Outside southern Africa little attention has been given to the lively debates, particularly within South Africa, about migration, economic integration, racism/xenophobia and exclusion. After the collapse of apartheid the Southern African Development Community (sadc) developed initiatives on regional co-operation on population movement in a far-reaching 1995 Draft Protocol on Free Movement. However, the post-apartheid South African state was concerned solely with free trade and, with the support of other regional players, managed to halt the Protocol. The processes of neoliberal regional integration, socioeconomic transformations, poverty and inequality, as well as the political turmoil in countries of the sub-Saharan region, have resulted in growth of migration to South Africa. The post-apartheid regime has made full use of the ancien regime's authoritarian legal migration instruments, while migrant workers from neighbouring countries, many undocumented, are exploited by employers, repressed by the police and immigration authorities and treated with suspicion. This paper focuses on the processes of localised and globalised racialisation of migrant workers in South Africa, which have allowed it to treat the question of free movement, migration and integration more or less in the image of Europe. The ‘rainbow nation’ seems to be racialising and excluding the ‘xenos’ based on the apartheid legacy's treatment of migrant black labour. Moreover, the myth of the ‘weak state’ serves to cover up the power of capital, which is benefiting from the drive to informalisation and the irregular/undeclared work of undocumented workers. Trade unions have failed to organise migrant workers, initially reacting defensively, but now increasingly recognising that migrant workers must be incorporated in the movement and their rights defended for the benefit of all workers. If trade unions look at the European and US experience they will find similar dilemmas but also strategies for incorporation in the unions. Finally the paper looks at future challenges beyond racialisation and xenophobia.