Anthea Jeffery: South Africa’s jobs crisis demands bold labour law overhaul - Biznews

Anthea Jeffery
South Africa needs bold reforms to overcome its unemployment crisis. Instead, the Department of Employment and Labour has put forward for public comment a raft of minor changes. A few of these are positive, but most are likely to deter job generation.

Despite its supposed commitment to growth and jobs, the African National Congress (ANC) is still side-stepping the sweeping reforms required.

The link between labour laws and the unemployment crisis
When the Labour Relations Act (LRA) of 1995 was proposed, organised business warned against it, saying “no developing country could adopt labour standards which even the developed world could not afford to maintain”. It cautioned that the statute would have “a disastrous effect” on the small and medium enterprises (SMEs) vital to growth and employment, which would battle to cope with its onerous rules.

In 1996 a business lobby group – then called the South Africa Foundation and now Business Leadership South Africa (BLSA) – added that the LRA was likely to increase the unemployment rate on the expanded definition (which includes discouraged workers) from 32% in 1994 to 40% in 2004. This was remarkably prescient, for it was indeed in 2004 that the jobless rate on the expanded definition reached the 40% level of which the BLSA had warned.

Since then, unemployment has risen further, making joblessness the greatest of the crises confronting the country. On the expanded definition, the joblessness rate reached 43% in 2025. The number of people wanting work but unable to find it is enormous too. On the expanded definition, it rose from 3.7 million in 1994 to 12.6 million in 2025.

Back in 1995, the BLSA urged that a “two-tier” labour market should be allowed, with more flexible conditions for young and inexperienced workers who would otherwise struggle to find jobs. The government rejected the idea. Thirty years later, however, with youth unemployment standing at 72% on the expanded definition, it is time for major reforms – not minor tweaks.

A raft of minor reforms
In late February 2026, the Department invited public comment – within a scant 30 days – on a raft of changes to the LRA and other labour laws.

As regardsdismissals, most of the amendments are relatively minor or apply only to a small number of employees: those on probation for three months (in general) and those earning more than R1.8 million a year. Under the most important change, a “fair procedure” for dismissal will generally be one “in which the employee has been given an adequate and reasonable opportunity to respond to the reason for dismissal”. This will help address the problem of “internal disciplinary processes that have come to mimic court proceedings,” as one labour lawyer has put it. For the rest, however, complex rules and a reverse onus of proof will continue to make employers averse to hiring more staff.

As for major retrenchments (dismissals of 5% of employees or more for operational reasons), the key change proposed is clearly negative. Doubling obligatory severance pay (from one to two weeks’ pay for every year of completed service) will have costly ramifications for many companies. In an adverse economic environment, it will also deter the generation of more jobs.

As regardsthe extension of bargaining council agreements to non-parties, a two-year exemption for new SMEs employing fewer than 50 people will shield these firms from having to pay unaffordably high wages for that two-year period. This may help them survive this initial period, but will not otherwise reduce the burden of coercive blanket coverage.

As forthe National Minimum Wage (NMW), the proposed exclusion of pension fund contributions and other deferred payments in calculating wages means take-home pay may have to rise in many instances. This will add to the burden of South Africa’s extraordinarily high NMW, which has already led to some 430,000 job losses. The NMW also prevents new entrants to the labour market from accepting lower-paying “stepping stone” jobs that would give them experience and help them climb the jobs ladder.

As regards “gig” workers, imposing complex notice requirements and other rules on employers could well result in fewer “gig” jobs being offered. This could curtail such employment and worsen the unemployment crisis.

As for harassment, the new rules seek to allow claims not only for sexual harassment, but also for harassment on a host of other grounds. This is likely to add to the burden on the Commission for Conciliation, Mediation and Arbitration (CCMA). Facilitating many more harassment claims – some of which may be poorly substantiated – could also make employers more reluctant to take on new staff if other options can be found.

Overall, adding reams more rules to labour laws that are already unduly long, complex and onerous will do nothing to resolve the unemployment crisis in South Africa.

What, then, should be done?
The best way to generate millions more jobs is to trigger an upsurge in economic growth. Ideally, South Africa needs an economic growth rate of some 7% of GDP a year. This would see the economy double in size every ten years. It would also generate an enormous need for millions more employees to help businesses meet rising demand.

That level of growth cannot be attained immediately, but it could be reached over time with the right reforms and concerted action to overcome skills shortages and other constraints. The ANC pays lip-service to “inclusive growth,” but its real focus is on expanding regulation and top-down government control, in keeping with its statist ideology. Moreover, when it says it wants more jobs, its primary aim is to expand subsidised public employment even though this is undesirable and unaffordable.

Overcoming the unemployment crisis should start with three vital labour law reforms. The National Minimum Wage Act must be repealed, so that it stops pricing the unskilled and inexperienced out of the labour market. The extension of bargaining council agreements to non-parties must be jettisoned too – and for the same reason.

Rules regarding dismissals and retrenchments need far-reaching reform. Greater flexibility in the hiring and firing process is vital so that employers can insist on sound performance and swiftly adjust to peaks and valleys in demand. The presumption that dismissals are unfair unless the employer can prove otherwise should be removed. Instead, employees alleging unfair discrimination should bear the onus of proving this. In addition, employers should be able to dismiss or retrench workers under the agreed notice periods included in their employment contracts.

The labour law changes now under consideration should generally be scrapped. Instead, the Government of National Unity should set about enacting these three major reforms as rapidly as possible. It should also confirm its determination to repeal other damaging labour laws – and to allow employers and prospective employees to agree the terms of employment contracts without the state’s intrusion.

The best guarantee of decent work is not ever expanding state control, as the ANC assumes. Rather, it is an economy which is doubling in size every ten years – and in which the demand for labour is strong. That demand will give employees real bargaining power without the need for government coercion.

Dr Anthea Jeffery holds law degrees from Wits, Cambridge and London universities, and is the Head of Policy Research at the IRR. She has authored 12 books, including Countdown to Socialism - The National Democratic Revolution in South Africa since 1994, People’s War: New Light on the Struggle for South Africa and BEE: Helping or Hurting? She has also written extensively on property rights, land reform, the mining sector, the proposed National Health Insurance (NHI) system, and a growth-focused alternative to BEE

https://www.biznews.com/rational-perspective/anthea-jeffery-south-africas-jobs-crisis

This article was first published on the Daily Friend.