The African National Conference is inviting debate about the flexibility of the labour market at their national general council meeting next month.
The ANC is proposing to deregulate the labour market to stimulate economic growth and reduce unemployment. While this has largely been welcomed by the business community, the proposals will face hard opposition from the ANC’s allies in the labour movement.
Private employers and foreign investors complain that labour laws in South Africa, won by the unions during South Africa’s transition to democracy, give workers too many rights and make it harder for businesses to survive in increasingly competitive international markets.
The regulations were intended to correct racially motivated labour market inequalities found under apartheid, establish basic employment standards and worker rights and ensure a healthy work environment for all. However, the ANC believes that the labour laws have had “unforeseen consequences”.
With too much emphasis placed on job security, at the expense of job creation, strict labour regulations stifle entrepreneurship, investment and growth.
The ANC is concerned that the level of unemployment in South Africa remains high, despite a robust economy that is creating 14 000 jobs per month. To halven the unemployment rate by 2014 -which is the government’s stated objective-, it will need to create 500 000 jobs a year.
The possible solution to this could be stimulation of small business development by lowering the barriers to entry. A inflexible labour market is one such barrier. To tackle unemployment and to generate growth, it will need to create an environment where small business and entrepreneurship, crucial drivers of economic growth, are able to thrive.
The current labour regulations are too much in favour of the worker. A deregulation of the labour market, as proposed by the ANC, could lead to increased job creation and foreign direct investment, reduced unemployment and economic growth – exactly what South Africa needs.