5 November 2026
The Free Market Foundation (FMF) has made a submission to Parliament’s Portfolio Committee on Employment and Labour recommending that the Employment Services Amendment Bill be withdrawn. The Bill’s proposed employment quotas for foreign nationals and additional regulatory obligations on employers will not address the causes of South Africa’s structural unemployment crisis.
Ayanda Sakhile Zulu, FMF Policy Officer and author of the submission, argues that South Africa’s highly restrictive labour regulatory regime makes commercial activity costly and disincentivises enterprises from creating jobs, particularly for young and low-skilled South Africans. Rather than addressing these barriers, the Bill seeks to expand state interference in the labour market through employment quotas, additional recruitment requirements, skills-transfer plans, and more punitive penalties for non-compliance.
The submission draws on the FMF’s Liberty First policy paper, “Defusing the Joblessness Timebomb: Restoring Dignity and Choice Through Labour Regulation Exemption”, and its joint report with the Solidarity Research Institute (SRI), “The Costs of B-BBEE Compliance”.
Unemployment
According to Statistics South Africa’s Quarterly Labour Force Survey for the second quarter of 2026, the official unemployment rate rose to 33.6%, up from 32.7% in the first quarter, with 8.41 million people unemployed. The unemployment rate among those aged 15–34 reached 47.4%, while it stood at 62.8% among those aged 15–24.
“Labour protectionism is no antidote to this crisis,” says Zulu. “Rather, it is a zero-sum exercise in determining who gets access to a dwindling pool of jobs in a shrinking economy where opportunity remains severely limited.”
The submission examines the Bill’s proposal to empower the Minister of Employment and Labour to specify maximum quotas for the employment of foreign nationals in any sector. Restricting access to existing jobs will not address the underlying barriers to job creation or generate employment on the scale required to make a meaningful difference to unemployment.
The submission further examines the Bill’s proposed pre-employment skills checks, requirements for skills-transfer plans, and increased penalties for non-compliance. The FMF argues that these measures risk increasing the already onerous administrative and compliance burden on enterprises and further disincentivising hiring.
“The FMF opposes the Bill’s attempt to expand state interference in the South African economy through labour protectionism, a further increase in the already onerous administrative and compliance burden on enterprises, and the imposition of more punitive penalties for non-compliance,” says Zulu.
The submission draws attention to the FMF’s joint report with the SRI on BEE compliance costs, which estimates that the annual direct cost of B-BBEE compliance amounts to between R145 billion and R290 billion, equivalent to roughly 2% to 4% of South Africa’s GDP. The report further estimates that the resulting economic effects reduce annual GDP growth by 1.5% to 3% and suppress between 96,000 and 192,000 jobs annually.
These findings illustrate the economic consequences of regulatory burdens that make commercial activity more costly.
JSEC
The FMF proposes the introduction of a Job Seekers Exemption Certificate (JSEC), as set out in its Liberty First policy paper, “Defusing the Joblessness Timebomb: Restoring Dignity and Choice Through Labour Regulation Exemption”, by FMF Policy Officer Zakhele Mthembu.
Under the proposal, anyone who has been unemployed for six months or longer would be eligible to apply for a certificate free of charge at their local municipality. The certificate would exempt its holder from all labour legislation, including the minimum wage, for 24 months and could be revoked by the holder at any time.
“The appropriate response to the crisis is deregulation through the introduction of a voluntary Job Seekers Exemption Certificate that restores agency to the unemployed, incentivises enterprises to create jobs for them, and avoids increasing the already onerous administrative and compliance burden on commercial activity,” says Zulu.
The FMF recommends that the Employment Services Amendment Bill be withdrawn in its entirety and that deregulation be prioritised as a means of addressing South Africa’s structural unemployment crisis. The Foundation calls on the Minister of Employment and Labour and the Portfolio Committee on Employment and Labour to consider the JSEC as an alternative to labour protectionism.
Click here to read the full submission.
Click here to read the Liberty First paper on JSEC.
Click here to read the joint FMF-SRI report on BEE compliance.
Ends.
