THE ECONOMIST CONFERENCES
TABLE BAY HOTEL, CAPE TOWN: SEPTEMBER 11 - 12, 2001
I must praise the organisers of this important event for this extraordinary roundtable which covers all the aspects of South Africa’s economic realities and perspectives. I must express particular appreciation for having introduced immigration issues within the consideration of our macro-economic situation. In the past seven years that I have been the Minister of Home Affairs, South Africa has grown to realise the essential importance of immigration within its overall formula for growth and economic success. We have accepted that our economic growth is impaired by a lack of necessary skills, which impedes capturing some of the potentials which exist in our country.
This skills crisis is not only the consequence of the brain drain caused by the emigration of skilled and qualified South Africans, especially from the white communities, but it is also the result of the insufficient and inadequate education policies of our oppressive and racially divided past. For too many years the majority of our people have suffered the many limitations of ignorance not only for lack of education, but also for the lack of knowledge, exposure and experience associated with a segregated society. To redress this, our government has placed an immediate emphasis on brain train and adopted a massive nationwide training programme which has been commenced recently. However, we have come to realise that the brain drain and the generalised lack of skills cannot be redressed only with brain train, but we must also rely on brain gain through the importation of foreign human capital. In fact, skilled and qualified foreigners bring into our country the capital of many years of education, exposure or experience.
We realise it is essential that as soon as possible, we reach a critical mass of skilled people whose presence is likely to unleash presently inhibited economic potentials. We also need to reach a domestic critical mass of consumers and active economic participants so that our economy can grow to progressively absorb into the productive economic cycle the majority of our people who are still excluded from it and relegated in a commercially unproductive limbo. Our domestic markets being so small is one of the most limiting factors of economic growth. Therefore, in the past four years, our policy debate has focused on maximising the possibility of attracting foreign investments in human capital, while ensuring that relevant concerns of trade unions and South African workers are addressed.
Since the beginning of our policy debate, a connection has been maintained between the acquisition of foreign skills and the training of our own nationals. Originally, a somehow simplistic view believed that by limiting the access of foreign skills to South Africa, one would create additional incentives for employers to go the extra mile in training our nationals. However, this view was abandoned even by its most extreme advocates. Nonetheless, in our administrative procedures we began imposing a connection between the hiring of foreigners and the training of our nationals by forcing employers to demonstrate to the Department of Home Affairs that they made special efforts to train our nationals. This led to absurd situations as work-places are not schools where one can impart or develop the skills employed there. This requirement was also impossible to monitor. Therefore, we sought different ways and means to maintain it within our reform of our system of migration control.
We also realise that in the present labour market it is impossible to classify skills which may be needed by employers. Moreover, the connection between skills and qualification has long been broken as many people have skills which are not reflected in degrees and many are successfully employed in fields other than those for which they originally qualified. It is also difficult to place skills in a hierarchy of need as used to be done and is still done in many countries, so that one deems brain surgeons to be more desirable than plumbers. In fact, some sectors of our economy are more dependent on lower level skills, such as specialised equipment operators, than they are on traditionally professional skills. We also realise that it is futile for Government to try to predict what skills the economy may need at any given present or future time, and that mandatory skills auditing associated with migration control would be nefarious for South Africa. Any such prediction would be contradicted every time an employer seeks to employ a foreigner.
We further realised that employing foreigners is more costly than employing South Africans in many tangible and intangible ways. Therefore, for as long as foreigners are employed at financial terms and conditions which are not inferior to those applicable to a South African national in the same workplace or industry, then the foreigner is needed by virtue of market force definitions. On this basis, we created a new courageous and greatly innovative system of migration control which does not require government to conduct elaborate labour certifications or often impossible evaluations and determinations of how many foreigners may be permitted to work in South Africa and how many we may need. We are leaving these decisions to employers on the basis of a liberal system which accommodates the concerns of our trade unions by making employers responsible for ensuring that foreigner labour does not undercut labour standards and the gains of collective bargaining.
In the new system of migration control, foreigners will be able to obtain a work permit on the basis of a certification by their employer’s accountant that they are employed on terms and conditions which are not inferior to those of nationals. Furthermore, the employer will need to pay a permitting or licensing fee for the work permit of the foreigner. By doing so we make the foreigner marginally more expensive than a South African, which is the indication which can satisfy both government and trade unions that there is a special need to employ such foreigner which cannot be easily and readily filled by a South African. This special fee is collected and transferred to the national training fund and used to train our nationals, so that we can maintain a necessary connection between the employment of foreigners and the training of our nationals, albeit not in respect of each situation, but rather at the macro level.
However, through the complex negotiations which led to the final formulation of the Immigration Bill now before Parliament, even this relatively small obstacle placed on the employer’s discretion in hiring foreigners is subject to six categories of exceptions where it does not apply. Among such exceptions this licensing fee will not apply when it is so requested by the Department of Trade and Industry in respect of foreign investments or industries in which such fee may create an undesirable economic impact. It will also not apply in respect of inter-company transfers, which is quite important for foreign companies, and in respect of foreigners with exceptional skills and qualifications, and those belonging to certain categories which, from time to time, the Immigration Board may identify as being people needed in the country whether they have a job offer or not. The flexibility of this system is enhanced by the provision enabling large private entities wishing to do so to issue work permits on the basis of a delegation from government and under our control.
The easier access to South Africa for foreigners will not extend only to temporary work permits, but also to permanent residence permits which will be able to be acquired on a broad range of grounds. Perhaps the most common ground will be the acquisition by right after a foreigner has worked in South Africa on a temporary basis for five years. Other grounds will include a permanent job offer or investments in the country. We are also making provision for special permits for retired persons, either as permanent residents or as snowbirds. The new immigration legislation will introduce greater mobility and flexibility in our labour markets, but will not undermine our social policies and labour standards. For instance it will not be possible to use foreigners to undercut general conditions of employment or to fill the quotas of black nationals required by our affirmative action legislation.
In the new system of migration control, employers will be able to determine for how long they wish to employ foreigners and can do so for as long as they provide information to Home Affairs and pay their nominal but periodic licensing fee. This simplified system will replace the various mechanisms employed throughout the world to determine which foreigners may work in a country and to assess whether their contribution is really needed, such as quotas, labour certifications, point systems and qualified employer’s sponsorship. By simplifying the issuance of permits we will be able to accomplish several results. Once all the relevant required information is provided, permits will be issued in a matter of days rather than months, as government will no longer need to make any evaluation or assessment. Furthermore, by simplifying permit procedures, we will be able to shift our scarce administrative capacity from permitting to law enforcement.
The new system of migration control will be less concerned about creating hindrances to people entering the country but more concerned about keeping track of them and their activities. In the past, we have been excessively harsh on those who were within the system and often impotent in respect of those outside the system. The new system will make it easier for foreigners to obtain work permits but more difficult for them to work in the country illegally. To borrow an expression made famous by my colleague the Canadian Minister of Immigration, it is our intention to open the front door of immigration while shutting the back door. Accordingly, our system of migration control will develop the capacity to inspect work-places and other venues where foreigners illegally in the country are likely to be found or conduct their activities. This will be an important step in furthering the transformation of South Africa into a normalised society under the control of the law.
Migration control is a challenge across the world and affects both developed and developing countries. In South Africa this challenge is particularly pressing as we seem to have to confront problems which are typical of a developed country often having only the resources of a developing country. However, I am pleased that we have finally crossed over the threshold of realising that migration control not only presents problems and difficulties, but first and foremost offers great opportunities to improve on the overall economic and social make-up of our country, enriching South Africa while boosting our economic growth.
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