South Africa Needs Economic Growth, Not Populism

Economic freedom drives economic growth. And it is economic growth – not populism – that will help reduce unemployment and gradually begin to turn things around.

Photo by Towfiqu barbhuiya on Unsplash

Like in several parts of the world, right-wing populism is resurging again in South Africa as the country continues to grapple with a socio-economic crisis of massive proportions.

Millions of South Africans, particularly young people, remain unemployed, poor, and on the margins of society, while the so-called Government of National Unity (GNU), which, while it has the appearance of a reformist government, continues to be unresponsive to their plight.

In this context, it has been easy for populist leaders such as Herman Mashaba of ActionSA, Zandile Dabula of Operation Dudula, and Jacinta Ngobese-Zuma of March and March – who style themselves as outsiders and their true representatives – to harness their legitimate anger and misdirect it at ‘illegal’ immigrants.

The populist playbook

Their strategy has been rather simple: to portray South Africans as victims of a “liberal” political establishment that is either involved in, or complicit with, an agenda to disenfranchise them by flooding the country with criminally minded, job-stealing, and burdensome illegal immigrants.

Their solution has been even simpler: to present mass deportation as the only measure that can resolve the socio-economic crisis, address crime, and reduce the burden on the state by expelling illegal immigrants.

Anyone who dares to differ with such a simplistic political programme is attacked and dismissed as a supporter of “illegal immigration”. Alas, the populists have also introduced a false binary: those who agree with them are patriots while those who differ are enemies who are advancing the agenda of the political establishment.

It should come as no surprise, therefore, that many of their supporters will likely dismiss this piece as yet another attempt by an enemy to defend illegal immigration.

Much is obviously wrong with this kind of simplistic thinking that lacks any nuance, and it needs to be interrogated because it is misleading people and fostering an environment where violence is becoming an increasingly appealing response.

Disclaimers

While crime and the supposed burden on the public health system are two important rallying points behind the anti-immigrant sentiment that has taken root, this piece is more interested in interrogating the job-stealing narrative that also colours the messaging of the populists.

Before delving into the analysis, I want to note that I agree with existing scholarship that rightly characterises the ‘legal’/ ‘illegal’ frame as nothing more than a smokescreen for underlying nationalist concerns about the very notion of immigration itself, its rate, and its perceived threat to the imagined community. This is a deeper philosophical question that falls outside the scope of this piece, and it will be explored in a future article. For this piece, examining the job-stealing narrative within the legal/illegal frame will suffice to drive the point home.

Debunking the job-stealing narrative

Credible research clearly demonstrates that many immigrants in South Africa, particularly those in the informal and semi-formal economy, are self-employed. They operate as street vendors, run spaza shops and other micro-enterprises, and deliver food and groceries to locals, among other activities. Interestingly, immigrants account for a significantly higher share of self-employment than locals, both in the informal economy and in semi-formal sectors such as e-hailing.

There are several reasons that explain this disparity, but two that are worth highlighting here are regulation and dependence on social security, which can reduce economic pressure to work. Regarding regulation, the late former Finance Minister Tito Mboweni was honest and courageous enough to acknowledge in 2021 that red tape had crippled many small South African businesses and that there was a need to reassess some of the country’s labour policies.

It may well be that most (if not all) of the immigrants that fall into the aforementioned categories are illegal. But what must not be overlooked is that many of them, apart from bad apples that have dubious intentions, want to be legalised. Therefore, the bigger problem we are dealing with in the country, is not individual malice, but systemic failure, coupled with endemic corruption that intersects with the human imperative to secure basic survival.

Having said that, the prevalence of self-employment among immigrants alone undermines the narrative of job-stealing. How can jobs that are created by people be ‘stolen’? Here, job reservation sounds appealing, but it doesn’t address some of the real reasons that explain why locals are underrepresented in employment, which include regulation and dependency on social security.

