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DA Policy on Labour December 2013
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Contents
1. Introduction .................................................................................................................................... 3
2. International trends in the labour market ...................................................................................... 3
3. Flexibility in the labour regime ....................................................................................................... 4
3.1. Democratising wage negotiations .......................................................................................... 5
3.2. Improving the ease of hiring ................................................................................................... 8
3.3. Enhancing temporary employment ...................................................................................... 10
3.4. Easing the regulatory burden on small businesses ............................................................... 11
3.5. Facilitating access for new job seekers ................................................................................. 11
4. Responding to labour unrest ........................................................................................................ 13
5. The institutions supporting labour in South Africa ....................................................................... 14
5.1. NEDLAC ................................................................................................................................. 14
5.2. CCMA..................................................................................................................................... 15
5.3. Labour inspectors .................................................................................................................. 16
6. Vulnerable workers ....................................................................................................................... 17
6.1. Migrant mine labour ............................................................................................................. 17
6.2. Farm labour ........................................................................................................................... 18
6.3. Domestic workers ................................................................................................................. 20
7. Labour and redress ....................................................................................................................... 21
7.1. Workplace inclusion .............................................................................................................. 21
7.2. Economic Inclusion ............................................................................................................... 24
7.3. Executive pay ........................................................................................................................ 25
8. Building the skills base .................................................................................................................. 25
9. Conclusion ..................................................................................................................................... 27
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1. Introduction
The most fundamental challenge facing South Africa today is that too few people are employed. The
DA believes that high barriers to entry in the labour market exclude millions of South Africans from
accessing employment opportunities.
The DA believes that high barriers to entry in the labour market exclude millions of South
Africans from accessing employment opportunities.
These barriers relate to two things: (i) Our country’s inflexible labour regime, and (ii) the failure of
the education system to equip South African job-seekers with marketable skills.
Labour policy must balance the protection of workers rights with the need to build greater flexibility
into our labour market to make it easier for businesses to create jobs. If this balance is not achieved,
labour policy is protecting the employed at the expense of the unemployed.
Labour policy must balance the protection of workers rights with the need to build
greater flexibility into our labour market to make it easier for businesses to create jobs.
Labour policy on its own will, however, not be sufficient to create the number of jobs South Africa
needs to establish a truly inclusive economy.
Appropriate labour regulation must be accompanied by an economic policy that stimulates growth,
an education and skills development system that empowers job seekers for labour market
participation in a changing global economic landscape and social policies that facilitate access to job
opportunities. Our labour policy will therefore be implemented in the context of our broader
economic platform, the Plan for Growth and Jobs as well as the DA’s policies on basic and higher
education.
In an Open Opportunity Society for All government will strive to create circumstances that allow each
and every citizen that so wishes to be skilled for labour market participation and to actively
participate in the economy in accordance with his or her desires.
2. International trends in the labour market Labour market regulations must keep up with the changing nature of work.
Global shifts that are fundamentally altering the world of work include:
The merging of world economies into a single, globalised marketplace, the intensification of
economic competition and the resultant pressure on labour costs;
Technological changes that allow for the substitution of repetitive manual labour and that is
driving unrelenting increases in the knowledge-content of work – with important implications
for skills requirements;
Social changes, like changes in gender relationships and fresh thinking around work-life balance,
that have both upped the number of new job-seekers entering the economy every year and
increased demands for flexible work conditions;
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The economic need for flexible labour relationships that have led to a rise in work relationships
where employees are not necessarily contracted directly by productive enterprises; and
The growing role of the informal sector in providing jobs opportunities – especially for low-
skilled work seekers.
It is important to understand that South African workers, and to a large extent also our labour
regime, are essentially competing with workers and labour systems across the globe to attract job-
creating economic activity.
South Africa’s labour regulations must be sufficiently nuanced to guide the divergent range of labour
relationships that arise in this changing context and to provide appropriate protection to workers in
every sphere. In addition, regulations must be flexible enough to ensure that they do not act as a
deterrent for job creation and retention in the country.
3. Flexibility in the labour regime By extending a homogenous labour regime to all types of work, South Africa’s labour regime
currently lacks the flexibility required in a changing world of work and is acting as a deterrent to job
creation.
