This article was first published by The Citizen on 1 August 2024
It is common to hear South African politicians praise the developmental achievements of the People’s Republic of China (PRC), currently under the stewardship of the Chinese Communist Party (CCP). This admiration is superficial because our politicians, even those in control of state power or who have been in the past, never emulate the truly developmental path of those they claim to admire.
In general, South Africans love of liberty. This is evident in the inclusion of individual and civil liberties in our Constitution, as outlined in Chapter 2. Therefore, it must be acknowledged that the refusal of our politicians to emulate the CCP’s governmental model of disregarding liberties is commendable.
The shallow admiration has both positive and negative elements. The downside is that while our leaders admire China’s development, particularly in poverty eradication, they are not inclined to replicate the strategies employed by the Chinese. In fact, one could argue that they do the opposite.
As evidenced by growth projections for the next few years hovering around 1 to 2% of GDP growth, the economy is struggling,. The unemployment rate is a whopping 32.9% and, most concerning of all, the unemployment rate for youth aged 15 to 35 is 45.5%. Our economy is struggling, and a significant portion of our population, especially the youth, is not productive.
By comparison, as of 5 June 2024 the unemployment rate in the PRC is 5%. Despite the issues with statistics from the PRC (such as the government controlling the release of statistics, such as ceasing the publication of youth unemployment statistics from mid-2023 until mid-2024), the figures are significantly different. The youth unemployment rate in the PRC is at 14.9% – this is deemed a crisis!
How does the Chinese government manage its economy? By embracing freer markets and principles related to voluntary trade, such as improved private property recognition and protection beginning in 1978 during the time of Deng Xiaoping , the Chinese economy began to experience significant growth. These concepts were virtually non-existent during Mao Zedong’s leadership as the Chairman of the CCP.
Deng Xiaoping introduced economic reforms that set China on its current developmental trajectory. We can confidently assert that free markets and their principles are the driving force behind China’s development. This is evident because China had a multi-decade history of central planning being the sole economic model under Chairman Mao; the economy was not growing as it is now, after the implementation of markets.
Most importantly, the labour regime in China is quite markedly different from the one in South Africa, as indicated by the unemployment statistics. One significant difference introduced during Deng Xiaoping’s tenure was the removal of the right to strike from the Chinese Constitution. This contrasts with South African culture, which recognises that right in the Constitution through Section 27.
Another major difference is the absence of collective bargaining in China, a key feature of the South African labour system involving unions. Chinese workers are unable to engage in collective bargaining agreements; instead the CCP has a system called collective cooperation or collective contracts which in theory ought to be like collective bargaining agreements but in practice, they leave a lot to be desired.
There are organisations like the All China Federation of Trade Unions, which have labour unions, but they are effectively an extension of the state and exist not at the whim of workers, as one would normally expect a union to be. There are instances where worker organisation does happen, but it is usually localised and occurs under strenuous authoritarian conditions, given the general inhibition on freedom of association that is prevalent in the PRC.
The Chinese labour market is anything but perfect. The problems it faces are well-documented. However, it is this labour market, with all its challenges, that has driven the development of China, which is highly admired by our politicians.
It is the freedom to contract (labour deregulation) that is prevalent in the PRC, even to terms many would deem ‘exploitative’, that has resulted in a low unemployment rate (by South African standards), as well as rapid poverty alleviation. This freedom to contract in the labour market is heavily restricted in South Africa by various pieces of legislation, which include terms and costs that would not exist if no labour legislation were in place.
We must ask ourselves as South Africans what we actually want. With an economy where the majority of participants are either semi-skilled or unskilled, there must be a way to ensure that they can engage in some form of productive activity. The most effective approach to ensure this would be for the state to eliminate all additional costs associated with complying with its legislation when hiring in the market.
As in China, if we were to deregulate our labour market, there would likely be individuals whom many would consider to be ‘exploited’, even though these individuals may have willingly agreed to work under what may seem like exploitative conditions; agency is the key. Presently, these individuals constitute the millions who are unemployed and likely receiving welfare benefits from the government.
We must ask ourselves, honestly, if we really want to be like China. Politically, that is unlikely given the absence of a hegemonic force like the CCP in our political climate for now, and as a lover of liberty I am glad for that. Economically, though, we also have high poverty levels like they used to, and still do have if you consider the sheer size of their population. Therefore, it would behove us to be like them and deregulate as much as we can.
Our politicians want to have their cake and eat it too. They desire the developmental outcomes seen in China without the determination or resolve to implement the necessary measures, such as deregulation, particularly in the labour market. Only when we embrace freer markets across all sectors, including labour, will we begin to steer away from the path to serfdom that we have been treading on.
