South Africa has an unemployment catastrophe.
According to Stats SA’s Quarterly Labour Force Survey for the second quarter of 2026, the official unemployment rate has risen to 33.6%. Around 8.5 million South Africans are unemployed. Politicians respond to numbers like these with jobs summits, employment programmes, subsidies and promises of industrialisation.
But the same government that claims to desperately want jobs maintains laws that make employing people more expensive, riskier and more politically complicated. South Africa will not solve unemployment through another government programme; we need businesses to start, grow and employ people.
That means making employment easier.
If government is serious about unemployment, three laws should be first against the wall: the Labour Relations Act (LRA), the National Minimum Wage Act (NMW) and the Broad-Based Black Economic Empowerment Act (BEE).
The Labour Relations Act
Employing someone is a risk. This is especially true when hiring an inexperienced young person with no track record, few skills and perhaps no references. An employer does not know whether that person will be productive, reliable or even suitable for the job.
In a country with millions of unemployed people, government policy should be designed to make taking that risk as attractive as possible. Instead, the LRA makes hiring someone the beginning of a potentially expensive legal relationship.
Under section 188 of the LRA, an employer must establish both a fair reason and fair procedure when dismissing an employee. Once the employee establishes that a dismissal occurred, section 192 places the burden on the employer to prove that the dismissal was fair. Remedies for unfair dismissal can include reinstatement, re-employment or compensation.
Big companies can absorb these risks. A small business with five employees may not be able to. The rational response is obvious: don’t hire unless you are certain.
The LRA also empowers bargaining councils to extend agreements to businesses that were not parties to the original negotiations. Section 32 allows collective agreements concluded in bargaining councils to be extended to non-parties within their scope.
This allows established businesses and trade unions to negotiate wages and conditions that smaller competitors may then be expected to obey. Large companies can often afford these costs. In fact, imposing expensive labour conditions on an entire industry can suit them perfectly. Their smaller competitors are the ones who suffer.
There is evidence that this costs jobs. Research into South African bargaining councils found that extensions of updated bargaining council agreements were associated with an employment decline of approximately 8%.
This is regulation that protects insiders at the expense of outsiders. The employee who already has a job receives elaborate protections, while the unemployed person trying desperately to get their first job is made more expensive and risky to hire.
The LRA should be radically stripped bare. Employers and employees should be free to determine their own relationships, with the law concentrating on fraud, coercion, genuine abuse and the enforcement of contracts.
South Africans need to be hirable. That means they also need to be fire able.
The National Minimum Wage Act
The national minimum wage increased to R30.23 per hour from 1 March 2026. At 40 hours a week, the Department of Employment and Labour calculates this at about R5,239 per month before considering other employment costs.
Government can legislate a minimum wage; it cannot legislate a worker’s productivity.
Imagine an unemployed young person with no experience who can initially produce R25 worth of value for a business every hour. An employer may be perfectly willing to pay them R25 while they learn skills, gain experience and become more productive.
Government says this transaction is illegal.
The worker does not magically become productive enough to justify R30.23 an hour because a minister published a figure in the Government Gazette. Instead, the employer may simply decline to hire them. The intended beneficiary then earns nothing.
South Africa is not a wealthy country tinkering with wages while unemployment sits at 4%. We have 8.5 million unemployed people. Under those circumstances, placing a legal floor under the price of labour carries an especially dangerous risk of shutting the least skilled and least experienced out of employment.
A low wage is not desirable, but unemployment is not a high wage.
The true minimum wage of an unemployed South African is zero.
The best way for low-paid workers to earn more is to gain experience, improve their productivity and compete in an economy where employers are fighting over workers. You cannot begin that process if the first rung of the ladder has been made illegal.
Black Economic Empowerment
BEE compounds the problem by punishing businesses when they grow.
The B-BBEE Commission classifies businesses according to turnover. Businesses below R10 million generally qualify as Exempted Micro Enterprises. Those above R10 million but below R50 million become Qualifying Small Enterprises, while businesses above R50 million are classified as large enterprises.
A rational government should celebrate when a R9 million business becomes a R12 million business. That business is expanding; it may be hiring people, purchasing equipment, opening branches and investing in its community.
Instead, the South African government rewards growth with additional regulatory obligations.
A 2026 survey by Codera Analytics and XA Global Trade Advisors examined 126 firms ranging from small owner-operated businesses to companies with revenues above R1 billion. Among firms facing BEE compliance costs, reported median initial setup costs across compliance categories ranged from R160,000 to R650,000, with ongoing annual costs ranging from R225,000 to R2.5 million.
The survey is not nationally representative, so its figures should not be treated as an economy-wide estimate. But its findings should still alarm anyone interested in employment. Only 4% of surveyed firms reported that BEE had increased net employment, compared with 35% reporting lower net employment, almost half reporting reduced reinvestment and more than 40% reporting reduced new investment.
Every rand spent restructuring a company around a government scorecard is a rand that cannot be spent somewhere else. It could have bought machinery, funded expansion, paid for advertising or employed someone.
BEE turns ordinary business decisions about ownership, suppliers, employment and investment into political exercises. South Africa should be encouraging businesses to grow as large and productive as possible, not creating regulatory cliffs that give entrepreneurs reasons to fear expansion.
BEE should be scrapped.
Let South Africans work
Repealing these three laws would not magically cure South Africa’s economy. We still need reliable electricity, functioning infrastructure, better education, lower taxes, secure property rights and far less government interference throughout the economy.
The Basic Conditions of Employment Act also needs substantial liberalisation, as do countless licensing requirements and other regulations that make starting and running businesses needlessly difficult. But the philosophy needs to change.
Government cannot declare unemployment a national emergency while simultaneously treating employers as suspects, workers as permanent liabilities and growing businesses as targets for additional regulation.
A country with millions of unemployed people should make hiring as easy as possible. We do not need another jobs summit or another government employment scheme.
Scrap the laws that punish hiring, punish growth and punish investment. Then get out of the way and let South Africans work.
Nicholas Woode-Smith is a political analyst and author. He is the Managing Editor of the Rational Standard and a senior associate of the Free Market Foundation. He writes in his personal capacity.