Is it better for a poor man to starve to death than to work for R4,000 a month, which is below the minimum wage in South Africa? Is it better for a poor woman to become a prostitute than to work for R4,000 a month?
The resounding logical answer from trade union leaders, from political leaders of all parties, from professors of economics and from most “intellectuals” would be “Yes!” But most of them are so dishonest that they would refuse to answer the question and would start blustering and attacking anyone who dared ask it.
Unemployment is in the news once again. StatsSA gives the total unemployment rate (including those who have given up looking for work) as 41.9% for the first quarter of 2024. This is far higher than for comparable emerging economies – off the scale, in fact. The news was greeted with the usual waffle from our lofty commentators and the usual hand-wringing hypocrisy from our politicians. There were some valid but peripheral comments such as that economic growth alone would not guarantee more jobs. That’s true.
Employers are now so terrified of the dangers and costs of employing people that they will seek such business activities as require the least number of workers even when the economy grows. But why are they so terrified of employing people? It is because the labour laws make it very expensive to employ people and very difficult to get rid of workers who prove dishonest, lazy or incompetent, and because the minimum wage is too high for a poor, small employer to pay.
The solution to unemployment is simply to allow poor people to enter the formal economy. We must scrap the horrible laws that deliberately shut poor people out of the economy, the laws devised by rich, powerful people for precisely this purpose. We must scrap the minimum wage, get rid of the compulsory powers of the bargaining councils and get rid of all the anti-poor, job-destroying labour laws. We must allow poor people to decide for themselves whether they want to accept a job offer from anyone who wants to make them one.
Anti-poor laws
Let me give a little example of what could be in South Africa of 2024 without the minimum wages and other anti-poor laws.
Themba Khumalo runs a little factory in a poor corner of a poor black township employing poor men and women. He makes warm clothing for poor customers in the township. He uses knitting machines, which are much cheaper and easier to run than weaving machines. (Knitting uses one end only, as you will have noticed watching your mother knitting with a single ball of wool. Weaving machines have thousands of warp ends.) He pays his workers R4,000 a month. They are delighted with this; it is far better than all the alternatives. It allows them to feed their children and prevent their brains being permanently damaged by malnutrition, and it gives them the dignity of work rather than the humiliation of hand-outs.
The factory produces warm garments cheaply enough for the poor local people to buy them and be protected from cold winters. Khumalo cannot afford to pay more, or he could not make goods cheap enough for his poor customers. Gradually his workers develop skills in fabrics and textiles. His little factory begins to prosper. His reputation grows and he attracts more customers. He begins to expand his range of products, moving on to sanitary towels for poor schoolgirls and other needs for the local people he understands so well. He pays his workers more. He buys more advanced machines.
Khumalo’s little local economy grows, with benefits for himself, his workers and his customers. That is what could happen without the wretched minimum wages and labour laws. As a matter of fact that is exactly what did happen on a colossal scale in China, producing the most dramatic erosion of poverty in the history of the world. But this is not allowed to happen in South Africa.
In South Africa, Khumalo’s little factory would be smashed by the rich authorities, and his workers would be kicked out of employment into jobless destitution. This is because he paid below the minimum wage, which is now R27 an hour or about R4,600 a month. Khumalo might be imprisoned, and so might his workers, because it is a crime to accept a wage below the minimum.
Moral superiority
Out of a job, his ex-workers might not be able to feed their children properly, and they might suffer permanent brain damage as a result. (27% of South African children suffer from acute malnutrition.) Some of his female ex-workers might have to turn to prostitution. His poor customers would not be able to buy warm clothing, and so would shiver in the cold and might become ill. The rich people who shut down his factory and caused this suffering to poor people would bask in the moral superiority of their achievement. They would feel terribly virtuous about the fact that they had made poor people starve.
The economics lecturers at leading universities, earning huge salaries in secure jobs, would celebrate this assault against “sweat shops”. To hell with the poor – especially if they are black.
