‘Draconian’ labour laws threaten entrepreneurship – Herman Mashaba

2014-02-04 16:40

South Africa has reached the end of entrepreneurial development because of the government’s “draconian” labour legislation, founder of Black like Me Herman Mashaba has said.

Small businesses are said to be important drivers of job creation but Herman Mashaba said South Africa had reached the end of entrepreneurial development because of the government’s “draconian” labour legislation.

Mashaba, also executive chair of Lephatsi Investments, was the main speaker at the 2014 Sanlam/Business Partners Entrepreneur of the Year competition, which was launched today.

He said the minister of labour should calculate the impact of the labour laws on society because the legislation on minimum wages was infringing on the rights of South Africans.

“Small businesses are the biggest employers and they are suffering the most. As long as you have this piece of legislation in place, small businesses will not flourish,” he said.

Mashaba added that poor and unskilled South Africans were not being given the opportunity to work because small business employers could not afford to pay them high wages.

The latest figure from StatsSA’s Labour Force Survey showed unemployment was at 24.7%. The study showed there was a decline in employment in the informal sector. The survey also showed 31.4% (10.4 million) youth aged 15–24 years were not in employment, education or training.

Mashaba said: “There is no way we can arrest employment. If there is no economic activity, jobs will not be created.”

He said small business owners were not incentivised to hire people.

Christo Botes, executive director of Business Partners Limited, said the minimum wage legislation was a “huge problem”. He said small business employers had to better manage their employees’ expectations so they didn’t make unreasonable demands when it came to salary increases.

He said one of the Business Woman of the Year winners was highly successful and employed over 1 000 people but had to close shop because her employees demanded higher salaries.

“She was making pastry goods for the big shopping chains in the food industry. She went out of business because of people going on strike,” said Botes.

Commenting on criticism of South African labour legislation last month, Labour Minister Mildred Oliphant said: “There are also some who are clearly of the view that our labour legislation is too restrictive and that the South African labour market is over-regulated. We certainly don’t think so. As government we are committed to a policy and legislative approach that is captured by the concept of regulated flexibility.”

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