This is to say that even if mass deportation occurred and job reservation was legalised, there would still likely be no significant improvement in local employment because the underlying issues would not be addressed. The immigrants, when critically assessed, are no thieves but, in part, beneficiaries of minimal regulation and necessity-driven initiative – factors that could change the picture for South Africans.

On low and semi-skilled labour

The job-stealing narrative also has no basis when it comes to immigrants who are engaged in low-skilled labour in sectors such as construction, and semi-skilled labour in hospitality, for instance. The simple reason for this is that employment here flows from the willingness to work for market-based wages rather than state mandated ones.

It does not flow from entitlement by virtue of nationality and a refusal to align wage expectations with the realities of the market. Exploitation is an easy retort, but the term itself is subjective, the labour in question is low to semi-skilled, and businesses operate under real constraints. Indeed, these businesses include big corporations that people assume can always absorb higher labour costs without considering what it takes them to stay afloat.

What is often missed in this discussion is that labour unions don’t represent the views and interests of all South Africans, and that many of them approach the question of labour differently. These people understand that low wages aren’t ideal, but they prefer something over nothing and understand the value of entering the labour market and developing their skills.

Here again, job reservation sounds like a solution, but it doesn’t address the rigid labour regulation that locks millions of South Africans out of work and creates a preference for immigrants. If it were implemented, it would likely destroy the very jobs that the populists assume would immediately shift to locals.

I must add that it’s interesting to hear Mashaba calling for job reservation. He is a self-professed capitalist who has railed for years against labour regulation and its role in destroying employment opportunities. That he now contradicts himself on basic economics is a reminder that political expediency can subvert honesty in public discourse.

High-skilled labour

The question of high-skilled labour hardly requires discussion unless one secretly believes that people whose skills are critical in areas such as specialised healthcare and information technology should be expelled simply because of the country of their birth.

This is not to deny the existence of highly skilled locals in the labour market, but rather to emphasise that the focus should be on producing more of them and not targeting people who contribute meaningfully to the economy of the country.

A viable way forward

Having said all that, it will likely be argued by some that this piece has an agenda against South Africans or that it wants to see them continue being sidelined. This is certainly not the case.

As this analysis has demonstrated, the main problem is a government that has not implemented the structural reforms that are required to reboot the South African economy and restore the freedom of millions to determine their own economic futures.

The scapegoating of immigrants by the populists is, therefore, not a solution but rather a misdiagnosis of the issue and a deliberate manoeuvre to pander to public sentiment for political gain.

JSEC

We have a massive reservoir of unemployed people in this country who have become available for political mobilisation. We need to do away with rigid labour regulation and allow them to enter the market and work. In this regard, the Free Market Foundation’s (FMF) latest report, titled Defusing the Joblessness Timebomb: Restoring Dignity and Choice Through Labour Regulation Exemption, which is part of its Liberty First initiative, is a critical intervention.

Authored by FMF Policy Officer Zakhele Mthembu, the report proposes the introduction of a Job Seekers Exemption Certificate (JSEC) that would allow an unemployed person for six months to exempt themselves from every labour law for 24 months. In practice, this would allow South Africans to walk into a municipality, prove six months of joblessness, and walk out with a certificate that gives them freedom to negotiate their own economic futures.

Instead of allowing the state to dictate to people and subject them to destitution under the guise of protection, the JSEC could give them freedom to decide on their own terms.

The JSEC would also directly benefit small and medium enterprises by removing regulatory burdens and giving them the latitude to operate without unnecessary constraints. This is the kind of approach that could allow small South African businesses to thrive and become competitive while creating employment for many.

We need to realise that part of getting things right in South Africa requires shifting towards economic freedom and allowing South Africans to participate freely in the economy, whether through trade or through their labour.

Economic freedom drives economic growth. And it is economic growth – not populism – that will help reduce unemployment and gradually begin to turn things around.

Ayanda Sakhile Zulu holds a BSocSci in Political Studies from the University of Pretoria and is an intern at the Free Market Foundation.