Death by labour law

2011-01-19 00:00

WILL 2011 be the year that labour laws finally throttle us?

This year is the Chinese Year of the Rabbit. It is also, according to the United Nations, the International Year of Forests, the International Year of Chemistry, and the Year of the Bat (clearly, rodents are a major theme).

In South Africa, however, 2011 may well be remembered as the Year of Death by Labour Law, the year in which increasingly restrictive labour laws finally eliminated all hope of solving South Africa's chronic unemployment problems.

In December last year, the Department of Labour (DoL) announced the publication of four new bills, three of them amendments, to the Labour Relations Act, the Employment Equity Act, and the Basic Conditions of Employment Act, and the fourth, the all-new Employment Services Bill. The bills, which were approved by Parliament mid-year and published on December 17, are currently open for public comment.

Taken together, these four bills make for a fairly radical redesign of the South African labour landscape. In particular, they eliminate labour brokers, expand the ability of trade unions to unionise workforces, criminalise the breaking of certain labour laws and enable the government to levy fines of up to 10% of turnover on employers who contravene the law. More generally, they increase the government's surveillance of employers and its ability to censure them, and restrict employers' flexibility. Below is a brief summary of each new bill.

The Labour Relations

Amendment Bill, 2010

• This bill aims to stop the practice of repeated contracting for short-term periods. The onus will be on employers to justify the use of short-term or fixed-term contracts, in place of contracting employees on a permanent basis.

• The bill repeals section 198 (of the Labour Relations Act) that deals with Temporary Employment Services.

• The bill introduces a new definition of employer and employee. As a result, no temporary employment service will be able to be the employer of workers whom it places in work.

The Basic Conditions of

Employment Amendment Bill, 2010

• This bill gives the minister the power to prescribe thresholds of representativeness of a trade union to have the organisational rights of access to employer premises. This is intended to apply to situations where unionisation is difficult but where a more flexible threshold may facilitate unionisation within a sector or area.

• It proposes that the minister could set increases to actual wages instead of minimum wages for vulnerable workers in sectoral determinations.

• The bill criminalises contraventions of certain provisions in monitoring and enforcement of the act.

• It imposes heavy penalties for offences and contraventions of the provisions of the act, as well as increased prison terms for employers who do not comply.

The Employment Equity Amendment Bill, 2010

• The Employment Equity Amendment Bill prohibits abusive practices by ensuring that employees who work for the same employer receive the same pay as other employees doing the same or substantially the same work.

• The bill empowers the director-general to impose fines on non-complying employers as a percentage of the annual turnover of the company, at two percent for first contraventions, escalating to a maximum of 10%.

The Employment Services Bill, 2010

• This bill requires employers to register all vacancies with a government employment agency.

• It increases government surveillance of employers and employment agencies.

Overall, the proposed rules seem to reflect a general belief that the best way to generate new jobs is to make it even more costly, bureaucratically complex, and risky for employers to hire people. Sadly, this is not true. In all likelihood, the new provisions will actually make legitimate employers much less likely to hire people, and will force more and more workers into the shadowy and completely unprotected informal sector. Surely it's better to have more jobs that are a little less protected or stable than a handful of good jobs and a mass of unemployed?

The hard fact is that jobs do not spontaneously form from the ether. Jobs are all about value creation, that is, the creation of goods and services that sustain and improve human life. Ultimately, people can only earn a salary if they are doing something that adds value equal to or greater than the value of that salary. This is something that South Africans desperately need to understand.

The ANC has a vision of a South Africa in which all citizens hold comfortable, protected and well-paying jobs in cushy industries. Unfortunately, jobs are not the result of visions, but of wealth creation.

The reality is that too many South Africans are not equipped for jobs that create a lot of wealth and thus merit large salaries. Decades of underinvestment in education has meant that many South Africans lack the basic skills — particularly maths and literacy — that employers in modern industries require. All the legislation in the world won't change this.

It is economically impossible for employers to pay employees more than they are worth (that is, more than they create), or to hire employees that they do not need. Companies that try to do this go bankrupt. If the government truly wants to create jobs, it will try to find ways to enable South Africans to create wealth. That is the only way out of the unemployment mess.

— Moneyweb.co.za

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