South Africa needs competition in labour: With unemployment at all-time highs, the conversation about competition in labour needs to happen
Competition is usually something associated with businesses. In South Africa, we even have legislation that mandates competition. The marketplace is made up of workers too, yet we hardly hear of worker competition as something that ought to be encouraged. One can ask, is labour competition not a good thing?
The labour market is no different. You find people with the same skills numbering in their hundreds. It is considered a good thing in business that a competitor will come in and undercut the existing business through low prices, for instance. In the labour market though, monopolies, or what would be called monopolies in the business market, are not only encouraged but protected once established.
Similarly, the problem arises when a business is protected from competition by laws that inhibit potential new entrants. This can also be in the form of regulatory compliance that makes it next to impossible for a layperson to compete effectively, as is the case in the banking sector, arguably the most regulated sector, and the most concentrated in terms of the number of enterprises formally operating in that market.
When the government passes laws, protecting existing workers, it does not heed the effect of these laws on the unemployed wishing to be workers. How do they feel about such laws? Given the current political climate, the conversation is mostly framed within a context of South Africans competing with foreigners in the labour market, and how this is a bad thing. The emotions associated with seeing someone who does not speak a language like yours getting an income when you have none in your “backyard” is understandable. Yet, competition in labour has benefits, those being getting skilled labour at low prices.
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