The coming ban on labour broking: more erosion of freedom and prosperity

According to reports today it would seem that once again, sadly, politics in South Africa is going to be the enemy of freedom and prosperity as it looks like parliament will move to ban labour broking in 2010.

There are a host tragic ironies in this issue: the fact that by going down this road the ANC/SACP/Cosatu are destroying wealth generating opportunities of the poorest; that labour broking has largely arisen due to over-regulation of the labour market in the first place; that it is exactly the opposite policy SA should be pursuing to achieve better productivity and growth; and that jobs will disappear as a result of all this.

Does parliament’s labour portfolio committee actually get the issue?  I doubt it.  This has populist political posturing to the unions written all over it.

JohnGalt and I have written recently about the issue of competitive currency devaluation and South African competitiveness vs the Asian economies.  Forget a weaker rand and trade barriers, they don’t make an economy more competitive.  What will make SA competitive is a deregulated labour market in which free adults are able to strike up any kind of employment contract they want with each other.

Labour brokers are thriving in SA because employers have very little flexibility under current laws and therefore banning labour brokers will force companies to find other ways of staying competitive and profitable.  Without doubt, if we see this legislation passed next year we are going to see more illegal labour practices, more ‘informal’/'under-the-radar work’, more labour substitution through mechanisation, and fewer work opportunities for the unemployed.

Once again we are seeing what happens when bad leadership is in place in government.  Bad leaders are really followers, and the ANC is following its brashest and most vociferous supporters, the unions.  What about the other millions who voted for the ANC: the unemployed.  Who’s looking out for them?

Banning labour brokers is another step away from freedom and toward poverty.  What SA needs is not more labour laws but fewer… far fewer.  If parliament has an ounce of sense it should throw this bill out, and then follow that up with a wholesale deregulation of the labour market, scrapping minimum wage laws, liberalising hiring and firing laws, curtailing the powers of the CCMA, liberalising unions and strike laws allowing employers to fire workers for strike action, allowing any kind of mutually struck employment contracts, and allowing any kind of labour broking practise.

SA became an free country in 1994, and now government seems to be making every effort to lead us back to economic tyranny.