Cosatu yet to spell out its labour stance

2011-02-02 08:38

Cosatu is yet to finalise its views on the proposed changes to the country’s labour laws, which are seen to be heavily weighted towards benefiting the employed.

“We are still studying these laws with our lawyers,” said Chris ­Malikane, head of Cosatu’s policy unit. “There will be an official ­position on the proposed amendments next week.”

The government last month published amendment bills for the Labour Relations Act, the Employment Equity Act, the ­Basic Conditions of Employment Act and the new Employment Services Bill.

It has also started public hearings that are scheduled to end on February 17.

The four bills have been heavily criticised by business and economists on the grounds that they will increase the cost of doing business, making South Africa less competitive against fast-growing and low-cost producing developing countries.

The SA Chamber of Commerce and Industry (Sacci) has warned that the bills could derail the government’s plans to fast-track growth and create 5.5?million jobs over the next decade.

Sacci chief executive Neren Rau said the amendments would make it impossible for South Africa to achieve the targets set out in the New Growth Path economic policy, which aims to cut unemployment to 15% and grow the economy by 7% a year over the next 10 years.

“Our economy is not ready for this kind of intervention. Companies will be very hesitant to hire if we keep on increasing rigidity in the labour system,” said Rau.

At the heart of the four bills is the government’s intention of strictly regulating “exploitative” labour brokers, who supply temporary workers to firms.

The bills propose to root out any abuse of temporary workers by employers by asking them to ­justify why they are hiring temporary staff.

The bills seek to push employers to offer temporary workers similar benefits to those they ­provide for regular workers, such as pension and medical aid.

There is a proposal for the establishment of a government employment agency, with companies required to report ­vacancies.

The bills propose huge penalties for companies that continue to flout South Africa’s employment equity or affirmative action laws.

Firms that find themselves on the wrong side of the law could be fined as much as 10% of their annual turnover.

The bills also want to do away with wage discrimination on the basis of race and gender. To deal with wage discrimination, commonly referred to as the apartheid wage gap, employers will be required to provide data to ensure they are offering equal pay for equal work.

Cosatu has been calling for a ­total ban on labour brokers, whom they accuse of exploiting workers.

Estimates suggest that as many as 850?000 workers are employed by labour brokers.

The country’s main business voice, Business Unity SA (Busa), said the proposals could worsen the unemployment caseload, which is estimated to be 25% of the population.
 
“The proposed amendments have a serious potential to aggravate rather than alleviate unemployment,” said Busa spokesperson Masego Lehihi.

“The most important issue facing the South African economy today is improving conditions to make greater labour absorption possible.”

A government-commissioned regulatory impact assessment study compiled by Cape Town University economists Paul Benjamin, Haroon Bhorat and Carlene van der Westuizen has raised alarm about some of the dangers posed by the proposed labour law reforms.

The report warns that forcing employers to convert temporary workers into permanent employees could raise the cost of doing business.

“This suggests an increase in the cost of doing business and the higher this share is in relative and absolute terms, the greater the impact of these proposed amendments on the cost of doing business in the domestic economy.

“While permanent employment is expected to increase as a result of the amendment, it is likely that a proportion of contract workers will not be offered permanent positions, with a resulting decline in total employment and therefore an increase in unemployment,” the study notes.

The study also warns that the imposition of a 10% turnover fine on companies that breach employment equity laws could lead to business failures, job losses and a negative impact on economic growth.

“Ten percent represents a considerable proportion of annual turnover. A fine of this magnitude could pose a significant threat to the continued viability of a company,” the report warns.

It remains to be seen if some of these proposals swim or sink. Previous attempts to introduce radical changes to South Africa’s labour legislation to deal with high unemployment have been unsuccessful.

One such bold attempt was made in 2005, when Jabu Moleketi, then a deputy finance minister, crafted a document that called for a dual wage system in which young workers earned less than prevailing wage minimums.

Cosatu and the SA Communist Party fought off the plan, which they feared would result in young workers being exploited and fired at will by employers.

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