The following article was originally published by the Free Market Foundation.
The spirit of entrepreneurship that previously existed in South Africa seems to have died a tragic death. Where are the entrepreneurs that you could see in the past when you drove around the streets of a township back in 1994? Where are the thousands of thriving and growing businesses that should be in every area of the country?
I am talking about those viable businesses that are still around after ten or twenty years in business. Most of those people are gone and young people are not taking their place. I am talking about businesses such as manufacturing, electrical, plumbing, building materials, clothing, butcheries, hardware and maybe even hair care products to name a few, the kind of business that can start small and grow.
When I think of my own history and the difficulties experienced in setting up and growing Black Like Me during the apartheid years, and how the yoke was lifted when apartheid was gone, and we were free at last. I remember thinking that blacks would then be setting up businesses all over the place. What could stop them after all those years of being held back by laws that contained huge barriers to success in business?
Has freedom created a negative way of thinking when it should have made us all positive? I look around me and I wonder what is stopping the many young people who form part of the 7.6 million unemployed from starting their own businesses. And I don’t mean everyone should start doing the same thing. I have total respect for someone who sells bananas but everyone can’t make a living selling bananas. There are many other possibilities. What makes you an entrepreneur is the ability to look around you to see what is in great demand, how you can meet that demand with a better product, at a lower price, or deliver it more conveniently, or better still, offer something new that people just want to buy when they see it.
The strict labour laws have played their part in reducing the growth of small businesses. What small business person in Soweto, Tembisa or Mamelodi has the knowledge or the time to comply with the labour laws? The two options available to them are the same as those followed by many small businesses everywhere, either they ignore the laws and risk prosecution and fines, or they don’t employ staff. The first option is unwise and can lead to thousands of rands in fines. The second option is causing the high level of unemployment in the country. Zoning laws imposed on the townships prevent the development of business areas in a natural response to demand from residents. Together, labour laws and the bureaucratisation of the townships are destroying our people’s spirit of entrepreneurship.
From what has happened to farms in the Western Cape, we see that even employers who are strictly following the requirements of the labour laws are treated almost as criminals when the wages they are legally paying come under the spotlight. The higher minimum wage that was imposed after the trouble ended was a tragedy for many farm workers and their families; they lost or will lose their jobs. In future, fewer people will get jobs on those farms. The personal dignity and rights of the workers are always ignored: the right to make their own decisions about their own lives and to work on terms and conditions that are acceptable to them.
No one knows better than the workers themselves what is in their best interests, and no one has a right to interfere in their decisions. If I think someone is being foolish or making unwise decisions, I try using persuasion. If I don’t succeed, I have no right to stop them by force. When government sets a minimum wage that makes some people unemployed and makes it impossible for them to find jobs they are actually using force to stop the unemployed person from working. Government does not apply this force directly to the workers, but targets the employer.
As a result of potential prosecution, employers avoid the consequences of the labour laws and the result is that there are more than seven million people unemployed in South Africa. Most of these people would find employment in thousands of small businesses, in households and on farms if the law was not preventing the employment from happening. A far-reaching solution is absolutely essential if we are to avoid a disaster.
Solving the unemployment crisis requires bold action. The labour laws must be changed in such a way that they will allow small businesses to hire the unemployed without fear again. The state needs to step back far enough and allow the people enough space to do business, take care of themselves, and pass on skills to their employees. Our people’s abilities, talents and ambitions must not be stifled any longer. South Africa’s entrepreneurial spirit can and must be revived.
The following article was originally published by the Free Market Foundation.
Herman Mashaba: Founder of Black Like Me, CEO of Lephatsi Investments, Co-Writer of Black Like You and former Chairman of the Free Market Foundation