Plan to restrict foreign workers will cost South Africa: analysts

Analysts have warned that the national and provincial government’s plans to restrict foreign workers is likely to come at a great cost to the economy.

This comes after the Gauteng government published the Gauteng Township Economic Development Draft Bill for public comment in September.

While the bill covers a number of issues, including job opportunities and growth, it also expressly prohibits foreign nationals from participating in economic activities reserved for citizens of, or persons with ‘permanent residency’ status in South Africa.

“Every citizen of and every person with permanent residency status in the republic has a right to practice his or her trade, occupation or profession of choice freely in the province,” the province said.

The bill further indicates that a list of business activities will be drawn up which will be exclusively and solely-reserved for ownership and operation by citizens.

In an analysis of the bill, the Free Market Foundation said that the bill relies on two mechanisms to effect township development:

  • Preferential treatment of township businesses by the provincial and municipal governments; and
  • Reserving township businesses for citizens and permanent residents only.

The proposal by the provincial government in Gauteng ignores that many township businesses had gone into stagnation before the arrival of migrant entrepreneurs, that these entrepreneurs brought with them skills that are scarce in the townships, and that these entrepreneurs are in mutually-beneficial relationships with landlords who are mostly South African citizens, the group said.

“Above all else, the proposal ignores that these immigrant-run businesses are successful because South Africans choose to buy from these businesses rather than from alternative outlets.

“It is forgotten that these enterprises are competing with retailers such as Pick’n Pay and Shoprite’s Usave and Boxer stores. Nor does it necessarily follow that South Africans would take up the mantle, or, if they do, it likely won’t be township residents but the big retail chains.

“We can immediately discount the spending that is going to be allocated to township enterprises. Government does not understand that the biggest barriers are not in the private sector but within government itself. ”

The Scalabrini Centre of Cape Town, a non-government organisation which offers specialised services to South Africans, migrants and refugees, has also raised concerns about the bill.

“We are concerned by the exclusionary nature of this draft bill. Rather than harnessing the potential that migration brings, the bill risks stifling such economic growth, which would be to the detriment of all people living in those areas, South Africans and non-South Africans alike,” Scalabrini’s advocacy communications officer, Charlotte Manicom told the Daily Maverick.

However, according to Nondumiso Mabuza, the Gauteng Department of Economic Development spokesperson, the bill’s reservation of opportunities is more about ‘affirming South Africans in terms of access to support, and does not ban legitimate foreign participation’.

She said the bill would clear up regulatory regimes, ‘which South Africans accuse foreign nationals of violating, and which in turn spur xenophobia’.

National push

While the draft bill is limited to Gauteng townships,  Employment and Labour minister Thulas Nxesi has said that national government is also looking at new regulations to limit the employment of foreign nationals in South Africa.

Nxesi said that the new legislation would not only be limited to problematic sectors such as the road and freight industry, but also other industries which employ a high number of foreign workers.

These include:

  • The hospitality sector;
  • Restaurants;
  • Security;
  • Farming and agriculture.

“We are looking into this matter in a proper way. However, it is important to remember that we can’t just ‘do away with foreigners’. Some of them are refugees and legally supposed to be here,” he said.

“The issue that we have to deal with is the illegal people which have been employed without any papers from Home Affairs.”

Nxesi said that the country’s labour laws state that South Africans should be given preference, but he noted that some bodies were pushing for a complete ban on foreigners in the trucking sector.


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Plan to restrict foreign workers will cost South Africa: analysts