With many South Africans underqualified for permanent jobs, many unemployed men seek piece jobs. If the government created a more business-friendly environment, businesses could upskill workforces, the writer argues. Picture: THE TIMES
Picture: THE TIMES

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THE Free Market Foundation’s (FMF’s) decision to challenge the constitutionality of section 32 of the Labour Relations Act has been misconstrued by some.

It is not the constitutionality of bargaining council agreements entered into between labour unions and employer representatives that the foundation is challenging. It is that agreements entered into between private parties (unions and employers) are being extended to nonparticipating employees and their employers. And why is the foundation doing this? Because it is time for the voices of the rapidly spiralling number of the unemployed to no longer go unheard.

The Free Market Foundation seeks to change just one word of section 32 — to change "must" to "may". As it stands, the labour minister is compelled to extend private bargaining council agreements across an entire sector and, thereby, to exert control over the unemployed and companies that were not party to those negotiations. In changing this one word, the minister will be in position to apply her mind to consider how her actions will affect the wider socioeconomic circumstances within an industry before extending an agreement that might prevent the creation of new and possibly terminate existing jobs.

There are more than 8.3-million unemployed people in SA according to the expanded definition of unemployment (which includes those people who have given up searching for work because they simply believe there is none available). Well over one-third (34.4%) of SA’s working-age population, which equates to more than the combined populations of Durban and Cape Town, has little hope of ever finding employment

About one-third of the unemployed are people who were previously employed but then lost their jobs. About 40% of unemployed people are new entrants into the labour market who, typically, are low-skilled and have never had a chance to prove themselves. More than 65% of unemployed people are younger than 35.

Statistics SA’s official unemployment data show that about two-thirds of unemployed people have been unemployed for more than a year. The negative implications of being unemployed for a long period of time are obvious. There is an erosion of skills, a loss of contacts and reluctance on behalf of employers to hire someone who has been unemployed for a long time. Also of concern are the psychological cost of being unemployed, which endures for a long time. The long-term unemployed lose their sense of dignity and self-worth and, in the end, give up searching for work because they believe there is nothing available.

Most rational people understand that the single biggest issue facing this country is unemployment. The twin evils of poverty and inequality are manifestations of the underlying problem of unemployment. In other words, poverty and inequality are inextricably linked to unemployment.

Many people have tried to silence the foundation’s attempts to solve the unemployment problem on the basis that we represent "big business" and want to see people being exploited. The charge that we represent "big business" is patently fallacious. We are arguing for the rights of the unemployed and small businesses not to have conditions of employment imposed on them that destroy their ability to reach agreements that are acceptable to both parties and make the functioning of their small businesses feasible.

Bargaining council agreements are generally entered into between big business and big unions who agree to set terms of employment that are acceptable to them but are too onerous for small businesses and their employees, who are not represented at bargaining council meetings, to implement without bankrupting the businesses and costing the employees their jobs. Termination of the ability of bargaining councils to have their agreements extended to nonparticipating third parties will not affect their ability to continue to agree among themselves.

Nicoli Nattrass and Jeremy Seekings sum up the situation succinctly. They state that the "extension of agreements ... and resulting job losses puts paid to the argument that SA’s bargaining councils do not affect employment. Indeed, the story illustrates how, under the hypocritical guise of promoting ‘decent work’, labour-market institutions and industrial policies can create an unholy coalition of the state, a trade union, and metro-based, relatively capital-intensive employers whose actions can inflict massive job-destroying structural adjustment on a labour-intensive industry".

The foundation does not oppose unions — to the contrary, we believe in freedom of association. We would like to see more people employed and the unions should appreciate this since they stand to gain from increased membership. We would like to see SA become a winning nation where everyone can enjoy a high standard of living. If nothing changes, where will we find the people prepared to invest in a country where more than one-third of the working aged population is unemployed?

Removal of the ability of bargaining councils to extend their agreements to nonparticipating third parties will not see the unemployment problem solved overnight. What it will do is end the imposition of employment conditions on employees and their employers that, if forced on them, destroy the jobs of the employees and make it impossible for labour-intensive firms to continue operating.

• Urbach is an economist and director of the Free Market Foundation.