I have to make this racial point. 93% of South Africans are black (according to the ANC’s definition) and an even bigger percentage of the poor are black. Almost all the aspiring little businesspeople, such as Khumalo, are black. The worst victims of the minimum wage, restrictive labour laws and despotic bargaining councils are small black employers.
The ANC lawmakers and the white university academics know this well. So their support for the minimum wage and destructive labour laws is inherently racist. They just hate the idea of small black employers.
In our odious bargaining councils, the rich conspire to shut the poor out of the economy. In each sector, rich powerful businesspeople sit down with fat-cat trade union leaders to discuss how to shut out all competition from the poor and the unemployed. They impose onerous conditions of employment for the whole sector that only the rich, which often means the rich whites, can meet. Then they order the Minister of Labour to impose these conditions on all non-parties to the councils, which means poorer parties. This ensures that no poor company can enter the sector. This ensures that unemployment will grow.
Sickening arguments
One of the sickening arguments for bargaining councils and job-destroying labour laws is to protect the “hard-earned rights” of workers. Pardon? The “hard-earned rights” to starve to death? Or the “hard-earned rights” to make others starve to death? The “race to the bottom” is not to allow low wages but to enforce high wages.
If the minimum wage were R1 million a year, there would be 90% unemployment and mass starvation. That would be the true conclusion of the “race to the bottom”.
A more plausible explanation for our high employment is that our people, especially our young people, are badly educated and without skills. Yes, the ANC has wrecked the education of most of our people (while protecting the education of its own small elite). Our children do indeed have appallingly low levels of achievement in reading, maths and science. But this only explains a minor part of our unemployment.
There is an enormous number of jobs available for badly educated men and women in South Africa if only they were allowed to get them. How many times in the last year have you required the services of a university professor with a PhD in sociology, mathematics or philosophy and how many times have you required the services of a plumber, painter, handyman, electrician, gardener, mechanic or roof-repairer?
I happen to have degrees in physics and mechanical engineering, and have also spent a good part of my life working on my old motorbikes and cars. How much has my engineering degree helped with my bike and car work? Not at all. The degree was extremely useful for deep understanding of the principles upon which my bikes and cars worked but useless for helping me to overhaul their engines.
Over and over again, in my years in industry, I saw ill-educated men starting off in lowly jobs in factories and developing high skills – sometimes astonishing skills – in their trade. I have an interest in nuclear power, which is experiencing a resurgence in some countries. The biggest problem for nuclear growth is lack of skills. The lack is not in nuclear scientists and nuclear engineers, of whom we have more than enough, but in artisans, welders, fitters, mechanics, instrument technicians and operators.
Fundamentally misplaced
Another argument, well-meaning I suppose, but fundamentally misplaced, is that the problem is not so much unemployment but low wages for those who are employed. We have moved to Kleinmond and my girlfriend showed me a Facebook plea from a couple desperate for accommodation, any accommodation, because although both are employed on the minimum wage, they only earn between them R8,090 a month. If they cannot find such accommodation they will have to kill (“euthanize”) their beloved cats and dogs and send their young son to live with relatives in another province.
Of course, this is heart-rending. Of course, a relatively well-off person such as I am should feel ashamed of their plight. But the fact is that R8,090 a month is an awfully lot better than no wages at all, which is the fate of 41.9% of our population.
My solution to the above is simple: scrap the minimum wage and the job-destroying labour laws entirely. The experience of the world shows that this would result in increasing employment, rising growth and greater prosperity. But I am told that it is not political reality in South Africa, given the powerful political forces, black and white, who want to resist this solution.
So good people argue about tinkering with minor steps forward. The worthy Ann Bernstein is a prominent example, recommending relaxations of the vicious labour laws here and there. Others suggest special exemptions from these laws for young people for a certain period, such as Job Seekers Exemption Certificates. And so on. All of these would help a bit. But our plight is too deep and too desperate for such tinkering.
We need to open the economy as widely as possible for our poor people, which means eradicating all the laws that rich people have drawn up to keep them poor.
[Image: Leroy Skalstad from Pixabay]
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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