Onerous labour legislation has effectively priced unskilled and inexperienced workers out of the job market

South Africa is experiencing a prolonged bout of labour market pains. Employment data released by StatsSA for the second quarter of 2022 reveal that amidst already high levels of aggregate unemployment, the situation is particularly dire for the country’s youth.

Whatever marginal gains might have been achieved in the most recent quarter, no sane person should be cheering a 44% unemployment rate, especially not against the backdrop of hundreds of billions of rands of deficit spending and fiscal and monetary stimulus. We are now confronted with more debt, less growth, and millions of people out of a job. Much of this can be attributed to our interventionist ruling party.  

The proportion of young people who are adding value to local and international supply chains is a key indicator of a country’s likely economic trajectory. In South Africa, the number of people aged between 15 and 34 who are not employed, in education, or in training (the so-called “Neets”) has climbed to 4.8 million. This sets the stage for growing social alienation and discontent, marked by violent protests, as a large section of the population struggles to eke out an existence. 

Of the group that is supposed to comprise the most dynamic and energetic people in South Africa, youth aged between 15 and 24, more than 70% are without a job. These people are supposed to be entering the workforce, gaining on-the-job experience and upskilling, but instead, they find themselves at the mercy of an increasingly hopeless regime. Of those aged between 24 and 34, more than 50% are jobless. That is nearly six million youth apparently written off by the ANC, deemed unworthy of contributing value to society. 

The rest of the workforce is left to compete for jobs in a highly volatile labour market, while the majority of available low- and semi-skilled positions come with tenuous job security. Often they do not carry the benefits that accompany occupations requiring high levels of expertise.

South Africa’s extreme labour market participation crisis cannot be solved by the ruling party. This is because the requisite labour market policy reforms are fundamentally at odds with the ideological inflections of the ANC. 

The current policy environment is not focused on generating growth and income across the board. Onerous labour legislation effectively prices unskilled and inexperienced people out of the labour market. 

Raising the minimum wage to a level that many employers battle to match, extending race-based legislation, shifting the focus towards localisation and protectionism, and buying into the fallacy that increased government deficit spending unleashes growth, all lie at the heart of the ANC’s interventionist agenda.