Frans Rautenbach argues that the new Labour Relations Bill should be scrapped
THE problem with the Labour Relations Bill is that, in the best possible scenario, such a system would be a disaster for the South African economy, growth, jobs, the Reconstruction and Development Programme and everything that goes with it.
The Bill is largely based on an adjusted version of the German model. Briefly, both systems provide for:
* The encouragement of centralised regional and sectional collective bargaining. This includes the power of the state to extend collective agreements to non-participating, non-consenting parties.
* The right to strike on matters of collective bargaining, free from dismissal.
* Legal protection of trade unions.
* Compulsory conciliation and, failing that, arbitration mechanisms.
* Workplace forums.
One major difference is that Germany has a largely homogenous society in terms of educational levels and cultural values, such as respect for authority, agreement, and co-operation — all qualities South Africa lacks, with its rolling mass action, high crime rates, school boycotts, hostage dramas and road blocks.
In other words South Africa comes out of the starting blocks at a huge disadvantage, given a proposed system that depends for its success (such as it may be) on a disciplined pursuit of co-operation.
In any case, how successful is the German system?
Between 1970 and now German unemployment has climbed from 200 000 to six million (one million to two million of that being from East Germany). German labour productivity and unit labour costs lag behind those of America and the Far East.
True, Germany has few strikes. But so what? The United States has more, but it also has more growth, more jobs and better productivity.
Why is this? In a nutshell, any system that makes it more expensive to employ people, must expect to have fewer employed people.
The German system of centralised bargaining coupled with the huge legal strike threat leads to one of two outcomes: more strikes or greater concessions being made by employers in order to buy labour peace. The latter has mostly happened in Germany. This is nowhere better illustrated than in the recent metal strike in that country.
German metal union IG Metall went on strike in Bavaria. When they threatened to take the strike countrywide employers started making concessions. Eventually a nationwide strike was warded off by a series of compromises, including pay hikes and a shorter work week, resulting in an effective wage increase of 10 percent being phased in over a year. That effectively wiped out the increase in productivity that German manufacturers had achieved over the past year.
Results like that unfortunately matter because, by failing to reduce unit labour costs while more competitive countries like the US, Hong Kong, Taiwan and Singapore manage to do so, Germany has weakened its position as a global competitor. It just falls further and further behind in the race. The price paid can be seen in the unemployment figures.
South Africa is much weaker than Germany in terms of education and skills levels, co-operation and
The new system is hailed as being “flexible”, presumably more so than its now discredited predecessor. What on earth are the commentators who say this talking about? One can only assume they have not read the Bill.
The proposed system of centralised bargaining makes provision for exemptions based on hardship, so does the present system. Strike protection is, if anything, more extensive under the new system and trade union protection will undoubtedly be beefed up. The system of workplace forums introduces no flexibility. On the contrary, employers have to consult, and must reach agreement on, various lists of operational topics before any such decision may be implemented; a dispute about any such matter must be referred to conciliation and that failing, to an arbitrator; the arbitrator (a third party civil servant) will then decide on commercial matters about which the parties themselves should have decided in the first place. What is flexible about that?
The system is, sadly, even more legalistic than its
South African unemployment stands at an effective 33 percent, excluding the informal sector. The present growth rate of some three percent is hardly enough to absorb the growth in the population of some 2,5 percent.
Because South African exports remain uncompetitive, and will as long as we follow a labour system that will at best have the kind of effects that the German system had on its competitiveness, our balance of payments will remain under threat.
Whenever the South African economy “heats up”, the amount of imports will exceed the amount of exports. As seems now imminent, sooner or later that leads to increased interest rates, which does nothing for the export performance of the country, but dampens domestic demand.
In short, before long, our fragile three percent boom will turn into a zero percent bust or worse. And up goes our unemployment.
That is the reality of the new Labour Relations Bill. A compromise around its terms simply won’t do. We need to go back to the drawing board.
Frans Rautenbach is a labour consultant and author of two books which argue for deregulation of industrial