When international ratings agencies downgraded South Africa’s credit ratings at the end of 2012 and
beginning of 2013, labour relations featured in two of their key concerns. Firstly, agencies expressed
concern about the resilience of the South African economy in light of what they called the
“deterioration in the institutional strength of government”. This referred to, among others, the
government’s weak response to the widespread labour unrest and questions around the state’s
capacity to manage competitive risks and foster growth. Secondly, agencies argued that South
Africa’s arduous labour regulations and failing education system have seen the gap between labour
productivity and pay widen.
In 2012 the World Economic Forum’s World Competitiveness Index put South Africa 144th out of 144
countries for “cooperation in labour-employee relations”, and 140th out of 144 countries in terms of
“flexibility of wage negotiations”1.
The World Bank’s Ease of Doing Business Report states that “Young workers are especially likely to
experience the negative effects of rigid employment regulation. They typically lack training and
substantial experience, and burdensome regulation and high redundancy costs discourage potential
employers”2. This is certainly true for South Africa, where unemployment for the age group 18-29
year olds is more than 50%.
1 World Economic Forum. 2012. Global Competitiveness Report. Available. [Online]: http://www.weforum.org/issues/global-competitiveness (May 2013); Sharp, L. 2011. ‘South Africa’s Labour Laws in an International Context’, in T.A. Nolutshungu (ed.) Jobs Jobs Jobs. Sandton: Free Market Foundation. 2 World Bank. 2013. Doing Business 2013: Smarter Regulations for Small and Medium-Size Enterprises. Available. [Online]: http://www.doingbusiness.org/reports/global-reports/doing-business-2013 (May 2013).
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Closer analysis of labour market rigidity shows that South Africa’s poor ratings in terms of labour
regulation is driven by perceptions around the disproportionate power of big labour unions and the
high transactional costs associated with dismissals3.
Labour issues also inhibit the growth and job creation capabilities of small business. In SBP’s 2013
SME Growth Index labour regulations and the lack of suitably skilled people were identified as two of
the top three barriers to hiring (together with local demand for goods).
The DA believes that labour regulations can be realigned to support, rather than inhibit,
job creation.
The DA believes that labour regulations can be realigned to support, rather than inhibit, job creation.
We will prioritise the following:
Democratising labour negotiations, challenging the dominance of large unions and ensuring that
the labour regime serves not only the representatives of workers, but the workers themselves;
Improving the ease of hiring through key changes to the Labour Relations Act;
Ensuring that South Africa’s labour regime stays in step with labour realities by strengthening
recognition for temporary work and supporting a regulatory system for such work that does not
stifle its job creation potential;
Easing the burden of labour regulations that are inhibiting job creation in the small business
sector.
3.1. Democratising wage negotiations
Collective bargaining is an important feature of the labour landscape in South Africa. As a labour
institution, it was designed to be an interactive process where unions and employers come together
to resolve disputes.
The DA believes that the conciliatory nature of collective bargaining is being undermined by “closed
shop” agreements that alienate non-unionised workers and those belonging to minority unions from
negotiating platforms.
The DA believes that the conciliatory nature of collective bargaining is being undermined
by “closed shop” agreements that alienate non-unionised workers and those belonging
to minority unions from negotiating platforms.
Collective bargaining is also losing its value as a forum for identifying mutually acceptable solutions
to labour issues as a result of the dominance of big business and big unions in collective bargaining
councils, and the extension of agreements by the council to non-parties, including small businesses
that are often unable to shoulder the responsibilities imposed on them.
3 Bhorat, H. & Cheadle, H. 2009. ‘Labour Reform in South Africa: Measuring Regulation and a Synthesis of Policy Suggestions’. Development Policy Research Unit, Working Paper 09/139. Available. [Online]: http://www.dpru.uct.ac.za/sites/default/files/sites/default/files/DPRU%20WP09-139.pdf (May 2013).
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A crucial aspect of the current collective bargaining regime, and one that is doggedly protected by
big unions, is the provision for “closed shop agreements” under Section 26 of the Labour Relations
Act (LRA).
Section 26 allows for closed shop agreements between employers and so-called “representative
trade unions”. A closed shop agreement obliges all eligible employees in the bargaining unit to
become members of the majority union and gives the representative union the right to collect
membership fees from all employees.
