In December 2017 we celebrate the coming of age of the Labour Relations Act. The Labour Relations Act turns twenty one this year and was supposed to be given the key to job creation as we enter into the next phase of our economic development. Sadly, this has not come to pass. Very tragically we already have 9.8 million people unemployed and this is destined to grow to over ten million with the advent of a National Minimum Wage.
Unfortunately, with our new democracy going over board to try and protect employee’s rights we have “thrown the baby out with the bath water”. The government and the trade union movement have been hell bent on the concept of the creation of DECENT jobs. What has not been properly looked at is the unemployed and the incentive to create jobs. It is the small business community who have suffered most and who have not had the benefit of large human resource departments and a phalanx of lawyers to advise them.
Over and above this, we have had various ups and downs in the world economy and industries such as manufacturing have thrived in deregulated jurisdictions. Our Labour Relations Act has been amended on a few occasions during these twenty one years creating more and more onerous and harsh regulations. We have seen from the business community that firstly they went on an investment strike whereby small businesses have rather invested in other jurisdictions other than their own business. We have also seen businesses outsourcing to other jurisdictions and in particular businesses have done everything they can to mechanise, industrialise and computerise. These developments have created jobless growth and even those investing in South Africa have put up factory and distribution centres completely controlled by machinery and computers.
The Department of Labour itself has failed in that both the desperately needed Workmen’s Compensation and Unemployment Insurance Fund are not serving the public properly. The Workmen’s Compensation Fund has had almost twenty years of abject failure and many cases are anything up to a decade old. Although the new Commissioner is trying his utmost to give the service delivery required of him he is at the moment fighting a losing battle. The Commissioner has clearly stated that he is trying to marry his two computer systems so as to ensure a quick turn around time but we haven’t seen much evidence of that as yet. The unemployment insurance fund still has long queues, lost paper work, bad service and impossible online applications. The public are hopping mad at the non-delivery and it appears that this is still going to take many years before it can be sorted out.
Luckily, and with a lot of hard work, the CCMA (Commission for Conciliation Mediation and Arbitration) has been a glowing success. The CCMA has a quick turnaround time, is able to keep track of all their cases and to a large degree is keeping industrial peace.
The real disaster is the unemployment which permeates the entire economy. This unemployment has created higher crime rates, more drug taking and alcoholism and less family responsibility.
Disastrously the Department of Labour is supporting the advent of a National Minimum Wage which is said to be beneficial to staff but the Treasury have told us that we could lose a further seven hundred and fifty thousand jobs on top of the ten million unemployed at that stage.
There is some good news in that Nedlac have agreed to have legislation in place which could stop disastrous strikes. The Ministry may intervene if a strike is set to be non-productive or negative to an actual industry. If the strike gets violent the Minister of Labour is able to step in and declare the strike unlawful. Over and above this the legislation will also only allow picketing if picketing rules have been agreed and registered. It also looks like we are going to get secret balloting before a strike can take place. South Africa has had some horrific strikes over the past twenty one years and we will all recall the disastrous strike on the platinum belt which lead to the murder of many of the strikers.
We all know that the world is a smaller place today and manufactured goods can be sent around the world within days. Some jurisdictions are able to manufacture goods much cheaper than other jurisdictions because of the lack of labour oversight. We have to compete with these jurisdictions and unfortunately our markets are being flooded with items such as cheap clothing and electronic goods. Under no circumstances can we compete with those foreign jurisdictions when they have government support and cheap labour. This in turn means that our manufacturing sector is slowly dying. Once the manufacturing sector dies it takes the backbone out of our economy.
Over and above this mining which used to be the mainstay of our economy is being politically attacked and the business community has reacted by investing less and less in mines. This means that we lose enormous chunks of labour on a daily basis.
The most destructive piece of legislation in the last year has been Section 198A(3) of The Labour Relations Act. The Labour Appeal Court has ruled that temporary employment services employees automatically become the sole employees of the client after having been placed at the client for a period in excess of three months (subject to certain exceptions). The CCMA has followed suit with this judgment and the attack on temporary employment services has been disastrous. Our Director General of the Department of Labour has said that the majority of new jobs being created are short term jobs and are jobs from temporary employment services. If these jobs become fragile they will certainly lose out on job creation in the future. The way of the world is for people to be moved from factory to factory and from office to office. The TES employees are almost two million employees in South Africa and if we lose this we will face disastrous consequences. The deeming provision in terms of Section 198A of the Labour Relations Act in our opinion has been wrongly interpreted and certainly has already begun to backfire on our economy.
We expect to hear from the Constitutional Court in the first quarter of 2019 and hopefully this will put the power back into the hands of the temporary employment service.
The Deputy President has said on more than one occasion that he wants the minimum wage to be introduced on the 1st May 2018. We do not believe that functionally this will happen and we believe that there will be more squabbles and administrative problems during 2018 pushing the National Minimum Wage to be passed only in early 2019. It is imperative for the government to try and pass the minimum wage before the 2019 elections in order to try and secure some votes to be able to obtain a 50% plus one majority. It is our belief that this minimum wage will create more problems than is necessary. The opposition have argued that they agree with a national minimum wage on a sectoral basis in order to make it palatable to particular industries.
We are still struggling with affirmative action and this has unfortunately led to wealth creation within a small sector of the business community. The affirmative action legislation has not in any way created a sustainable black middle class which is so desperately needed.