Labour Bills threaten to gut golden goose

Busisiwe boards train 9017 every day at 5.50am for a two-hour journey from Vereeniging to Johannesburg, where she works as a domestic cleaner. She works for me on one of these days each week. Two weeks ago, she arrived shaken. People associated with the petrol attendants’ strike boarded her train and threatened passengers with violence if they did not jump off the moving carriage. She was one of a few who escaped their threat.

Violent strikes are nothing new in South Africa. More than 180 people have died since 2000 as a result, 60 in 2006 alone. Last year, we had Marikana, the agriculture strike in the Western Cape and the truck drivers’ strike. The economy suffered R14-billion in immediate damages and 50 people died, all of them poor. Although blame has been directed in numerous ways, there have been few sincere efforts to root out the causes.

In any caring society, no potential causes would be disregarded. Yet Parliament recently approved amendments to the Labour Relations Act that remove strike balloting requirements, despite the Marikana tragedy a year earlier. This means that, despite having no voice, workers who do not want to strike may still face violent intimidation if they defy their union leaders.

The Employment Equity Amendment Bill, which received approval in principle two weeks ago, heralds numerous changes that business warns against. Businesses will no longer be able to appeal against government compliance orders, may be taken to court more quickly and more regularly for noncompliance and may be punished with heavy fines.

These punitive measures may be apt in times of transformationless growth, but the dictum that transformation needs growth appears to have been forgotten. Barely 40% of working-age adults in South Africa are employed at all, yet the government sees fit to tighten the noose around the neck of even temporary employment services.


We should recall that, although almost one in four jobs is government-related, all of those jobs are funded by revenue raised from the private sector. This revenue, and the jobs provided by the private sector, are by-products of private investors being willing to chance a buck on an opportunity in which they think they can satisfy a demand. Therefore, if we want jobs, we need to balance sensible labour protection, which already exists among a minority of less sensible provisions, with a sensible approach to attracting investors.

What would such a sensible approach take account of? Not less, but more union accountability. Not talk shops and policy declarations, but real movement on key policy issues.

The government miscalculates that the dynamic in public and private-sector unions is the same. Public-sector unions benefit from politically determined wage settlements and 11th-hour concessions of the nature we saw recently in the labour relations and employment equity amendments in Parliament. Unsustainable or not, their payrolls do not shrink, they grow.

In the private sector, labour has become disaggregated. It has fundamentally lost trust in traditional union management and frameworks, jostling in the tripartite alliance and wage bargaining structures that don’t relate to workers’ conditions. Service delivery issues, housing and social support are key concerns. In the private sector, payrolls are shrinking and concern is growing that the policy inertia the government has lulled itself into will outlast the time frames investors are willing to endure to realise the profits they could otherwise have made more easily elsewhere.

What would the effect of the recent amendments be? The risks for investors have become higher. As the R20-billion shutdown in the automotive sector illustrated, big business will be pressed into rerouting investment decisions to competing subsidiaries elsewhere. Automotive manufacturers are now saying that, despite the massive incentives provided by the South African taxpayer, labour hostility is decimating the benefits.

This is an example that the treasury should take note of as it advances its Employment Incentives Bill, which is the next big employment Bill to be finalised. It wants to make youth labour more affordable for employers to improve the prospects of them getting jobs. 

Though a positive step, these proposals are not unproblematic, for they won’t promote growth, and they want to provide approved state entities and companies invested in government’s special economic zones with additional benefits, therefore disadvantaging proven players. Any positive impact the incentives may have could be undermined by the tightened regulations in the preceding Bills. Let's unpack how.

As the barriers to striking and the accountability of union leadership remain low they, along with high wage settlements in the government, will mean centralised bargaining structures will keep pushing wages way beyond productivity gains. In addition, stricter term limits for temporary employment will make it more difficult to employ, especially for smaller businesses, which are not party to wage settlements. These provisions in effect make the idea of small business as the engine of job creation a nonstarter.

Businesses do not work with budgets that must be spent and that automatically get replenished every year. The worst-case scenario for low productivity and high vacancy rates is not redeployment, but bankruptcy. Lack of recourse and heavy fines with regard to employment equity provisions assume that every business enjoys the same set of available options to achieve demographic representation, and that public-servant adjudicators know when business impediments are valid or not. The truth is the opposite.

Employment equity may, therefore, remain the same for businesses with many opportunities to comply and government may profit off those who can afford the penalties, but it will simply kill off business and employment growth where demographic representivity is less attainable.

For the foreseeable future, our labour regime will not provide employers, poor workers or the unemployed with much joy. It will also not inspire much action from the government.

But there is light at the end of the tunnel, for the increasing divide between public and private-sector Cosatu affiliates is opening up ever greater opportunities for realignment in the labour space.

If more constructive industry-labour partnerships with less government intervention emerge as a result, such as we have seen in Brazil and some of our other competitors, people like Busisiwe may look forward to a more peaceful and better quality life.

Coenraad Bezuidenhout is the executive director of Manufacturing Circle

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Coenraad Bezuidenhout
Coenraad Bezuidenhout works from Johannesburg, South Africa. C-suite advisor on public policy, corporate relations and political projects across Africa. Tweeting in private capacity. Coenraad Bezuidenhout has over 547 followers on Twitter.

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