This provision is strengthened by others in the Act, that deem it not unfair for an employer to
dismiss an employee who refuses to join the majority union, and gives the majority union the right
to withdraw membership from employees who refuse to participate in a strike. This leaves individual
workers extremely vulnerable.
There is limited provision for workers to refuse union membership when they hold conscientious
objections. These workers will, however, still be covered by so-called “agency shop” agreements,
and allow the representative union to collect a fee from the worker. As a consequence, if an
individual was unsatisfied with his or her union representation, he or she would have to continue
paying membership fees and would be expected to pay double membership upon joining an
alternative union.
These agreements make union activity potentially very lucrative and render collective bargaining a
“winner-takes-all” system which serves as a mechanism to protect the entrenched interests of large
unions.
Close shop agreements make union activity potentially very lucrative and render
collective bargaining a “winner-takes-all” system which serves as a mechanism to
protect the entrenched interests of large unions.
In describing closed shop agreements labour experts have noted that, “it can only be surmised that
the main objective of unions promoting the concept of the closed shop was to eliminate, as far as
possible, the existence and acceptance of other unions within the bargaining unit and, by this
somewhat illegitimate means, to maintain or extend their own power base”4.
Truly representative labour negotiations are also undermined by Section 18 of the Labour Relations
Act. Section 18 allows majority unions to reach agreements with employers (or the members of a
collective bargaining council) that fixes a minimum threshold of representativeness for a union to
gain organisational rights in a workplace (including rights of access to the workplace, the right to
collect membership fees via the employer’s payroll and the right of office bearers to take reasonable
leave to fulfil trade union duties). This provision is open to abuse by dominant unions hoping to
entrench their own positions by limiting the activities and membership of new or smaller players.
4 Bendix, S. 2010. Industrial Relations in South Africa: 5th edition. Cape Town: Juta.
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In national government, the DA would:
Repeal Section 26 of the Labour Relations Act which allows for closed-shop agreements
Propose a model of proportional representation in labour bargaining, with firm minimum
thresholds for participation to prevent the proliferation of labour representatives in a given
bargaining unit.
Prevent free rider problems by extending agency shop agreements to employees who are not
members of unions represented in the bargaining council, with membership fees distributed
proportionally to represented unions.
Repeal Section 18 of the Labour Relations Act which allows majority unions and employers to
agree on thresholds of representativeness for unions to gain organisational rights in a specific
workplace or sector.
Establish a universal minimum threshold of representativeness above which organisational rights
and participation in collective bargaining cannot be denied to a union.
Strengthen the monitoring of provisions to ensure that no portion of the union membership fees
collected under collective bargaining agreements may be used to pay for affiliation to a political
party, and that these funds may not be applied for any purpose other than the promotion and
protection of the socio-economic welfare of employees.
Collective bargaining arrangements must also be democratic from the perspective of employers. The
extension of industry-level bargaining agreements to non-parties impacts negatively on the
competiveness, and ultimately the survival of small players.
Research presented in support of a court case challenging the constitutionality of extending
collective agreements to non-parties shows that “there is a clear causal relationship, supported by
rigorous empirical analysis, between bargaining councils and lower levels of employment in sectors
and regions where these councils operate. The largest negative impact of bargaining councils is on
employment in smaller firms and entrepreneurs: employment and entrepreneurship is lower where
bargaining councils operate"5.
It is argued that large firms participating in collective bargaining units have an incentive to set labour
standards that cannot be met by smaller players, thus eliminating competition6.
The DA position on this issue can be summarised as follows:
We support the system of collective bargaining as an institutional mechanism to encourage
collaborative conversations between business and labour.
The extension of collective bargaining agreements to non-parties does not serve this purpose
and has caused it to become another means to establish economic insiders and outsiders.
We believe that collective bargaining agreements should only apply to entities and organisations
that were party to the agreement.
We support a nuanced approach to bargaining agreements that take the unique conditions,
markets, and products of businesses in different areas in the country into account.
