ATM President Vuyo Zungula.
Image: Oupa Mokoena | Independent Newspapers
THE campaign to criminalise South African employers who hire undocumented foreign workers, championed most visibly by ATM President Vuyo Zungula, proves, and I say this with the utmost respect, why politicians should not be entrusted with economic decisions, and here is why.
There is a deeply troubling spectacle unfolding in South Africa’s political discourse, and it has found its most vivid expression in the parliamentary “interventions” of the ATM President.
From the security of a seat in the National Assembly, drawing a salary funded by the very taxpayers and business owners he now aggressively targets, Zungula has made it his mission to demand that employers who hire undocumented foreign nationals be charged with criminal offences.
His latest effort, a parliamentary question to Home Affairs Minister Leon Schreiber, extracted figures that on the surface appear to validate his crusade: Over the past five financial years, 8 180 employers have been charged for hiring undocumented foreign nationals, 6 279 workplace inspections have been conducted, and 109 735 undocumented foreign nationals have been arrested and deported.
This is precisely the diagnosis that political analyst Moeletsi Mbeki, chairperson of the South African Institute of International Affairs, has now placed squarely before the country.
Speaking on May 28, Mbeki cut through the populist noise that politicians like Zungula have generated, arguing that South Africa’s migration crisis is driven not by an open-door policy but by state incompetence.
His intervention reframes the entire debate in terms that the political class has assiduously avoided and this is the pragmatist framework the country has been missing. A framework that forces the discussion away from the scapegoating theatrics of Parliament and toward the structural policies that have produced capital flight, an investment strike, and the deep structural unemployment now entrenched in the economy.
To criminalise 8 180 employers while the economy haemorrhages capital and formal employment collapses is the highest form of populism. South Africa's official unemployment rate currently stands at a catastrophic 32.7%, with the expanded definition, which includes those who have abandoned the search for work, reaching a staggering 43.7%.
The first quarter of 2026 alone witnessed the disappearance of 345 000 jobs. Meanwhile, foreign direct investment inflows have imploded, collapsing from R73.5 billion in the second quarter of 2025 to a mere R21bn in the third quarter, a decline of over 70% in a single quarter.
What is clear is that Capital is not simply on strike; it is in active flight, relocating to jurisdictions where the regulatory environment is less hostile to enterprise.
The fundamental question that Zungula refuses to confront is: Why does the demand for undocumented labour exist so stubbornly, so pervasively, and with such resilience despite decades of enforcement attempts?
The answer is not a vast criminal conspiracy of South African entrepreneurs who prefer breaking the law for its own sake but is embedded in the cruel implementation of a regulatory framework that has made legal entry-level employment economically unviable for millions of small businesses and households.
The national minimum wage, increased by 5% to R30.23 per hour as of March 2026, has long since detached itself from the productivity of the least-skilled workers. For a small construction contractor, for a fledgling restaurant operating on razor-thin margins, or for a domestic household teetering just above the poverty line, this mandated wage is not a policy that protects workers; it is an impediment that prevents any employment relationship from legally existing.
The undocumented worker, who is desperate for any income and cannot afford to insist on the legal minimum, becomes not a preferred choice but an economic lifeline, for the employer struggling to survive and for a working class household that is a cheque away from poverty but needs a domestic worker to look after their children so as to work.
China's economic transformation offers the most powerful real-world rebuttal to the redistributive-first logic that has paralysed South Africa yet easily adopted by political actors.
Between 1952 and 1986, China deliberately kept wages low and relatively compressed to facilitate capital accumulation and industrial expansion. This was not a moral endorsement of poverty wages; it was a strategic recognition that a poor country cannot mandate prosperity into existence.
Value must first be created before it can be shared. China only introduced its first minimum wage law in 1994, long after the economic take-off was firmly established, and even then, regional flexibility was maintained to reflect vastly different productivity levels across provinces.
