Solidarity: grants are unsustainable; labour regulations must be scrapped

28 July 2021

Solidarity has strongly criticised the government’s efforts to find solutions to the economic crisis in which South Africa currently finds itself. This follows the Minister of Finance, Mr Tito Mboweni’s speech today on the economic support package announced by President Cyril Ramaphosa.

Solidarity is of the opinion that making available more funds to be able to afford the R350 allowance for the unemployed is unsustainable and will in fact put more pressure on the economy and increase the burden on the whole of South Africa. The larger than expected tax revenue is still less than what is needed to balance the ordinary budget of the state and can rather be used for that.

"What the government is doing with its support packages is to keep people alive on debt instead of creating a better future for them. What it should rather do is enable people to thrive. This can only happen if the right climate is created where an economy can grow so that jobs can be more readily available. By immediately relaxing its labour regulations and doing away with restrictive regulations and ideologies such as the minimum wage and black economic empowerment, this will be possible,” said Theuns du Buisson, Economics Researcher at Solidarity.

According to Du Buisson the tax deferral that has been announced is a welcome lifeline for struggling businesses. However, he contends that the predicament most businesses are currently facing should be laid at the door of the government, and that the temporary relief may be too little to solve the problem.

Du Buisson moreover contends that the minister’s proposal that people can access a portion of their pension funds may be good in the short term, but t the minister is saddling a wild horse. The legislation and regulations pertaining to pension funds exist for a reason namely to enable people as far as possible to retire independently. Although we are in an emergency situation this sets a dangerous precedent that could prevent people from retiring comfortably.

“The government is still relentlessly pursuing its course to make more people dependent on the state instead of enabling the private sector to take over the task of job creation in particular. It is more important for the government to let people just survive on R350 than it is to scrap a regulation such as the minimum wage requirement, thus enabling a person to earn at least R1 000 or more.

“The government should stop trying to achieve economic recovery all by itself and to borrow money. Instead, it should see to it that infrastructure is put in place and that legislation and regulations area scrapped to make it easier for the private sector to do business and to employ people,” concluded Du Buisson.

Issued by Theuns du Buisson, Economics researcher: Solidarity Research Institute, 28 July 2021