SA falls down in ranking of Economic Freedom of the World Report
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THE FREE MARKET Foundation (FMF) has urged the government to relax its labour policies in a bid to ease trade, boost economic activity and create much-needed employment. This comes as South Africa slipped down the rankings of the Economic Freedom of the World: 2021 Annual Report, falling into 84th position out of 165 countries.
The report measures economic freedom – levels of personal choice, ability to enter markets, security of privately owned property, rule of law – by analysing the policies and institutions of 165 countries and territories.
South Africa’s scores in key components of economic freedom were the size of government, legal system and property rights, access to sound money, freedom to trade internationally, and regulation of credit, labour and business. The report was released by the FMF in conjunction with Canada’s Fraser Institute yesterday, but was based on 2019 data, the most recent comparable data.
FMF director Eustace Davies said other countries, such as Bulgaria, had improved their rank on the index, kept taxes low, reduced inflation, and improved foreign trade conditions, resulting in increased average income per capita.
“By contrast, South Africa has adopted laws and regulations such as minimum wage laws and hiring and firing laws that have caused the country to have one of the highest unemployment rates in the world,” Davies said.
“Applying a good dose of economic freedom to the problem would be the quickest and best way to resolve the matter and allow the unfortunate victims to get jobs.”
South Africa’s unemployment rate surged to the highest on a global list of 82 countries monitored by Bloomberg. The jobless rate rose to 34.4 percent in the second quarter from 32.6 percent in the three months through March, Statistics SA said last month.
Economic freedom is described as the difference between poverty and prosperity; between First and Third World living standards and lifestyle; good and deficient healthcare; quality and inferior education; long lifespan and premature death, etc.
The study shows that economic freedom enhances income mobility while the poor in unfree nations have fewer opportunities to escape poverty and build prosperity.
FMF’s head of legal systems and property rights, Rex van Schalkwyk, said South Africa’s lack of economic freedom must be addressed. He said South Africa was a world leader in unemployment, with terrible labour regulations, threats of property rights, corruption, bad leadership and needed liberalisation across the board. “We need a clean administration to solve the endemic corruption in government. Collectively, we need to ensure that people get the services they deserve and pay for.”
Hong Kong and Singapore again top the index, continuing their streak as first and second, respectively.
New Zealand, Switzerland, Georgia, the US, Ireland, Lithuania, Australia, and Denmark round out the top 10.
The 10 lowest-rated countries were the Central African Republic, Democratic Republic of Congo, Syria, Republic of Congo, Iran, Zimbabwe, Algeria, Libya, Sudan and Venezuela.
Countries such as North Korea and Cuba cannot be ranked due to lack of data.