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Labour's shaky future in South Africa

19 July 2014, 18:35

The South African labour environment is characterized by massive unemployment and a low level of education. With the large amount of available unskilled labour, government should encourage an environment in which value added products and services are created as cost effectively and efficiently as possible and the labour environment in which such industries can thrive. Small business is probably the vehicle through which this will happen. This means instilling confidence - business doesn't like lots of looming questions.

The spectre of Nationalization would be one such question; the shambles of land redistribution, producing a long list of failures, is another.

Labour unions have evolved into toxic parasites that are in no way beneficial to employees. Even when strikers receive increased pay - industry simply reacts by reducing the labour force by an equivalent number. It becomes a question of who needs who more.

Miner's in Canada for instance need to be multi-skilled. Thus, what takes a team of 2 to complete in Canada, would require a work gang of 30 in the South African platinum belt. Impala Platinum's 3 new shafts in Rustenburg are being designed from the outset to be highly mechanized. Due to the narrowness of the platinum seam being mined, the resulting machinery will introduce inefficiency into the operation. However, this inefficiency will be balanced out over the long term by the fact that machines don't go on strike and never need a raise. The drive to implement widespread mechanization has never been as urgent. In the past, labour used to be cheap and machines expensive. But over time, workers seek ever greater remuneration for ever falling levels of productivity. The solution for a company that wishes to stay profitable is to design labour out of the equation. To be clear: no company can remain operational unless it is profitable and every company's first priority is profit, not social responsibility. At some point in the minds of the masses, profit and social responsibility were switched. For companies, using machines means no striker gets to hold them to ransom, and companies will increasingly gravitate towards this approach.

The vast labour pools will dry up and be replaced by tireless machines, programmed, operated and maintained by a handful of highly skilled and well paid employees. In today's market, the single greatest threat to any business is its own employees holding it hostage.

It is ironic that in an environment where there is an ever increasing supply of human capital, business is forced to reduce staff numbers due to the financial threat that they pose. We could redirect this trend of downsizing labour forces by deregulating the labour environment. This would encourage the providers of employment to take risks, employ people, create jobs and encourage foreign direct investment.

Even although this is the best approach to kick start our economy, government is unlikely to do it. The reason is that the ANC is shackled by the tripartite alliance, an uneasy truce between revolutionary capitalists, socialism and communism. No clear policy direction has ever emerged from such a polarized ideological mash-up and none ever will. In place of leadership and direction, there is populist pandering to the voter perception that strong labour laws prevent job losses. The very opposite is true, not only will strangulating legislation not prevent job losses, it will block entry into the workplace to begin with as well as shrinking the economy. Instead of paddling for the shore, the occupants of the life raft have determined that a better course of action would be to eat each other.

Business needs freedom in order to operate in a globally competitive environment. The shirt you're wearing right now probably comes from China and not South Africa because it's cheaper and more efficient to manufacture it there and ship it almost 12,000km to Johannesburg. They send us their T-Shirts; we send them our jobs and standard of living.

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