5 Neil Rankin, in Free Market Foundation, 2013. FMF to challenge extension of bargaining council agreements to non-parties. Available. [Online]: http://www.politicsweb.co.za/politicsweb/view/politicsweb/en/page71651?oid=362643&sn=Detail&pid=71651 (April 2013). 6 Payne, T. 2013. ‘Bargaining extension fought on constitutional grounds’, in Mail & Guardian. Available. [Online]: http://mg.co.za/article/2013-03-08-00-bargaining-extension-fought-on-constitutional-grounds-1 (May 2013).
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We favour workplace-level agreements which allow for negotiations on wages and other labour
issues to be located closer to workers and their direct representatives.
3.2. Improving the ease of hiring
To encourage job creation in a competitive and dynamic economy, labour regulation must seek to
provide protection to workers while limiting the cost of compliance, and allowing greater flexibility
in labour arrangements when operational requirements change.
The cost of labour compliance in South Africa is driven up by the administrative costs associated with
compliance to employment equity requirements, the complex system of skills development levies,
and the development of skills development plans to claim back levies through the Sector Education
Training Authorities (SETAs). In addition, there are costly contributions to the Unemployment
Insurance Fund (UIF) and Workmen’s Compensation Fund.
Costly labour institutions have not proven to be particularly effective.
The UIF has grown from R54bn at the end of 2010/11 to R65bn at the end of 2011/12. Annual
collections of approximately R12.4bn are offset by expenditure of only R5.6bn. This means that the
fund grew by a significant R6.8bn in 2011/12.
Over the past ten years South Africa has spent more than R57 billion on SETAs7. SETAs are
inefficient, overly bureaucratic and unresponsive to the actual skills needs of the South African
economy. The Minister of Higher Education and Training, Blade Nzimande, has criticised the poor
quality of training provided through SETAs and has said that the country has little to show for the
massive investment made in them8.
The DA proposes that:
UIF contributions made by both employers and employees should be provisionally halved (from
1% to 0.5%) until the capital base of the fund contracts to a predetermined benchmark. This will
reduce the cost of hiring workers and will stimulate the economy by increasing the net wages of
workers and increasing their spending power. The fiscal risk of our proposal can be mitigated by
reinstating the 1% contribution determined by the Unemployment Insurance Contributions Act if
the capital base contracted beyond a certain benchmark.
SETAs must be disbanded to allow individual businesses or industries to create programmes to
invest in the development of the skills that they actually require.
Employers must be reimbursed to the value of the full amount spent on approved training,
including schemes administered by employers’ associations. This will ensure that employees’
skills are better matched with market demand.
7 Ramutloa, L. 2013. Billions spent on training but the investment has not advanced transformation: Department's Transformation Indaba told. Department of Labour. Available. [Online]: https://www.labour.gov.za/media-desk/media-statements/2013/billions-spent-on-training-but-the-investment-has-not-advanced-transformation-departments-indaba-told (May 2013). 8 Ensor, L. 2012. ‘Little to show' for Seta funds – Nzimande. in Business Day. Available. [Online]: http://www.bdlive.co.za/articles/2012/03/07/little-to-show-for-seta-funds--nzimande;jsessionid=A2C3D100C57F094D0F0CFAF73905380D.present1.bdfm (May 2013).
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Evaluations of South Africa’s labour regime identify the high transactional costs of dismissals as a key
contributor to regulatory rigidity9. This includes the costs associated with hearings and delays.
The development of easily interpretable and more flexible Codes of Good Practice was intended to
ease regulatory rigidity. In practice, very few commissioners of the Commission for Conciliation,
Mediation and Arbitration (CCMA) refer to the Codes in arbitration procedures and make punitive
awards for even relatively minor lapses10.
In addition, there are concerns around the inefficacy of current provisions in the Labour Relations
Act and Codes of Good Practice to deal with probationary employees. Employers need probationary
periods to assess whether an employee is suitable to fulfil a particular role11. There must, however,
be a balance between the need for flexibility on the part of the employer and the need to protect
new employees from exploitation and unfair dismissal.
The Labour Relations Act and Code of Good Practice technically provide a lower threshold for
fairness in the dismissal of probationary employees. However, it introduced a “thicket of evaluation,
instruction, training, guidance and counselling12” which places a heavy burden on employers if they
want to dismiss probationary employees who fail to perform to satisfaction.
In national government, the DA would promote labour market flexibility in the following ways:
Introduce a six-month probationary period during which firms will face no punitive penalty for
dismissing underperforming workers. Probationary workers will still be protected against unfair
labour practices.
