Employment and Labour Minister Thulas Nxesi. (Delwyn Verasamy/M&G)
The changing nature of work requires a review of South Africa’s labour protection system, especially as many in the labour force fall outside the traditional definition of an employee, according to Minister of Employment and Labour Thulas Nxesi.
Nxesi was speaking during the second day of a conference organised by the University of the Witwatersrand’s Centre for Researching Education and Labour, which discussed how to support inclusive employment amid a number of disruptions to the labour market.
The minister noted that the Covid-19 pandemic had demonstrated how many workers were excluded from the traditional mechanisms to protect the labour force — like the Unemployment Insurance Fund. During the health crisis, the fund helped protect the jobs of millions of workers through the temporary employee/employer relief scheme.
The pandemic, Nxesi said, exposed that South Africa’s social protection system was inadequate. UIF funding, he said, “applies only to employees as classically defined”.
“Left outside the net were the informal sector and precarious workers in the gig economy, who would be defined as self-employed,” Nxesi said.
“Clearly,” he added, “changes in the world of work challenge traditional notions of work as a physical place where employer and employees meet to do battle over the proceeds of production.
“The repercussions call for a review of our systems of social protection, for the regulation of health and safety in the workplace and probably for aspects of collective bargaining in general.”
Until recently, domestic workers were excluded from the Compensation for Occupational Injuries and Diseases Act. The legislation allows for the compensation of workers or their survivors for work-related injuries, illnesses and deaths. Towards the end of 2020, the constitutional court ruled that the act was invalid because it excluded domestic workers from the definition of “employee”.
Nxesi noted that a number of workers no longer have a traditional employer-employee relationship, giving the example of food delivery drivers who work for multinationals, such as Uber, but have no access to the higher-ups in these companies.
Social partners at the National Economic Development and Labour Council are seized with these issues, the minister said.
According to the latest data from Statistics South Africa, there are 2.8 million workers in the informal sector.
During the first months of the pandemic, the number of informal sector workers immediately declined from 2.9 million in the first quarter of 2020 to 2.2 million the following quarter — presumably as a result of the lockdown, which stringently enforced restrictions on movement and non-essential economic activity.
There are still 100 000 fewer workers in the informal sector, as South Africa’s labour force struggles to recover from Covid-19’s economic onslaught.
The country’s stubbornly high unemployment rate retreated slightly in the first quarter of this year to 34.5%. But analysts say bringing that number down significantly will take years.
In a recent discussion with the Mail & Guardian, Haroon Bhorat, professor of economics and director of the Development Policy Research Unit at the University of Cape Town, said South Africa’s low rate of informality is at the heart of the country’s unemployment crisis.
“The reason we have very high rates of unemployment is not principally due to the standard constraints on economic growth, which we regularly consider in policy debates, but rather due to the fact that we have a very low proportion of the labour force in the informal sector.
“South Africa’s rate of informality is one of the lowest in a sample of comparator economies.”
For this reason, reducing the barriers to entry into the informal sector would dramatically reduce the unemployment rate, Bhorat said.
Policy interventions to boost employment, in both the formal and informal sectors, would take time.
“You have to at least not discourage labour-intensive economic growth because that is going to give you larger numbers of formal-sector employment, which is very important to structurally transform the economy,” Bhorat said.
“But, in the interim — while you try and do that, and encourage investment, keep the exchange rate stable and lower interest rates and create incentives and so on — you better make sure you’re not you’re not dissuading, or violently discouraging, the vulnerable from finding some piece of the economic pie through the informal sector.
“We are clearly not thinking creatively about encouraging the informal sector in South Africa. Growing the informal sector is the closest we have to a magic bullet to reducing our unemployment rates.”
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