South Africa’s unemployment statistics for the fourth quarter of 2022 revealed that 7.8 million South Africans were unemployed, and 18.3% had been unemployed for a year or longer. The figures further revealed that higher levels of unemployment affect mostly women and people with lower levels of education. 80.6% of women were long-term unemployed – for males 76.1% were long term.
Onerous minimum conditions of employment, such as the compulsory minimum wage, or other regulatory conditions imposed on employers, all serve to consign women and young people in South Africa, in large numbers, to the ranks of the long-term unemployed. The total costs to the potential employer of complying with the labour regulations can exceed the economic value to the firm of hiring an additional employee. Every employee is expected to increase the earnings of the firm by a greater amount than the net costs of employing them. Under such circumstances young unemployed people can unfairly and deliberately be rendered jobless for a long time.
Does the Bill of Rights play a positive role?
When the South African government steps out of line and inflicts legislation or regulations upon its citizens which conflict with the Constitution, the citizens would expect to be able to turn to the Constitution for relief. For instance, regulation of the labour market which has resulted in mass unemployment due to the implementation of unconstitutional minimum wage legislation in the South African Parliament, the opponents of the legislation would expect to be able to turn to the Human Rights Commission and the Constitutional Court to assist unemployed victims of the legislation to remove the barrier to their employment.
Members of Parliament have imposed by force, unconstitutional and discriminatory legislation upon employers and potential employees, which has led to mass unemployment in South Africa.
The reality was that there was no mention of the Bill of Rights and particularly not Section (7)(1) which states that, “This Bill of Rights is a cornerstone of democracy in South Africa. It enshrines the rights of all people in our country and affirms the democratic values of human dignity, equality, and freedom. And section (7)(2), which decrees that the state must respect, protect, promote, and fulfil the rights in the Bill of Rights.”
There was apparently no opposition from the Human Rights Commission to the implementation of the minimum wage. Given that the implementation of the minimum wage conflicts with section 9 of the Bill of Rights (the Equality Clause), the minimum wage is unconstitutional and the limitation of the rights of the people – who were rendered unemployed by the minimum wage – was not justified.
In a report issued by the Human Rights Commission it was stated that: “While the mandate of the Commission includes to promoting respect for human rights and a culture of human rights, promoting the protection, development and attainment of human rights and monitoring and assessing the observance of human rights in the country, such mandate is intricately linked to the mandate of the state in section 7(2) of the Constitution to respect, protect, promote and fulfil the rights in the Bill of Rights.” Given this statement, it is unfortunate that the Commission did not intervene in defence of the young people who have been rendered unemployed by the implementation of the National Minimum Wage.
Depriving job seekers and employers of their right to freedom of contract
Labour laws that seek to increase the job security of people who already have jobs cannot avoid interfering with the contractual rights of the unemployed and of their potential employers. If that were not so, there would be nothing to stop jobseekers from contracting freely with employers on mutually agreeable terms. Given unrestricted freedom of contract, no one should be unemployed unless they are holding out for higher wages or better conditions of employment.
Implementing the minimum wage law, which deprives the unemployed of their right to freely contract with employers of their choice, at wages and conditions of employment acceptable to them, conflicts directly with Section (7)(1) of the Bill of Rights. That conflict deprives the unemployed of their constitutional rights to the democratic values of human dignity, equality, and freedom. Section 7(2) of the Bill of Rights requires that the state must respect, protect, promote, and fulfil the rights in the Bill of Rights.
Instead of following the constitution, members of Parliament, as state representatives, have adopted legislation that conflicts with the Bill of Rights and has deprived the unemployed of their constitutional rights. Members of Parliament have imposed by force, unconstitutional and discriminatory legislation upon employers and potential employees, which has led to mass unemployment in South Africa.
Minimum conditions of employment
The potential compliance costs facing employers include (1) the time required to understand the legislation and to implement and maintain the administrative processes needed to avoid contravening the laws, and (2) The potential executive time, professional fees and other costs related to an inadvertent contravention of the labour laws. Compliance costs are similar for the employment of high-wage and low-wage employees, which means that compliance costs constitute a greater percentage of the total cost of employing low-wage workers compared to high-wage workers. These costs are therefore a greater deterrent to the employment of unskilled workers compared to the employment of skilled workers.
The most damaging aspect of the implementation of the minimum wage in South Africa is the burden it places on low-income employers. In countries where small firms thrive and provide jobs to millions of first-time workers, the small firms provide a valuable knowledge-transfer service to new employees. South Africa desperately needs similar freedom to work conditions to apply in our country.
Eustace Davie is a director of the Free Market Foundation.
First appeared in BizNews.
Photo by Jaques Nel via Unsplash.