Encourage informal dispute resolution mechanisms and the application of Codes of Good
Practice by CCMA commissioners to avoid lengthy legal procedures.
Amend Section 189 of the Labour Relations Act (Act 66 of 1996), which imposes severe
restrictions on employers wishing to dismiss employees based on operational requirements. This
will involve: removing Paragraph 2a and b which requires that consulting parties attempt to
reach a consensus on the method for selecting employees to be dismissed; removing paragraph
3, which requires that employers provide extensive documentation concerning the dismissal to
the consulting party, including the prospects for re-employment; and removing paragraph 7a
which provides that employers must select employees to be dismissed according to criteria
agreed to by employee representatives.
Amend Schedule 8 of the LRA, Act 66 of 1996, which details the Codes of Good Practice
governing dismissals. This will involve removing Section 2a, which concerns dismissals for poor
work performance, and places the onus on employers to take steps to improve employee
performance prior to dismissal, and Section 9b (i) which implies that a dismissal for poor work
performance could be unfair if the employee claims to be unaware of the required work
standard.
9 Bhorat, 2009. 10 Van Niekerk, in Bhorat, 2009. 11 Bhorat, 2009. 12 Bhorat, 2009.
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3.3. Enhancing temporary employment
Over the last decade South Africa has seen a significant increase in the number of non-permanent
workers, with an estimated 3.9 million people being employed in temporary, fixed term, or labour
brokered relationships13.
World Bank research shows that the use of fixed term contracts for permanent tasks encourages
business to create jobs, particularly for young workers14. Such contracts not only allow employers to
screen workers for permanent positions, but also benefit the contracted workers by giving them the
opportunity to develop professional skills. It is significant to note that evidence suggests that fixed-
term contract maximize the chances of a temporary worker being promoted to a permanent
position15.
It is telling to note that 52% of low-income economies do not allow fixed term contracts for
permanent tasks, whilst almost 4 in every 5 high income economies do allow this practice16.
In terms of the amendments to labour legislation passed by parliament in 2013, employees will be
deemed to be permanently employed as soon as they have served on a fixed term contract for more
than six months, thus negating many of the benefits of fixed-term contracts to the employer.
The DA recognises that temporary employment relationships can render workers vulnerable to
exploitation. We do, however, believe that the formalisation of temporary employment relations
through temporary employment agencies can provide protection to workers while preserving
flexibility in labour relationships for the employer.
In national government, the DA would:
Enhance temporary employment: Recognise the importance of temporary employment agencies
in transitioning people into the formal job market, and support the formal temporary
employment agency sector in supplanting illegal and exploitative temporary employment agents.
This will be aligned with the introduction of a redesigned and better resourced Labour
Inspectorate featuring: a computerised database of registered labour brokers; improved
oversight capacity in each of the nine provinces; power to search premises and issue notices; and
improved coordination with the SAPS, including information sharing where appropriate.
Encourage the use of fixed-term contracts for task- or project-based employment.
Retain the current legislation which holds that a temporary employee will only be deemed
permanent when he/ she has been employed for more than two years. This allows sufficient
scope for temporary employments for once-off projects with longer timeframes whilst ensuring
that workers do not remain perpetually excluded from the benefits of permanent work.
13 Deloitte. n.d. ‘The non - permanent workforce, what are the risks going forward?’. Available. *Online+: http://www.deloitte.com/assets/Dcom-SouthAfrica/Local%20Assets/Documents/Non_permanet_workforce.pdf (May 2013). 14 World Bank, 2013. 15 World Bank, 2013. 16 World Bank, 2013.
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3.4. Easing the regulatory burden on small businesses
Small businesses are an important employer. The National Development Plan envisions that by 2030,
90% of jobs would be provided in this sector.
Small business is particularly hard hit by labour regulations that drive up the cost of employment.
Small business is particularly hard hit by labour regulations
that drive up the cost of employment.
A survey by the South African Chamber of Commerce and Industry (SACCI) found that a quarter of
possible new jobs are not created because businesses are dissuaded by burdensome labour
legislation, particularly the high financial and administrative costs associated with disciplinary
procedures. Around 61% of businesses surveyed employed less than 50 workers (and are thus
considered small firms)17.
