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THROUGH THE LIBERTY LENS - with Leon Louw
- Jeanré du Plessis
- Apr 1
- 5 min read
8 Riley Rd,
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Johannesburg, South Africa
2007
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Registration nr: 2023/726599/08
MEDIA RELEASE
Freedom Foundation Submits Response to National Minimum Wage Review:
A Libertarian Call for Employment Rights
Johannesburg
02/10/2024
DRAFT
In response to the National Minimum Wage (NMW) Commission’s request for submissions regarding potential adjustments to the NMW, the Freedom Foundation has presented a thorough and compelling argument for reform. The Foundation’s submission emphasizes the negative impact of the NMW on employment opportunities, particularly for South Africa’s most vulnerable citizens, while proposing a more flexible, rights-based approach to help address the country’s unemployment crisis.
According to official figures, South Africa’s unemployment rate is currently pegged at 33.5%, with the expanded definition—including those discouraged from seeking work—pushing this figure to a staggering 42.6%. However, as GG Alcock’s influential research on "kasinomics" has shown, many of the so-called "unemployed" are active in the informal sector, highlighting the complexity of the situation. Yet, for those stuck in the formal unemployment pool, the minimum wage laws have only served to deepen their plight, leaving them without access to even entry-level jobs that could give them a foothold in the economy.
Leon Louw, Director of the Freedom Foundation, addressed this issue in the Foundation’s submission, stating:
"The National Minimum Wage, while introduced with good intentions, has in fact become a barrier to employment for many South Africans. It assumes that no job is better than a low-paying job, which simply isn’t the case. By denying people the ability to accept work at wages they are willing to agree to, the NMW strips away their fundamental right to work and earn a living on their own terms."
Louw argues that the minimum wage, rather than protecting workers, effectively prevents millions from accessing the formal job market. This is particularly true for young and unskilled workers, who are priced out of the labour market altogether. Small businesses, which are often the lifeblood of local economies, are also disproportionately affected. These enterprises are unable to absorb the rising costs associated with the minimum wage, which restricts their ability to hire and grow.
The Freedom Foundation’s submission calls for a Work-Seeker’s Exemption (REE) or Unemployed Right to Get Employed (URGE). This proposal would allow individuals who have been unemployed for six to nine months the opportunity to take on any job at a wage that both employer and employee agree upon—free from the restrictions of the NMW. This exemption would empower job seekers to make decisions based on their personal circumstances, allowing them to gain experience, build skills, and eventually move up the economic ladder.
"This is not about abandoning the idea of a minimum wage entirely," Louw explained. "It’s about recognizing that one-size-fits-all policies are harmful. For people who’ve been unemployed for long periods, a minimum wage law only serves to lock them out of the economy. Giving these individuals the freedom to negotiate their own wages is a humane and pragmatic approach to tackling unemployment."
The proposed exemption would be temporary—lasting two to three years—during which time individuals would be able to gain experience and establish a work history, which in turn would enable them to find better-paying jobs in the future. This solution, Louw notes, is a significant departure from the current “all-or-nothing” approach, which leaves the unemployed with no options.
"It’s time for a fresh perspective on labour laws," Louw continued. "What we’re advocating for isn’t a dismantling of protections for workers, but an acknowledgment that the unemployed are being forgotten in the current framework. We need to respect their right to work—whether that means taking a job at a lower wage to get their foot in the door, or negotiating their terms based on what they feel is best for them."
In its submission, the Freedom Foundation highlights that the current NMW policy may infringe upon South Africans' constitutional rights, particularly the right to seek and obtain employment. By rigidly enforcing a minimum wage, the law effectively prohibits individuals from negotiating work agreements that suit their needs. For many, this leads to long-term unemployment and the erosion of basic human dignity.
"Denying someone the right to accept a job offer—whether it’s for R5,000 or R2,000—is a violation of their freedom to choose," Louw asserted. "We must recognize that each individual’s circumstances are unique, and it’s not the role of the government to dictate what wage is acceptable for everyone. The right to work, and the freedom to negotiate the terms of that work, should be respected."
This approach, the Foundation argues, would address a critical gap in the current labour market—allowing people to choose for themselves what is preferable: a low wage or no wage. With millions of South Africans still seeking employment, the choice between the two should rest with them, not the state.
South Africa’s high unemployment rate is not merely a statistic; it reflects a deeply rooted economic problem. While the NMW was intended to raise living standards, the evidence suggests that it has had the opposite effect for those at the margins. The Foundation’s submission references international examples from countries with flexible labour markets, such as Singapore and Switzerland, which enjoy lower unemployment rates and more robust economies, precisely because they allow market forces to guide wages and employment terms.
The Foundation also points out that SMMEs—small and medium-sized enterprises—are the backbone of any growing economy. However, in South Africa, many of these businesses are unable to expand or hire more workers due to the high labour costs imposed by the NMW. Allowing wages to be determined by supply and demand would give these businesses the breathing room they need to hire more staff and compete in the marketplace.
"South Africa’s economy is being suffocated by a rigid labour market," said Louw. "A flexible, market-driven approach to wages would not only help reduce unemployment but would also encourage entrepreneurship and innovation. It’s time to let businesses—and workers—decide what wages are fair, rather than leaving it in the hands of bureaucrats."
A Simple but Effective Solution the Freedom Foundation reiterates that the proposed Work-Seeker’s Exemption is a straightforward, effective solution to South Africa’s unemployment crisis. It offers a middle path that respects the dignity and autonomy of workers while still allowing businesses to operate sustainably. "We have an opportunity to make a real difference in people’s lives," Louw concluded. "By adopting a Work-Seeker’s Exemption, we can provide meaningful employment opportunities to those who’ve been left out of the economy for too long. It’s time to rethink the NMW and embrace solutions that prioritize freedom, opportunity, and human dignity."
End
Author
Leon Louw – Freedom Foundation
Notes to the Editor
‘Leon Louw speaks’ is a regular communication of Leon’s thoughts and ideas on government policy, free market economics, individual freedom, and liberty drawn from his 50 years of policy and think tank work in Southern Africa and internationally.
Leon Louw founded and led the Free-Market Foundation and now leads his own research and policy group, Freedom Foundation & Izwe Lami (Titling), as CEO.
Media Contact
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