Sunday Times

Amendments will throttle job creation

Labour Law | Organised labour is hostile to any attempt to put young, low-paid, unskilled people to work

- BRENDAN PEACOCK

A REPORT by the office of South Africa’s auditor-general this week showed that just 5% of the country’s 278 municipali­ties received clean audits for the past financial year. None of the country’s eight metro areas received a clean audit.

Nearly three-quarters of them — 71% — depended on consultant­s to help them with their financial reports. Outsourced services cost municipali­ties more than R378-million last year, yet only 17 municipali­ties received clean audits, with no improvemen­t in the statistics in the past three years.

The numbers illustrate a skills shortage and widespread mismanagem­ent of taxpayers’ money.

But would more flexible labour laws solve the problem by making it easier to fire incompeten­t civil servants?

Loane Sharp, labour economist at Adcorp Analytics, said poor service delivery was the result of a collapse of basic managerial capability in the public service, not really of labour laws.

“Deployment of weak cadres to managerial positions has led to the public service being ‘captured’ by the public-sector unions, notably Cosatu, which has refused to allow its members to enter into performanc­e or productivi­ty agreements with their employer, the government,” said Sharp.

“This affects not only municipal service delivery, but provincial and national government functions as well, including policing, electrific­ation, schooling, healthcare, transport and administra­tion.”

However, there would be few negative consequenc­es if labour laws were relaxed.

“Citizens would experience a significan­t increase in service delivery by the state. And employers would experience a significan­t increase in labour productivi­ty. But there would be negative consequenc­es for some workers, particular­ly those who are unproducti­ve or incapable, since a loosening of labour laws would make it easier to sanction those workers,” he said.

In Sharp’s opinion, there are only two aspects of the labour laws that should be relaxed — “dismissal protection­s, which keep unproducti­ve and incapable workers in positions which their on-the-job performanc­e does not justify, and central bargaining, which drives a wedge between wages and labour productivi­ty . . . the first makes workers unproducti­ve; and the second makes workers expensive”.

The problem, Sharp said, was that the tripartite alliance, specifical­ly Cosatu, was the biggest obstacle to job creation.

As long as the interests of Cosatu’s constituen­cy — older, skilled and highly paid workers — dominated labour-market policy, measures to get young, unskilled and low-paid people into jobs, such as the youth wage subsidy, would be met with hostility, said Sharp.

It opposed any relaxing of labour laws, even though such loosening was the best hope for creating jobs.

This was demonstrat­ed by the stalled negotiatio­ns on the labour-law amendments, which are expected to be promulgate­d by early next year. At the talks, the government appeared to give in to Cosatu’s push for a ban on labour brokers.

“The imminent labour-law amendments will have catastroph­ic, though not immediate, effects by curtailing the use of temporary or agency workers, by introducin­g hefty fines for companies that fail to meet affirmativ­e-action targets and by criminalis­ing workplace accidents,” said Sharp.

“The amendments represent the most significan­t tightening of labour laws since the Labour Relations Act in 1995.”

The act “decimated employment in the farming and mining sectors by introducin­g unrealisti­c minimum wages and promoting automation and mechanisat­ion, and [it] produced a significan­t decrease in the labour market’s ability to absorb unskilled youth joining the labour market each year”.

The most contentiou­s amendment relates to “temporary employment services”— essentiall­y labour brokers such as Adcorp.

According to a World Bank developmen­t report on South Africa this year, 7% of the country’s workers, effectivel­y about 410 000 people, find work through labour brokers.

The proposed amendments seek equal pay and benefits for any temporary worker hired for more than six months.

If the employer fails to offer an indefinite contract if there is a reasonable expectatio­n of one, this will be construed as a dismissal. The contract worker must also be employed permanentl­y, unless the company can justify the need for continued fixed-term contract work.

Critics of the new laws say such regulation­s are antithetic­al to the government’s growth path and job creation.

“Minimum wages in agricultur­e reduced farming employment from around two million people to 600, 000, but that took about 15 years,” Sharp said.

“Although companies have commitment­s and limited options right now, over time they will adjust to the law or circumvent it — most likely through indemnity from unfair labour practice written into clever commercial contract arrangemen­ts.” Comment on this: write to letters@businessti­mes.co.za or SMS us at 33971

www.timeslive.co.za

 ??  ?? RELAX LAWS: Loane Sharp
RELAX LAWS: Loane Sharp

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