Creating a job shouldn’t cost R365,000 (but it does in SA)

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LAP was established in April 2024 to train entrepreneurs and create jobs, while the UIF is a policy that extracts money from employees and employers, with the plan of paying out a worker if they become temporarily unemployed. A function that would be better served through private savings.

LAP is a grandiose project, budgeted at R24bn, and aiming to create over 700,000 jobs. While the initiative to train and equip individuals with the skills to run businesses and undertake jobs is worthwhile, and this is by far not the worst initiative in the country – this is not the solution to South Africa’s rampant unemployment.

As of the second quarter of 2024, the unemployment rate is sitting at 33.5%. This is a low estimation, not taking into account people who have given up looking for a job. The economy continues to contract, leading to bankruptcies, retrenchment and major job losses.

700,000 jobs is not going to cut it when over 8.2 million people are unemployed. And if something drastic doesn’t change on a legislative level, none of these expensively trained job-creators will make even the slightest dent on joblessness.

Policy reform is essential

We don’t need expensive entrepreneurial programmes, or grand job-creation promises to solve our unemployment crisis. The root cause of our unemployment is government policy. If that policy changes, existing companies and future entrepreneurs will immediately begin to start repairing our unemployment crisis.

Labour regulations in this country make it incredibly risky and costly to hire an employee, and very risky to fire them. It is a common tale to hear about an employee actively stealing from a company, and the company being unable to fire them.

Even decent employees are costly, as a multitude of legislation adds a huge regulatory and financial burden on the employers. UIF demands that employees and employers send a hefty chunk of their income to an arbitrary government fund – a function better served by simply opening a bank account.

Trade unions dominate negotiations, dominating a portion of government through Cosatu’s role in the Tripartite Alliance. Strikes can sink sectors, and companies are unable to defend themselves from unrest and violence – or even hire reasonable workers to replace unsustainably costly ones.

But no single piece of legislation has been as bad for economic growth, and almost all aspects of South Africa, as the racialised regulations of Black Economic Empowerment (BEE).

BEE: A corruption catalyst

While masked as simply enabling the redress of past economic oppression, BEE in fact serves as a bloated quagmire of arbitrary regulations that force race quotas on businesses, forcing businesses to hire based on race, and even give a portion of their business to people just because of the colour of their skin.

BEE enables mass corruption, as BEE partners not only need to be a certain race, but are often shadily appointed by government officials in an effort to line their own pockets.

BEE-adjacent legislation has enabled the corruption mafias, as local gangs force companies to give large sums of money and profitable positions to violent thugs – citing regulations that require local participation in development.

The cost of creating a real job in South Africa is probably far greater than R365,000. But it should be much less. And it can be. Cut the red tape. Cut the needless regulation. Abolish BEE, most of all. And then you will see businesses and investors flock to South Africa to create jobs.

That is the only way we solve our unemployment crisis.