The South African dilemma: low-skill, low-wage or fewer jobs

South Africa is a country faced with either getting rid of the minimum wage and other policies or facing worsening unemployment.

This according to executive director for the Centre for Development and Enterprise (CDE) Ann Bernstein, who spoke to City Press during an interview after a media briefing ahead of the jobs summit this week.

The CDE is an advocacy body for big businesses.

The National Economic Development and Labour Council will convene the two-day summit on October 4 and 5 at the Gallagher Convention Centre in Johannesburg.

Bernstein said among the major challenges that worsened unemployment in the country were bad policies such as minimum wage and the collective bargaining system.

She pointed out that collective bargaining disadvantaged smaller employers because it imposed unavoidable wage demands on them.

She said the country needed a bold reform agenda: “We need to change the approach to collective bargaining so that work seekers and smaller firms are not priced out of the market; reduce the cost of employing young people, especially in comparison to older, more experienced workers; and reduce subsidies being paid to firms that are capital and skill intensive.

“The smaller companies cannot afford the wages collective bargaining agreements impose,” she said.

Bernstein also said the minimum wage of R20 per hour was another bad policy as some employers could not afford it.

“The taxi industry, for instance, is paying much lower than that. The minimum wage is way too high,” she said.

Asked if the scraping of such would not open the door for exploitation of workers, Bernstein said government first had to define exploitation.

“Rather have low-skill, low-wage than no jobs. That’s the big decision the country has to be make,” she said.

Bernstein said there were four important questions that the summit needed to respond to in the affirmative.

“Do the proposals respond to the scale of the challenge? Are they likely to improve the business environment for all firms, especially smaller and newer firms? Will they encourage firms to hire more workers, especially young and inexperienced work seekers? Is the jobs summit agreement all there is or is this the start of a process of further engagement and reform on the more fundamental issues? If the answers to these questions are positive, the CDE would regard the jobs summit as a success,” she added.

The CDE reported that only 43% of working-age adults had jobs, a figure it said was substantially lower than the global norm of around 60%.

The CDE said it looked at youth unemployment in 20 cities, towns and townships across the country.


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