Unemployment in South Africa: Do labour laws hinder job creation?

Clement Manyathela interviews Dr Morné Malan, Deputy Head of Policy at the Free Market Foundation and Dr Dick Forslund, Senior Economist at AIDC.

Listen below.

South Africa's labour laws aim to safeguard workers' rights and ensure fair treatment in the workplace.

Key legislation includes the Basic Conditions of Employment Act, the Labour Relations Act, and the Employment Equity Act.

Despite these protections, almost eight million South Africans were unemployed at the end of 2023, with many still jobless as of March this year.

Some economists argue that the high levels of regulation in the labour market, excessive worker protections, and elevated wage demands contribute to this unemployment crisis.

Given these challenges, Manyathela raises an important question: do these laws facilitate or hinder job creation?

Malan characterises the situation as a 'humanitarian crisis', stressing the urgent need for solutions, including policy reforms to address the issue.

"Just about everybody is doing a better job at job creation than we are, and they have been for quite some time."

- Morné Malan, Deputy Head of Policy – Free Market Foundation

Conversely, Forslund argues that the country’s labour laws do not impede the job market and believes that policy reform is unnecessary.

He points out a widespread culture of non-compliance with these laws, and that officials from the Labour Department are often reluctant to enforce them.

"I can't see the reason for softening up the labour laws even further if we are not following the laws that we have in the country today."

- Dick Forslund, Senior Economist – AIDC

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