After 100 years labour laws need more reform

This month marks 100 years since the promulgation of the Industrial Conciliation Act in 1924, a pivotal piece of legislation that formed the basis for future SA’s labour relations. It introduced industrial councils and a system of voluntary collective bargaining.

This act was in response to the Rand Rebellion of 1922, when about 25,000 mineworkers went on strike, resulting in 5,000 strikers being arrested and 150 people killed.

However, the Industrial Conciliation Act had a major flaw: it discriminated against black workers by excluding them from the definition of “employee”, preventing them from forming or joining registered trade unions. This exclusion would persist until 1979, when black trade unions were first granted statutory recognition. The country’s current constitution enhanced the rights of all workers, with section 23 providing for specific labour rights that include collective labour rights.

This new era of collective labour law could be given effect in practice only by the jurisprudence developed by our labour courts. Imperfect as it may be, SA’s labour regime has covered a lot of ground to ensure equity and fairness in the workplace. We, of course, still have the stain of Marikana as a stark reminder of the system’s shortcomings.

After 100 years of trial and error, the time has come to reform our labour laws regulations and processes. This is particularly crucial for cutting red tape and administrative costs for small medium and micro enterprises. Greater attention needs to be on job seekers. There is scope to put to the fore policies to improve job seekers’ prospects. Such reforms must come hand in hand with others, such as in the areas of education. In essence, reforms must primarily benefit disadvantaged groups such as youth.

Reforms must also be geared at making SA’s labour market resilient to shocks. The Covid-19 shock exposed weaknesses in the resilience of our labour market. Based on Okun law estimates, unemployment is more responsive and sensitive to the business cycle in SA than in the average emerging market, partly reflecting the rather low prevalence of informality.

It should be of serious concern that SA’s unemployment rate never fell below 20% in the past two decades. With the country’s unemployment crisis being structural in nature, all levers at the disposal of policymakers must be deployed to avoid the imminent socioeconomic disaster. The government needs to come up with a bold strategy to reform labour market institutions to enable them to tackle the root causes.

The IMF has already suggested some reforms to align SA’s labour laws with contemporary needs. It says minimum wage setting should carefully balance reducing in-work poverty and enhancing the job prospects of disadvantaged groups. And wage bargaining co-ordination could be strengthened by adopting a norm that facilitates negotiation based on productivity gains and inflation. These and other reforms should be considered to ensure the next century is not marred by joblessness and inequality.