Government is wasting the South African unemployment crisis


Being unemployed sucks, and being unemployed and poor is even worse, which is why it’s hardly surprising that poor unemployed people would have the greatest incentives to start businesses. This is especially true in a country where our heroic African National Congress has ensured that South African unemployment numbers are the highest in the G20 group of countries, more than twice the rate in Brazil. Despite all of this, not only is government doing its best to stop you negotiating an employment contract, it also has a problem with you starting a business.

Sane economists agree that the root cause of the massive South African unemployment rate are our labour laws; collective bargaining, sectoral minimum wages, etc. Some of those same economists would probably agree that one of the ways to solve this problem is the creation of small businesses and so-called informal traders by increasing disposable incomes available for such investment by lowering taxes, but the government seems determined to reach its fiscal targets by introducing even more taxes rather than cutting spending.

It’s not only tax reform that could help boost small business creation. Deregulation is also needed, but our government would rather double down on liquor licensing, for example, making it harder to start one of the more profitable businesses in the townships. We’re losing a golden opportunity when it comes to small business. Our high levels of unemployment means we have an army of people willing and able to start their own business, but government is more interested in placing obstacles in their path than turning a South African unemployment crisis into a small business revolution.

The ruling party of South Africa since 1994, the ANC, just concluded its policy conference and by the looks of things, they’ve come up with a solid plan for maintaining our leading position globally when it comes to the unemployment rate.

They are a party that seems to understand the economic problems we face (from what they say) as well as the required solutions in broad strokes, but can’t translate that understanding into policy because their most urgent task is managing their various factions rather than solving the bread-and-butter issues of the peasants they rule over; as the current ANC and South African President Jacob Zuma once said, the ANC comes first.

Prosperity will follow if the ANC would only accept that the solution to South Africa’s unemployment and poverty problems lies in doing everything government can do to make it easier for an unemployed person to start a business; and that means government doing as little as possible in the economy. Government should accept that they can’t create businesses, and that they are not the best people to invest everyone’s money.

As numerous studies have shown: property rights, deregulation, the rule of law and generally more freedom are the best way to deal with poverty and unemployment. South African unemployment is no exception (the only exceptional thing about it is how much of it we have), and we should stop excusing government’s economic suicide on apartheid and colonialism, as some high-profile commentators and public intellectuals often do.

The lack of economic opportunity is wreaking havoc on the lives of ordinary South Africans as we speak; this is no time to be playing political games and using desperate people as guinea pigs for an economic experiment when we already know what works. Unacceptably-high unemployment in South Africa is a fact of life but that doesn’t mean that these people don’t want to take this extremely bitter lemon and turn it into lemonade – some of them literally so – who knows. Government should get out of the way and allow the rest of us to be full economic actors in the pursuit of our version of happiness.