Reflections on labour market deregulation in South Africa

Discusses how, from 1919 the ILO (International Labour Organization) has been meeting the call for labour market deregulation with the plea that “labour is not a commodity” and that treating it as such can only result in ‐ and exacerbate ‐ social injustice. On its re‐entry into the international community, South Africa has plunged head on into the global debate on the subject: should it “deregulate” its labour market in order to achieve “international competitiveness”? Would deregulation create employment? Argues against labour market deregulation in South Africa. Posits that new markets in which the country can be internationally competitive have yet to become apparent and that it would be inappropriate, in light of the country’s economic and human resource base, to cheapen labour in the search for that market. Concludes that such a move in South Africa would widen the incomes gap, subsidize labour inefficiency and undermine long‐term productivity gains. While the “low road” to international competitiveness might yield short‐term results, it is urged that the long‐term social costs would be too high. In sum, argues that labour market policy should place more attention on improvement of human resources and labour market institutions and on the broadening of domestic and regional markets.