South Africa’s inhumane labour laws

Some well-fed armchair critics, who have no conception of what it is like to be unemployed and poor, support policies that forcibly prevent potential employers from employing destitute people for less than a so-called “living wage”. Whether their intentions are benign or malign, the consequence remains the same: millions of people remain cut off from the job market and mired in poverty as a direct consequence of SA’s inhumane labour laws.

Legislation that prevents people from getting work is inhumane and the inhumanity is disguised by the fact that it is the employers who face prosecution if they and their workers agree to ignore the labour laws, not the employees. No record exists of the people who, because of the threat of such laws, have turned away hopelessly and repeatedly from “NO JOBS” signs at factory gates.

In a voluntary exchange all parties exchange something they value less for something they value more, an exchange from which everyone gains and no one loses. Those who cry “exploitation” when someone other than themselves is employed at what they believe is an inadequate wage, are engaged in “zero-sum” thinking – the notion that one person’s gain is exactly equal to another person’s loss. Economic activity is not a zero-sum process.

If one person’s gain were in every case equal to another’s loss, there would be stagnation. The analogy of dividing up the cake, where the contest consists of getting a bigger slice of a fixed-size cake disappeared when producers started using their specialised skills to produce more than they could ever consume themselves, exchanging their surplus for other things they wanted, including cash. Producers increased their productive capabilities by using their savings to invest in machinery, which then allowed them to further increase their production.

A modern economy consists of a teaming mass of producers churning out goods and services for a teaming mass of consumers to eat, drink, utilise, benefit from, and enjoy. However, these are not two unique sets of people, one set doing the producing and the other the consuming. People are simultaneously producers and consumers, exchanging the products of their minds and labours for the products of the minds and labours of others

Whether or not it is their intention, producers are our great benefactors. Firms employ workers because they want to produce more and make larger profits, not because they feel sorry for the people who need work. In the process, they provide jobs that allow people to take care of themselves and their families.

Economic activity is often depicted as a contest in which employers and employees are constantly at war with each other. Employers supposedly attempt to squeeze every ounce of effort out of workers while malevolently paying them much less than their labour is worth. The truth is that successful employers increase the productivity of their workers, not by working them to death, but by improving the tools available to them.

When an old machine is replaced by one that doubles the firms output, the machine-minder’s job is usually made easier by the more modern technology, and she or he is likely to be paid more for doing a job that requires less physical work but which carries greater responsibility. It is a win-win situation. The worker gets paid higher wages and the firm earns higher profits, the often forgotten cause being the firm’s investment in superior technology.

Employees and employers are subject to employment contracts. Such contracts should be tailored to the special needs of their unique situation, subject to principles of employment law established by the courts. Attempts to micro-manage complex arrangements through legislation usually cause disruption, especially when the legislation compels firms engaged in similar activities to make similar arrangements with, and to pay similar wages to, everyone doing the “same job.” There is no such thing as the “same job” – not when owners and managers are doing their utmost to distinguish their firm from every other firm – to make it more efficient, more productive and more responsive to consumers. Large-scale unemployment is only possible if the contractual rights of citizens are suspended or nullified by statute.

Do the unemployed prefer to earn nothing, remain destitute and unemployed; or would they prefer working for a wage that others regard as exploitative? How many people who believe that paying below a “living wage” constitutes exploitation have ever bothered to ask unemployed people what they think?

One thing an unemployed person has plenty of, is time, and we can be sure that they value many things more than their involuntary leisure. Some find involuntary leisure, or unemployment, so demeaning and soul-destroying that they are prepared to exchange a large part of it for a small return – a return that others might find ridiculously small.

The question to ask is: “Does anyone have the right to stop them from making the exchange?” Do those who fear that it will cost the jobs of some existing employees if the doors of the labour market are opened to low-wage competitors have that right? Do the representatives of the people sitting on the benches of Parliament have the right to legislate to prevent the unemployed from competing for jobs? Does the executive branch of government have the right to coldly deny the jobless the right to step onto the first rung of the labour market?

Organised labour does have a right to argue that the legislature should maintain high barriers to entry into the labour market. They have the right to threaten to vote anyone out of office who dares to suggest the lowering of those barriers. However, in all conscience they do not have the right to occupy the moral high ground of claiming that they do so in the interests of the unemployed masses. They do not have the right to insist that denying people the right to work, to compete in the job market, is not exploitation, while insisting that employing someone at a low wage exploits them.

It is time for those who really care about the unemployed to stand up and be counted. How can the Human Rights Commission stand by and say nothing while the statutes of the country prevent millions of destitute people from claiming the right to regain their dignity by working to support themselves and their families?

If the allegation that the unemployed are being cruelly exploited is wrong, there is a simple way to prove it. Place the contractual rights firmly in the hands of the unemployed. Give them the right to enter into any contract they wish, on any conditions acceptable to them, with any employer of their choice.

Do this and let us see whether they will find employment. Do this and let us see whether they will not be rapidly absorbed into the economic life of the country. Do this and let us see whether it will not turn out to be one of the greatest acts of humanity the government of this country has ever engaged in.

Let us see whether the workers’ fears of greater competition in the job market, based on the faulty fixed-size cake notion, are not largely unfounded. Let us see if firms do or do not create jobs to absorb the labour available. And finally, let us observe the shining faces of SA’s young people when the “JOBS AVAILABLE” signs start appearing all over the country.

Author: Eustace Davie is a director of the Free Market Foundation and the author of Jobs for the Jobless: Special Exemption Certificates for the Unemployed. 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 / 7 August 2007