Crucially, this was not accomplished by imposing wage mandates on a fragile economy and then prosecuting those who could not comply. It was achieved by integrating people into productive activity at whatever level the market could sustain and then allowing wages to rise organically as productivity climbed.
Average real wages in China grew from approximately 12 459 yuan in 2015 to over 24 555 yuan by 2025, with increases tied explicitly to output, not to political decree.
Yet South Africa has stubbornly implemented the opposite sequence, and the consequences are now dire. We adopted what are arguably the world's most progressive labour protections without first building an economy capable of sustaining them.
The national minimum wage now operates as a barrier that protects a shrinking circle of formal-sector workers while permanently excluding millions of unskilled outsiders. When the legislated price of labour exceeds the economic value a worker can generate, employers do not simply absorb the difference as an act of charity.
They mechanise, automate, restructure, or retreat into the informal shadows, precisely the behaviour that Zungula’s prosecutorial approach now seeks to criminalise. Farmers facing unaffordable wage bills purchase machinery.
Factories invest in automation. Small businesses close down. The very workers the minimum wage was intended to uplift are pushed into unemployment or into the undocumented economy.
The lesson from China is not that South Africa should replicate its political system, nor that labour exploitation should be tolerated. The lesson is about sequencing.
A person with no skills, no work experience, and no capital does not need a living wage as their first intervention; they need a wage, any legal wage, that allows them to enter the economy, build a work record, develop skills, and climb the productivity ladder.
By demanding that the first rung be placed at the top of the ladder, South Africa has effectively removed the ladder altogether. Zungula’s 8 180 charges are not a victory for worker protection. They are an indictment of an economic model that has criminalised the only entry point millions of marginalised citizens can access.
Until we absorb the uncomfortable sequence that China internalised decades ago, that wealth must be created before it can be redistributed, our unemployment statistics will remain a global shame, and our politicians will continue to chase scapegoats while the country burns.
Wrong economic policies such as minimum wage law do not eliminate the demand for cheap labour; they merely ensure that the labour market that meets this demand operates outside the law, vulnerable to exploitation, and perpetually at risk of becoming a flashpoint for communal violence.
A genuinely critical analysis must confront the possibility that the minimum wage, far from being an instrument of worker protection, has become a mechanism of exclusion, a form of economic violence perpetrated by the state against the very people it purports to defend.
When the cost of legally employing a person exceeds their productive output, no legal employment will exist. The worker is not protected; they are prohibited from working.
Nonetheless, the prosecutorial approach Zungula champions is seductive because it offers the illusion of decisive action without requiring any of the difficult structural reforms that genuine job creation demands.
It is far easier to scapegoat foreign nationals and the employers who hire them than it is to confront the reality that our labour legislation, however well-intentioned, has forced businesses to downsize, retrench workers, and systematically priced the least-skilled out of the formal economy.
Hence the South African labour consensus has collapsed under the weight of its own contradictions. We have the highest unemployment in the world and the most progressive labour laws. The xenophobic violence that periodically erupts is directly connected to this economic design.
When the formal sector cannot absorb labour at the mandated price, the informal sector becomes a battlefield. Citizens, themselves excluded, turn on foreign nationals who are willing to operate in the economic cracks that regulation has created.
The 8 180 employers charged, the 109 735 deportations, and the 43.7% expanded unemployment rate are not separate crises requiring separate enforcement responses.
They are a single crisis produced by economic policies that disincentivise exactly the investment needed to create the jobs that would shrink the informal sector, reduce the demand for undocumented labour, and drain the reservoir of frustration that periodically erupts into xenophobic violence.
Until the country is willing to have the conversation Mbeki is calling for, a framework led by experts, premised on policy first and politics later, we will continue to produce populists who inflict deep economic damage while insulating themselves entirely from its consequences, because the political rewards for scapegoating will always outweigh the personal cost to politicians who never have to carry the cost of employing South Africans.
* Phapano Phasha is the chairperson of The Centre for Alternative Political and Economic Thought.
** The views expressed here do not reflect those of the Sunday Independent, IOL, or Independent Media.