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Section 32 Hinders Job Creation and Hurts Smaller Competitors, says Herman Mashaba

Capitalist CrusaderBlack Like YouHerman Mashaba, businessman and co-author of Capitalist Crusader: Fighting Poverty Through Economic Growth and Black Like You, is engaged in challenging Section 32 of the Labour Relations Act in his capacity of chair of the Free Market Foundation.

In a recent article for Fin24, Sara Gon outlined the foundation’s reasoning for challenging Section 32, which forces employers to extend any agreement reached in a bargaining council to “any non-parties to the collective agreement that are within its registered scope and are identified in the request”.

Cosatu has taken issue with the proposed challenge, and are currently rallying for a boycott of Black Like Me products, which are produced by Mashaba’s company.

Nonetheless, Mashaba and the FMF believe that this requirement regarding non-parties is unconstitutional and makes it difficult for smaller companies to compete with big businesses.

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FMF and Mashaba believe Section 32 creates unemployment and uncompetitive conditions in product markets.

By setting wage levels above what some companies would pay and some employees would accept, makes it unprofitable for certain types of firms to operate.

These firms are forced to exit and new firms, which might enter the market under different conditions, do not do so. These new, potentially dynamic, firms are precisely the kind of firms SA needs to create new jobs according to Mashaba.

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