South Africa must relax labour laws to tackle unemployment

South Africa is grappling with one of the highest unemployment rates in the world. According to recent statistics, nearly one in three South Africans of working age is unemployed. This is not only an economic crisis—it is a social catastrophe.

Our current labour laws, which are among the most rigid in the world, are playing a significant role in stifling job creation and driving businesses, especially small and medium-sized enterprises (SMMEs), into retrenchments or closures. As a country, we need to face a hard truth: we are a nation of job seekers, not job creators. The framework we have built around labour is idealistic and unsustainable in our current developmental stage. While labour protections are essential in any society, they must be balanced with economic realities. Unfortunately, in South Africa’s case, the balance has tipped too far in favour of regulation—at the cost of economic growth and employment.

The High Cost of Labour

At the heart of the problem is the cost of labour. Many South African companies, especially SMMEs, are burdened with wage bills that are disproportionate to their income. They are not laying off workers because they want to exploit the system or suppress wages. They are doing so to survive. For many, profits are no longer being reinvested into expansion or innovation, but merely used to meet payroll obligations. When salaries become a company’s biggest liability instead of its biggest investment, that’s a sign that the system is broken. Wage increases have often been driven more by union pressure than by productivity gains. In a country with low productivity and high unemployment, this is economically reckless. Many employers would rather not hire at all than risk being trapped in a relationship where they cannot afford to terminate underperforming staff or adjust wages according to market conditions. The result is fewer jobs for the unemployed and increased strain on the social welfare system.

Trade Unions Must Come to the Table

South Africa's powerful trade unions have long fought hard for workers' rights—and they deserve credit for some of the protections we have today. However, the country is no longer in a position to sustain inflexible demands. We need trade unions to evolve from combative protectors of current jobs to strategic partners in national development. That means being willing to engage in reform—temporarily relaxing some labour protections, especially for small businesses, in order to promote employment and economic growth. This is not a call to strip workers of dignity or rights. It is a call to reassess our priorities. We must ask: what is more important—having a few highly paid workers, or having many more people with access to jobs, skills, and a pathway out of poverty?

Learning from China’s Example

If we are serious about transforming South Africa’s economic fortunes, we must be humble enough to learn from others. China offers a clear example. Just a few decades ago, China was a developing country with a massive, low-skilled labour force. Instead of imposing strict labour regulations upfront, China prioritised economic growth, investment attraction, and job creation. This allowed the country to industrialise rapidly and uplift millions of people out of poverty. It’s worth noting that China did not get stuck in a race to the bottom. Over time, as the economy developed and productivity improved, so did wages and working conditions. Workers began to benefit from the wealth they helped to create. This gradualist, pragmatic approach to labour policy should be instructive to South Africa.

We cannot afford to demand first-world wages and benefits from a third-world economy. We must build the economic base first. When the country is wealthier, more stable, and more productive, we can—and should—improve the benefits and rights of workers. But to insist on those benefits now, while our economy is stagnant and unemployment is rising, is to put the cart before the horse.

A Call for National Discipline

What South Africa needs now is disciplined labour—a workforce willing to prioritise the long-term wellbeing of the country over short-term gains. This does not mean working for nothing or accepting exploitation. It means recognising that in order to grow the economy, we need to create an environment where businesses can thrive and hire more people. At the same time, we must ensure that macroeconomic policies, particularly those of the Reserve Bank, remain focused on curbing inflation. Inflation is the enemy of both workers and businesses. Stable prices create confidence, investment, and sustainable wage growth. We are far ahead of ourselves in expecting high wages and tight labour protections in an economy that simply cannot afford them. The hard reality is that unless we make our labour market more flexible, we will continue to see rising unemployment, deepening poverty, and increasing instability. Relaxing labour laws may be politically unpopular, but it is economically essential. Let us choose pragmatism over ideology—for the sake of millions who remain shut out of the economy.

* Mayalo is an independent writer. The views expressed her are not necessarily those of IOL and Independent Media.