Walkout at Nedlac about proposed changes to labour legislation
CONTROVERSIAL AMENDMENTS proposed to South Africa’s labour Bills have been put on ice. Finweek can reveal that follows an unprecedented walkout by organised business, represented on the National Economic Development and Labour Council (Nedlac), where consensus has to be reached between Government, labour and business before any Bills are referred to Parliament. Furthermore, the agreement – struck to get business back into the Nedlac talks – is likely to become one of the keenest tests yet for the ANCled Government, which is going to have to make some stark choices between labour market regulations that stimulate employment and keeping ANC labour alliance partner Cosatu placated.
Business Unity South Africa (Busa) confirmed organised business represented on Nedlac dug its heels in over a suite of four labour amendment Bills that represent the first major legislative intervention of President Jacob Zuma’s term. Three of the four Bills propose changes to existing labour laws: the Labour Relations Act (LRA), the Basic Conditions of Employment Act (BCEA) and the Employment Equity (EE) Act. The fourth labour Bill, the Employment Services Bill, is new.
Busa’s Vikashnee Harbhajan says business refused to engage in a line-by-line discussion of the Bills (as required by the Nedlac process) because they weren’t only fundamentally flawed and poorly drafted but business also believed they had the potential to achieve exactly the opposite of Government’s intention to attract investment, grow SA’s economy and escalate job creation (see box).
Business returned to Nedlac negotiations after all parties agreed that instead of focusing discussions on the Bills, several labour policy themes would be chosen and used as terms of reference for taking discussions forward. While the policy themes include atypical employment, collective bargaining, dispute resolution and access to employment, the talks will now also include the initial discussion documents Government tabled in 2009, when it first signalled its intention to draft amendments to SA’s labour laws.
“We’re very positive the negotiations are going in the right direction and the parties are coming together,” said Harbhajan.
Nedlac wasn’t available to comment, but an official at Nedlac (who didn’t want to be named) says: “In other words, it’s back to the drawing board on this issue.”
Apart from businesses’ criticism of the Bills and the unintended (job-shedding) consequences they hold, the Labour Department’s own regulatory impact analysis (RIA) acknowledges their damaging potential. The RIA concludes: “While permanent employment might increase… it’s a fair assumption that total employment will decline.” It concedes proposed penalties “could contribute to company contraction and retrenchments, and even company closure, resulting in job losses and negative impacts on economic growth”.
The contradiction between Government’s top priority – job creation – and the Bills’ contents suggests the internal politics of the ANC alliance, especially the need to appease powerful trade unions, has informed the proposed legislation more than economic realism has.
Idasa’s Judith February says the controversy underscores the tight political spot Zuma finds himself in as he navigates between factions in the labour alliance to secure a second term at the ANC’s 2012 elective conference.
The solution, says Adcorp labour market analyst Loane Sharp, is really very simple: scrap minimum wages and remove dismissal protections. “It strikes me SA created 3,5m jobs for immigrant Zimbabweans over the past decade yet the country can’t create jobs for 4,2m unemployed South Africans.”
Of course, illegal immigrants differ from South Africans in two important ways: they earn less than the minimum wage and aren’t afforded legal protections against dismissal.
Cosatu rejects this out of hand, saying there’s absolutely no way it will agree to any liberalisation. On the contrary, it wants more stringent labour regulation and intends to fight for that at Nedlac.
LOANE SHARP Scrap minimum wages