Cosatu, Fedusa concerned about subsidy bill

By Drum Digital
15 October 2013

Trade union federations Cosatu and Fedusa expressed concern at the draft Employment Tax Incentive Bill.

Trade union federations Cosatu and Fedusa expressed concern on Tuesday at the draft Employment Tax Incentive Bill.

The Federation of Unions of SA (Fedusa) said it was concerned about several aspects of the bill, including deadweight loss, displacement, and substitution.

"Deadweight loss occurs when a company would have employed a person anyway, without the subsidy. This means that the subsidy actually adds no value," Fedusa general secretary Dennis George said in a statement. "Substitution and displacement on the other hand, happen when a regular worker is dismissed and replaced with a subsidised worker." The Congress of SA Trade Unions (Cosatu) called for the immediate withdrawal of the bill, which was published by the national Treasury on September 20. "In our view the... bill will in practice translate into a fundamental attack on the security of employment of workers, decent work standards and collective bargaining rights," it said in a statement.

"Accordingly Cosatu is committed to resisting the passing and implementation of the bill and will make an urgent political intervention through the [tripartite] alliance to stop it going ahead."

According to a Cabinet statement from September 18, the bill was released for public comment.

"The bill introduces an incentive mainly aimed at encouraging employers to hire young and less experienced job seekers," it said.

"The incentive is one among many that will fall under the umbrella of government's youth employment strategy and will complement existing government programmes."

Fedusa and Cosatu agreed that there was a lack of consultation over the bill at the National Economic Development and Labour Council (Nedlac).

"Nedlac was also not afforded an opportunity to consider the actual bill, and hence the details of the actual form and structure of the subsidies that will be imposed," Cosatu said.

George said Nedlac was the "flagship institution" where the bill would be debated and finalised.

"It is essential that this bill be taken to Nedlac. We will discuss it with our sister federations with a view to a possible filing of a section 77 protest action notice at Nedlac," he said.

Section 77 of the Labour Relations Act gives organised labour the right to protest on the grounds of a dispute regarding socio-economic matters in the economy.

George said the penalties to be paid by employees for displacing workers was too low.

"The current penalty for displacement is 150 percent of the incentive, if an employer is proved to have displaced an employee for the sake of placing a subsidised employee," he said.

"The penalty must be increased to at least 200 percent with the further option of criminal prosecution."

George said education and training needed to be linked to the proposed subsidy scheme.

Cosatu said the bill was "appallingly drafted". "It seems unlikely that anyone with credible labour law expertise was consulted in the drafting process." With regards to displacement, Cosatu said nothing prevented employers, especially larger ones, from "creatively reorganising work at a workplace so that subsidised workers are not placed in a unit where the dismissals have taken place". "Further, the burden of proof would rest with the employee to prove not only an unfair dismissalbut also that the dismissal was aimed at accessing the incentive," it said.

"The matter could take years to resolve should either party take the matter on appeal."

Fedusa submitted its comments on the bill on Monday, while Cosatu submitted its comments on Tuesday.

-by Sapa

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