Unshackling licensed professions would create jobs

'Licensing doesn’t stop bad behaviour (speak to the chartered accountants at KPMG or Steinhoff to see how little protection is actually built into the licensing process)' (Delwyn Verasamy)

'Licensing doesn’t stop bad behaviour (speak to the chartered accountants at KPMG or Steinhoff to see how little protection is actually built into the licensing process)' (Delwyn Verasamy)

COMMENT

Licensing, permits, certification and just about anything else that restricts supply has the effect of raising prices. In some cases, this is a fair trade-off. We are happy to pay the premium for a properly certified surgeon rather than for a properly certified bricklayer, because we attach greater value to the skills of the surgeon.

One of the things happening at a dentist’s practice is cleaning teeth, often performed by an oral hygienist. The hygienist is usually forced to ply his or her trade inside the dentist’s office. The effect is that you pay a dentist’s rates for having your teeth cleaned, whether this cleaning is done by the dentist or the hygienist.

Dr Russ Roberts of Stanford University proposes that oral hygienists have shops offering teeth-cleaning services inside malls, an idea that could create many jobs and improve the oral health of South Africans.

According to Payscale.com, an oral hygienist can expect to earn about R189 000 a year, and a dentist will earn closer to R425 000 a year.

If we unbundled the hygienist from the dentist’s office, we would reasonably expect a fairly steep discount for teeth cleaning — certainly something that would allow the entrepreneurial oral hygienist to earn more than they currently do, and also allow the consumer access to an important service at a lower price. (The dentist, who currently earns the salary difference between the two professions as profit, may be less enthusiastic.)

I really like this idea of unbundling licensed professions to get to the nub of the skill that actually requires oversight or control. All the other activities that require lower skill levels under the umbrella of the industry should then be exempted from licensing or have lower licensing requirements.

In fact, it would make sense for any job to start off as unlicensed and only require certification by exception.

Certification is meant to serve in some way as an indicator that a person is skilled to a certain level in a particular field, but it also presumes the field is filled with jobs requiring only that high level of competence. This is almost never the case.

How many new clinics would pop up if we allowed nurses to deal with a far greater number of medical issues not requiring a doctor’s specific skill set? Do lawyers really need to handle home property transfers or lodge your Road Accident Fund claim? The very significant premium charged for these secondary services appears simply to be a form of rent seeking dressed up as quality assurance.

By restricting the supply of service providers in a given market, we don’t only inflate the cost of the service, we also restrict the ability of that profession to absorb jobs. Our universities are already unable to cope with the influx of new aspirant students each year.

Although we have been focused on the #FeesMustFall movement, we forget that most kids leaving school with matric will not get into university, even if it were 100% free. And those who do get in? Many will never graduate. At the moment, and for the foreseeable future, this is how it is.

Why can someone not do a six- or 12-month course in property transfer and then set up shop as a conveyancer? Will there still be a role for specialised property lawyers? Of course, but I would guess most property transfers require no such skill, and I would also guess that, right now, these transfers are not actually being executed by lawyers.

To be clear, I am not saying that by using an unlicensed person the work of conveyancing is regarded as unskilled or uncomplicated — merely that you don’t need a lawyer to do the work 90% of the time.

South Africa needs to make it easier for people to generate an income. Licensing professions inappropriately appears to be an impediment to this. I don’t think it’s a good idea for a taxi driver to also fly a plane but let’s look more critically at professions that are licensed and ask what parts really require certification.

If we were to allow teeth cleaning as an unlicensed service, would someone go rogue and offer both car cleaning and teeth cleaning as a bundled service, using the same staff and even the same equipment? Maybe. But consumers are not stupid and can distinguish between good and bad experiences. Licensing doesn’t stop bad behaviour (speak to the chartered accountants at KPMG or Steinhoff to see how little protection is actually built into the licensing process).

Opening licensed markets to less regulation would yield a net good for South Africa. And we can all do with a little more net good right now.

Donald MacKay is a director of XA  International Trade Advisers and Stratalyze

Donald MacKay

Donald MacKay

Donald MacKay likes to see the world and eat unusual things. To fund this lifestyle, he established XA International Trade Advisors, which advises companies about complex international trade issues. Donald also established Stratalyze, an international trade analytics company. He listens to a lot of music, reads obsessively and cooks – eggs are a specialty. Read more from Donald MacKay

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