Johannesburg - The alliance between labour and the ANC was
given an uncomfortable warning this week by Finance Minister Pravin Gordhan,
who suggested labour laws they had crafted over the years to protect workers
could in fact be causing chronic unemployment.
Gordhan's comments annoyed trade union federation Cosatu,
but they could spur a much-needed debate about labour laws that have eaten into
the global competitiveness of SA's economy.
Firms have shied away from South Africa due to the laws that
make it expensive to hire and fire workers, and are ranked by the World
Economic Forum's Global Competitiveness Report as some of the most restrictive
in the world.
Gordhan told a conference on Monday that unless changes were
made, "we will not be able to make the breakthrough we need to create
He also suggested that regulations should be loosened to
make it easier for firms to hire young workers at a reduced wage, to ease their
way into the job market.
Unemployment, officially at just under 26% but estimated by
some economists as closer to 40%, is a major factor behind an alarmingly high
crime rate, and is driving the economic disparity that makes the country one of
the most unequal in the world between the haves and have-nots.
"South Africa has among the least opportunities in the
world for graduates and those who leave school," said labour expert Tony
Healy. "Extraordinary challenges of this nature require extraordinary
Lost to inefficiency and corruption
President Jacob Zuma has pledged billions of rand for job
creation, but his government has also undercut those plans by proposing
sweeping changes to labour laws that a presidential report said could actually
cause millions to lose their jobs by adding a raft of new costs and regulations
The ANC has allocated billions over the years for job
training only to find the money lost to inefficiency and corruption, with few economists
expecting the latest jobs plan to do little more than swell state spending.
Zuma, struggling for support and facing an election next
year to prolong his presidency over the ANC, does not want to antagonise
Cosatu, a political power broker that has used its might to put pro-labour laws
on the books.
Cosatu spokesperson Patrick Craven told Talk Radio 702 this
week that cheaper workers will not grow the economy.
"The cheaper the labour, the less tax they pay and the
less money they spend in shops," he said.
The problem is that without an inexpensive way to take new
workers into the workforce, the unemployed will likely remain unemployed -
raising government spending for welfare benefits.
Youth unemployment is at about 50% and a study by the South
African Institute of Race Relations said about half of the current generation
of those between 25 to 34 years old will never work in their lifetimes.
"Cosatu is not beholden to the unemployed. They are
beholden to the employed, which is their membership," labour expert Healy
While Cosatu members in sectors such as mining and
manufacturing have seen wage increases of about 30% over the past three years,
the economy has shed more than a million jobs as employers cut workers to help
pay for increasing personnel costs and as a result of the global financial
South African labour is already more costly and less
efficient than in emerging market rivals, with the average South African factory
worker earning six times more than a Chinese factory worker and producing far
Economists say South Africa's long-term economic viability
is at risk unless the country makes it easier and cheaper for firms to take on
new workers and dismiss them in a less restrictive manner than at present -
where it can take years for government agencies to decide if a dismissal is
They would also like to see money earmarked for job creation
going to tax breaks for firms that could help grow the economy, such as
industries that would process the country's mineral wealth, which is now mostly
exported for the value added work.
As Gordhan said: "Given our current growth projections,
South Africa may only create 4 million jobs by 2025, not enough to make a
significant dent in unemployment."