Why is it bad that another worker, if they so wish, can undercut an established worker by being paid less?
The labour department’s attempt to delete three words, buried deep in employment-equity legislation, has hurtled the debate over labour laws on to centre stage.
The words in question, “national and regional”, sound innocuous enough, but are of profound significance. They appear in section 42(a)(i) of the Employment Equity Act and are deleted from the corresponding section of the Amendment Bill, one of the four pieces of draft labour legislation gazetted in December.
The deletion sparked a research study that led to a Sunday newspaper article. That in turn set the proverbial ball rolling. The context of the words is as follows: section 42 of the Employment Equity Act deals with benchmarking for employment equity, in effect, the set of criteria used to judge whether a company is compliant with black economic empowerment quotas.
The legislation words it thus: “The extent to which suitably qualified people from and amongst the different designated [race] groups are equitably represented within each occupational category and level in [an] employer’s workforce.”
Currently, regional demographic criteria are one of the ways of assessing a company’s compliance. The removal of any reference to regional demographics leaves the section referring to “the demographic profile of the economically active population”, that is, the economically active population countrywide.
The problem with this is as follows: by benchmarking against national rather than regional demographics, the Employment Equity Amendment Bill will require employers to scale back their employment of any race group that is highly concentrated in their region to meet revised employment equity targets that are linked to national demographics.
In practical terms this means that an employer in the Western Cape or Northern Cape will now be expected to show the labour department that it is scaling back on coloured employees and a firm in KwaZulu-Natal will need to show it is reducing its number of Indian employees. Likewise, a company based in Limpopo, Gauteng or Mpumalanga will need to show it is reducing its back on black employees and hiring whites, Indians and coloureds.
This is centralised planning on a grand scale. It places existing jobs in jeopardy and it will stifle the creation of new ones. In early January my colleague, MP George Boinamo, and I pointed out that the removal of this clause could create significant problems.
We said in our discussion document on this legislation that a one-size-fits-all approach would discriminate against particular race groups that happen to be more densely populated in particular provinces and discriminate in favour of groups that happened to be “under-represented”.
What is particularly peculiar about the timing of the labour department’s proposals is the fact that the ANC has been campaigning vehemently for the idea that it cares about coloured people in the Western Cape. Here is a proposal that will mindlessly discriminate against coloured people in the province, for no reason other than that they are “over-represented” in the province, according to some arbitrary ANC racial -standard.
The various responses came thick and fast. Initially, a labour department spokesperson claimed on a national news website that coloured South Africans had nothing to worry about because they were “under-represented in management positions in businesses and this is what the changes to the Act plans to address”. That line was dumped as soon as we pointed out that section 42 deals with all employees of a company, not just management.
Then Cosatu tried a slightly different tack. It said the “amendment was ambiguously drafted, since no intention to delete [the] ‘regional or provincial’ [clause] or to change this clause has ever been moved or even suggested by government ministers or officials in discussions around amendments to the labour laws”.
In other words, it claimed that the amendment was some sort of accident. That is quite difficult to believe, given that the Bill explicitly removes the section. It was not just accidentally omitted, it is bracketed out, as is the convention when drafters of legislation want to delete something from an existing Act.
Then the ANC, quite egregiously, switched to accusing us of politicking along racial lines. Quite how that argument works isn’t clear, because our concern is with job losses and arbitrary discrimination.
Finally, the ANC in the Western Cape at last admitted that there may be a problem with the proposed law, saying it was “urgently prepar[ing] a submission to the office of ANC secretary general Gwede Mantashe”. However the issue of the demographic criteria plays out, it is certainly not the last of the problems with this legislation.
In fact, the most problematic aspect of the proposed new legislation is found elsewhere — in the Bill’s outlawing of labour broking. Whereas hundreds of thousands of jobs are at risk as a result of tinkering with demographics, about two million may be affected by a ban on the labour-broking industry. This, indeed, is what the department’s own regulatory impact assessment suggests.
Labour broking has become a particularly thorny issue, but it should not be. Cosatu often calls labour-brokered jobs a form of slavery because it says workers are unable to gain access to the sort of labour rights they would as -permanent workers. The slavery reference aside, it is right: a labour-brokered job does not provide the same set of employment conditions and safeties that is engendered by an offer of permanent employment.
But in a country where one in three is unemployed and in which extended public-works jobs — really the closest thing to slavery — are perpetually mooted as the antidote to our jobs crisis, it is difficult to entertain calls to shut down a R3.4-billion industry simply on the basis that certain benefits of permanent employment are unavailable.
If research shows temporary jobs will not be replaced by permanent ones should labour broking be banned, then we can’t afford to extend our unemployment crisis further. We believe that temporary employment services — labour broking — requires certain reform and that reform should include a self-regulatory board that would enforce a strict code of conduct among the role-players in the industry.
Under this system, legitimate players would have an incentive to stamp out those brokers who exploit workers as they would place the industry at risk and take away business. The broader point is this: if we are to enhance our labour laws in a way that protects workers and advances job opportunities, then we need a process that engages with all stakeholders and that embraces the economic evidence available to us, rather than eschewing it.
Banning labour broking is a drastic step, taken by the ANC to appease an alliance partner rather than as a result of careful economic consideration. Likewise, summarily removing three lines from the Employment Equity Act on demographic representivity has the potential to have an impact on hundreds of thousands of jobs.
We need to be smarter in how we go about legislating and we need to start acting in the interests of all South Africans, rather than the narrow interests of particular lobby groups. The alternative is an unemployment crisis for decades to come.
Ian Ollis is a Democratic Alliance MP in the National Assembly