by Sindile Vabaza
South African government policies result in a paradoxical situation: Even when industrial output grows, jobs are not created. Instead, firms invest in more capital- and skill-intensive technologies. Accelerating economic growth does not raise the demand for labour in industrial sectors.
Put simply, South Africa continues to have stubbornly high structural unemployment because of policies like the minimum wage, centralised collective bargaining which punishes and at times puts small businesses out of business, and onerous labour laws which disincentive hiring and make firing employees who are unproductive very difficult and expensive especially for small and medium enterprises.
Taken together these policies are anathema to job creation in an economy with surplus labour like South Africa’s. Policy must prioritise job creation, especially in the potentially job intensive manufacturing sector over artificially high wages.
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