, are not productive, not employed, and thus not contributing through their actions to the growth of our economy. 

The solution to this problem is simple and has been written about in various economic texts. Human beings have infinite preferences, meaning they are always “wanting” something — food, entertainment or anything else. Therefore, with unlimited preferences there is an inherent unlimited demand for those who can satisfy the needs and preferences of others. 

Why then are some not making any income or being productive (actions that have the aim of satisfying the needs of others), while everyone has unlimited wants or preferences that need to be satisfied? 

This question will not be answered fully in this article, but the fault lies at the feet of the state. The state, through intervention in the various markets, including labour, creates distortions.

Instead of a meeting of the minds between people that leads to a commercial contract, there is now another party, the state, putting down conditions and terms for every commercial contract before it is even entered into. This state intervention creates the issue of unemployment that plagues SA. 

To illustrate how the state discourages employment I will use an anecdotal example. Over the past couple of years anti-immigrant rhetoric has become a permanent feature of our political discourse. One of the reasons behind illegal immigration is that illegal immigrants take the jobs of locals by undercutting them and getting paid “peanuts”, as the phrase goes. 

The phenomenon of illegal immigrants finding employment in a country that has nearly half of its working population unemployed shows how the state is culpable. Since illegal immigrants do not respect the state as local citizens would, they are more accepting of disregarding the “law” of the state and negotiate their employment terms using their own agency. 

Since South Africans are by nature bound by the laws of the country, as an employer you are not negotiating with a South African only when employing them; rather, you are negotiating with Cape Town, Pretoria and Bloemfontein too through compliance with pieces of legislation such as the Labour Relations Act and the Minimum Wage Act.

Most telling though, is that some people can find employment while others cannot. What distinguishes the group that is employed is that they are not easily bound by the country’s labour laws, while the unemployed are. 

The Free Market Foundation’s Job Seeker’s Exemption Certificate (JSEC) is one way to solve the problem of unemployment faced by many South Africans. If immigrants can get employment due to not being subject to the labour laws, then why should South Africans be subject to these laws and remain unemployed? 

The JSEC allows workers to choose to be exempt from certain provisions of SA’s various labour laws, allowing a South African to compete with the hypothetical immigrant on an even footing, without being inhibited by legislation.

The government needs to stay out of the economy and make it as free as possible. This is the best way to create employment, which will grow our economy. Adopting solutions such as the JSEC will assist in removing the inhibitions on agency present in our labour market. 

Until we allow human beings to freely serve one another, satisfying each other’s preferences, unemployment will persist; the best way to do that is to give people the agency to pursue the “good life”, however they deem fit, as long as they are not harming anyone. We must choose liberty in the labour market, lest we continue down the road to serfdom. 

• Mthembu is policy officer at the Free Market Foundation.