South Africa is experiencing a national emergency. It is neither a “climate emergency”, nor an “inequality emergency”. In fact, the true emergency is South Africa’s high unemployment, a problem most acutely felt by the youth. The solution is to give young people the choice to exempt themselves from South Africa’s onerous labour laws, a new report by the Free Market Foundation (FMF) argues.

This week, Statistics South Africa (Stats SA) released its latest Quarterly Labour Force Survey (QLFS), showcasing employment data from the third quarter of 2025. The data showed some modest improvements in overall employment.

The (official) unemployment rate decreased by 1.3 percentage points from 33.2% to 31.9%. Out of a total economically active population of 25.1 million people, 17.1 million were employed and 8 million were unemployed in the last quarter. There were 360 000 fewer unemployed between Q2 and Q3.

The expanded (unofficial) unemployment rate is a lot higher. This stood at 41.5%, representing roughly 11.1 million South Africans without work. This is arguably the more accurate measure of unemployment, as it includes people who are no longer actively seeking a job.

The young and the restless

For young people (aged 15 to 35 years), the situation remains desperate. South Africa’s official youth unemployment rate stood at 45.5% in Q3. Within the broader youth category, the most unemployed are those aged 15 to 24, with an unemployment rate of 58.5%, whilst the age group 25 to 35 recorded an unemployment rate of 39.2%.

Long story short: nearly half of young people are without a job.

This has calamitous consequences for South Africa’s economy and its politics. Many of these unemployed youth (and young men in particular) might feel tempted by radical political movements like the Economic Freedom Fighters (EFF) – with its toxic blend of false hope and hatred. Others will end up joining a criminal gang, a decision that might leave them either in jail or dead. Most will lead a life of quiet desperation, forgotten on the margins of society.

Economists and policy wonks will offer many explanations for South Africa’s chronically high levels of unemployment, including the vicissitudes of the global economy and the poor skills profile of the workforce.

Nobody would dispute that if demand for commodities goes up or down, then so too will the need for workers in the mining and agricultural sectors. And it certainly helps having a more skilled population to support the growing tertiary sector.

But these explanations miss the biggest driver of South Africa’s structural unemployment: rigid labour market regulation.

Protection racket

Laws such as the Basic Conditions of Employment Act, the Labour Relations Act, and the National Minimum Wage Act impose high costs on employers, make it difficult to fire delinquent or underperforming workers, extend collective bargaining wage agreements to non-parties, and give trade unions disproportionate power.

These rules combine to effectively dissuade prospective employers from hiring in the first place. Why take the risk on a young, untested person if I might end up in the Commission for Conciliation, Mediation and Arbitration (CCMA), then the Labour Court, costing me hundreds of thousands, a business owner might ask?

Ostensibly intended to “protect” workers from unfair labour practices and to strengthen workers’ rights, these laws have the effect of compounding South Africa’s unemployment crisis.

As economist Thomas Sowell wisely advised: judge a policy by its consequences, not by its intentions.

Let me work

It is against this background that the FMF this week released its latest report in its Liberty First series of policy recommendations entitled Defusing the Joblessness Timebomb: restoring dignity and choice through labour regulation exemption.

Authored by FMF Policy Officer, Zakhele Mthembu, the report calls for the introduction of a Job Seekers Exemption Certificate (JSEC), a long-time policy proposal of the Foundation originally developed by now President of the FMF, Eustace Davie.

The certificate would exempt the holder from all labour laws and regulations such as the minimum wage, strict hiring and firing regulations, and equity targets. The JSEC would be a voluntary mechanism, and applicants would have to demonstrate that they have been unemployed for six months or longer to be eligible.

The JSEC would be valid for two years and would effectively serve as a subsidy to the hiring company by reducing its compliance costs. This would be a temporary, non-renewable measure that would enable new entrants to the job market to learn on the job through lateral skills transfer thereby improving their future employment prospects.

“By eliminating artificial, non-market-based wage floors, certificates would make their holders more attractive in the job market,” Mthembu argues, thus presenting a solution to the problem of structural unemployment.

The beauty of the JSEC is that it would not require large-scale changes to the existing labour legislation. This would sidestep the problem of the African National Congress (ANC) having to convince its alliance partners in the organised labour movement to deviate too sharply from the status quo.

Balancing rights

A legal scholar, Mthembu also justifies the JSEC in terms of the existing constitutional framework.

While section 23 of the Constitution demands fair labour practices, Mthembu argues that “fairness” can be broadly defined and should be balanced against other rights such as freedom of contract and freedom of association.

A reasonable limitation on the right to fair labour practices could also be applied using the limitations clause under section 36 of the Constitution. This stipulates that rights in the Bill of Rights can be limited under a law of general application, must be reasonable and justifiable, and be based on human dignity, equality, and freedom.

As Mthembu argues, a JSEC would satisfy these criteria and be an important recognition of the dignity and agency of job seekers:

“The determination of what is ‘fair’ concerning employment conditions and wages should be left to the individual who will be subject to those conditions and salaries. This will not only actualise the dignity of that individual by enabling them to be responsible for their own welfare, but it will also help solve the unemployment problem that plagues the country,” Mthembu writes.

For those who worry that workers might be treated unfairly under an exemption certificate, the proposed law would make it illegal for employers to compel workers to acquire a JSEC. A worker would be able to revoke their participation in the scheme at any time, enabling them to return to the existing regulatory regime should they so choose.

Common law remedies would also remain in place for breach of contract, assault, and other forms of unlawful treatment, the report says.

Trade-offs

Last Sunday, I appeared in a televised interview on South Africa’s state broadcaster to discuss a new report on global inequality by Nobel Prize-winning economist, Joseph Stiglitz, commissioned by President Cyril Ramaphosa on the eve of the G20.

I was asked whether South African policy makers could address inequality by: “intervening on the income side and ensuring a social wage.” There is no such thing as a social wage, I explained, much to the dismay of the interviewer.

Jobs and wages are the expression of how much value employees can add and how much employers are willing to pay them for their efforts. A minimum wage effectively removes a poor person’s right to work and consigns them to a life of poverty and joblessness, dependant on the state for handouts, I said.

South Africa does have high levels of income inequality, but this is not because the rich are hoarding wealth. Inequality is a function of a lack of jobs and the poverty that this causes. Simple as that.

The FMF’s JSEC proposal would enable workers to decide for themselves under what conditions they are willing to work, for what pay, and for whom. If the Government of National Unity is serious about addressing poverty, it needs to recognise that other fundamental truth expounded by Thomas Sowell: there are no solutions, only trade-offs.

Ansara is CEO of the Free Market Foundation.