Labour laws will slow job creation – Sacci

2012-04-12 13:05

Proposed new labour legislation will slow job creation amid concerns that South Africa’s labour productivity is waning, the SA Chamber of Commerce and Industry (Sacci) said.

“[Sacci] is concerned by the recent research of the International Monetary Fund (IMF) that the rapid growth of the real wage in South Africa outpaced labour productivity growth in most sectors and suppressed employment creation,” said CEO Neren Rau today.

“The IMF provides a clear message that the South African labour market is less competitive than other emerging markets in this regard, and it is essential for this imbalance to be urgently addressed in order to create more jobs.”

He said the IMF’s research was pertinent in light of the proposed amendments to the Basic Conditions of Employment Act and Labour Relations Act.

“In broad terms, the amendments in their current form will reduce the flexibility in the labour market and thereby dampen job creation.”

The IMF released its report “Real Wage, Labour Productivity, and Employment Trends in South Africa: A Closer Look” on April 1.

The report suggests that South Africa’s large job losses during the financial crisis in 2008/09 may have been influenced by the rapid increase in real wages, and not the economic conditions.

According to the IMF report: “Despite the contraction of economic activity in 2009, the tepid recovery in 2010, and the overall soft labour market conditions, the real wage continued to increase rapidly, outpacing the growth of labour productivity.”

Sacci recently surveyed its members about the labour market and labour regulations.

“The general finding of the survey is that a simplification of the statutory disciplinary process would lead to greater employment creation,” he said.

The survey found that smaller companies were more vulnerable to the administrative costs associated with labour regulations.

“This strengthens the argument in favour of the simplification of the disciplinary and dismissal processes as the small- and medium-sized businesses sector is widely recognised as pivotal to job creation.”

Forty-three percent of the respondents said economic conditions were the biggest hurdle to creating jobs.

This was followed by the burdensome dismissal processes in the current labour legislation at 26%; a skills shortage, 23%; and high wage demands, eight percent.

Just over half of the Sacci members surveyed said they would like to see the simplification of the statutory disciplinary processes.

Twenty percent of respondents wanted a more favourable broad-based black economic empowerment rating for education grants and bursaries.

Rau said Sacci was preparing comments on the proposed amendments to the labour legislation.

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