Is there no compassion for the unemployed?

Unemployment has been a national crisis for too long. As with any national crisis, bold, creative and, in many cases, unpopular decisions have to be taken. When there is a crisis of national magnitude it is necessary to ask whether it is a manifestation of a structural fault requiring corrective measures. If so, government must muster the will to forge ahead, despite incurring the wrath of vested interests, knowing that in the long term the benefits will come through.

The ability to make unpopular decisions when required distinguishes statesmanship from run-of-the-mill politicking that focuses solely on short-term pros and cons and, at times, is tantamount to playing to the gallery. Hard decisions often require a paradigm shift. Persistent unemployment has serious implications. It excludes a vast section of the adult population from productive participation in economic activity and the country is the poorer for that. Unemployed people are desperate people and desperate people can more easily be tempted to turn to crime in an attempt to meet their needs. The cost, in terms of the mental and physical health of the unemployed and their families, is enormous. But what is to be done?

In his booklet, Jobs for the Jobless, Eustace Davie propounded an ingenious solution that could contribute to the alleviation of poverty and generate employment, especially for the unskilled, and thereby help them to salvage what little self-respect they have left. The definitive feature of the proposal is its point of departure. It is predicated on the current reality of the country’s labour legislation. Davie proposes that labour legislation should be left as it is, but that a special exemption (SPEX) certificate be instituted, in terms of which exemption from the provisions of labour legislation can be granted to people who have been unemployed for more than six months. This provision would be a safeguard against businesses that might want to take advantage of the certificate by sacking their employees and rehiring them on a SPEX basis at a lower rate. Importantly, the exemption is for the benefit of the unemployed rather than for the employer.

The unemployed should be entitled to exemption as of right for a period of at least two years to allow the holders to change jobs until they find suitable employment. Certificates should be conveniently available, such as at the offices of the nearest local authority. Obligatory written employment contracts with employers would protect exempted employees and provide assurance to labour inspectors that certificate-holders are legitimately employed.

Given the vast number of unemployed people in SA, large and small employers should be able to hire the long-term unemployed on an exempt basis. Labour unions would probably object to a blanket exemption so government could limit the employment of exempt workers to small, medium and micro enterprises (SMMEs) that generally account for the greatest slice of job creation at the unskilled and semi-skilled level.

SMMEs are vital points of entry into the labour market for young and unskilled people, at both entrepreneurial and employee level. The SMME sector, including the informal sector, in most countries is the primary job creator according to EU studies. A 1990 study showed that SME’s accounted for a very large percentage of the jobs in the following countries: Spain (91.9%); Italy (82.8%); Portugal (80.3%); Luxembourg (75.7%); Belgium (71.5); Great Britain (70.0%); Germany (64.2%); Netherlands (61.3%); and France (60.9%). A further study in 2002 revealed that more than two-thirds of all jobs in the EU were provided by SME’s employing 0-249 employees, 93% of them in firms employing 10 or less people.

Vested interests most probably will cry ‘exploitation!’, but in dealing with this criticism it is important to confront the stark reality that what is worse than being exploited is not being exploited. A sad reality is that many unemployed people are confronted with very stark options: to work for what many of us might regard as exploitative wages, to starve, or to rely totally on employed relatives.

Sticking our heads in the sand, thinking that, if prevented from accepting low wages, the unemployed will somehow miraculously find another means of earning an income, or that the problem will simply go away, is of no help. Government arbitrarily banning labour brokers will most certainly exacerbate the situation. Unemployment in this country is a calamity. The time is now for legislators to show compassion for those who desperately need to find work: those to whom something is better than nothing.

Author: Temba A Nolutshungu is a director of the Free Market Foundation. This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.

FMF Feature Article / 06 October 2009