The Most Significant Labour Law Reforms in 30 Years

For too long, South Africa’s labour laws have been cripplingly restrictive, discouraging businesses from taking on new employees. The laws were crafted against an ideological background that saw businesses and employers as essentially evil and employees as their hapless victims.

Thirty years later, the consequences stood out for all to see: an official unemployment rate of over 30%, while the global average is nearer 5%, and a youth unemployment rate of over 50%. Even at those numbers, it took the defeat of the African National Congress (ANC) in the 2024 national election for its leadership and Cabinet ministers to snap out of the ideological straitjacket they had fastened around themselves.

Under the proposed amendments, employers will be able to dismiss workers within the first three months of employment without the need for a formal hearing. This change is particularly beneficial for smaller firms and young workers who might struggle to prove themselves during a lengthy probation period. This more flexible approach creates an environment where businesses are more likely to hire, knowing they won’t be trapped in employment contracts that aren’t working out.

Perhaps most significant is that the amendments propose that small businesses will be exempt from bargaining council agreements for the first two years of their operation, reducing regulatory pressure and costs. Such agreements force all businesses in a particular sector to adopt the same wage hikes regardless of the age or health of a business. Large corporates loved that regime as they could use it to crush start-ups or new market entrants.

In an economy where the youth unemployment rate is eye-wateringly high, these two changes alone could provide a path to employment that was previously inaccessible. Labour laws, as they have been written over the past 30 years, had the effect of pricing poor South Africans out of work and forcing them into dependency on handouts and grants. Easier hiring and firing rules allow businesses, especially new start-ups, to take on young talent without the looming fear of unmanageable costs or legal complexity if the hire doesn’t work out. In this, the proposals must be seen as a moral victory in favour of the poor.

Left-wing agitators in civil society, the media, and politics had for years delighted in their fantasy that South Africa’s high unemployment rate might help spark a revolution against South Africa’s essentially liberal democratic order and the capitalist economy, in as far as it was capitalist, that formed part of that. The ANC and its alliance partners used to delight in that too. One prominent communist called the poverty and desperation that arose from South Africa’s unemployment rate a “revolutionary asset”. Another said it was better to be unemployed than to be “exploited”.

How hard it must have been to realise, after the 2024 vote numbers came in, that the joke had been on you and that your whole ideological framework of business and employers being an evil from which the poor had to be protected by the state had brought the revolution crashing down on your own party.