To ease the regulatory burden on small employers, the DA proposes the following:
Amending the definition of big employer in the Labour Relations Act so that it only applies to
entities that employ more than 250 persons. The aim here is to reduce the administrative
burdens faced by SMMEs, and encourage them to employ more people.
Developing a Code of Good Practice for Small Employers that provides guidelines on substantive
and procedural fairness whilst taking into account the unique relationship between small
employers and their employees as well as the capacity and resources of the employer.
Exempting small businesses from the statutory requirements for a fair dismissal for operational
requirements. Procedural fairness for dismissals by small employers should be contained in the
Code of Good Practice for Small Employers.
Establishing a one-stop shop for small business registration that would include an advisory desk
on labour regulations.
3.5. Facilitating access for new job seekers
The 2013 World Bank Doing Business Report highlights that young workers often bear the brunt of
rigid labour regulations as they typically lack training and substantial experience and employers are
reluctant to take them on because of “burdensome regulation and high redundancy cost”18.
Young workers often bear the brunt of rigid labour regulations as they typically lack
training and substantial experience.
The World Bank proposes the use of apprentice wages as a means to overcome employer resistance
and create new opportunities for young jobseekers. Apprentice wages allow businesses to hire
young, first time employees for a portion of the mandatory minimum wage. The apprenticeship is
normally tied to a specific time period, typically one year.
17 SACCI, 2012. SACCI Survey on Labour Regulations. Available. [Online]: http://www.politicsweb.co.za/politicsweb/view/politicsweb/en/page72308?oid=292362&sn=Detail&pid=72308 (May 2013). 18 World Bank, 2013.
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This practice is most common in South Asia, where 63% of economies use some kind of apprentice
wage, and in high income OECD economies, where 48% of economies make use of such a system19.
Apprentice wages are typically 70% to 80% of the mandatory minimum wage, with the average wage
ratio for apprenticeships at 0.3320.
Apprentice wages can pay a “double dividend” by securing the transition to permanent employment
for young workers and providing for lower labour costs by the employer21. Lower wage costs are
compensated for by training commitments on the part of the employer.
This provides the apprentice with job-ready skills that have value in the economy in which he or she
participates22. Additional benefits for employers is that they have an opportunity to form a
relationship with an individual over time and that the apprentice contract allows them time to
improve the skills of an employee to ensure that their level of productivity warrants full wages if, or
when, they are permanently appointed.
A national DA government would:
Subject the use of apprentice wages to comprehensive regulatory impact assessment and pilot
the use of such wages in targeted industries.
The DA also believes that a national Youth Wage Subsidy would break the cycle of unemployment
for young South Africans.
The DA also believes that a national Youth Wage Subsidy would break the cycle of
unemployment for young South Africans.
The ANC government continues to bow to irrational resistance from its alliance partners and has not
secured the full implementation of a Youth Wage Subsidy for South African businesses.
In a study of small business growth, SBP found that 55% of panellists were in favour of a youth wage
subsidy23 as a mechanism to promote employment. The subsidy had the most pronounced support
among firms employing 31 to 40 people, with two thirds of firms of this size supporting the
subsidy24.
A national DA government would:
Immediately introduce a targeted wage subsidy for young and low skill people aged between 18
and 29 years old earning below the personal income tax threshold. It will be available for a
maximum of two years and have a maximum value of R12 000 per year. It will run through the
Pay as You Earn (PAYE) system operated by the South African Revenue Service (SARS). The
subsidy will be subject to an initial implementation period of three years with detailed
19 World Bank, 2013. 20 World Bank, 2013. 21 World Bank, 2013. 22 Karmel, T. & Rice, J. 2011. The economics of apprenticeships and traineeships. Report 4. National Centre for Vocational Education Research. Available. [Online]: http://www.australianapprenticeships.gov.au/documents/NCVERReport4.pdf (May 2013). 23 SBP, 2013. 24 SBP, 2013.
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monitoring and reporting on a quarterly basis. Continuation of the subsidy and design changes
will depend on a full impact evaluation, with appropriate job creation and cost per job criteria.
4. Responding to labour unrest Concerns around labour in South Africa also centre on the level of strike action, and specifically the
escalation in levels of violence associated with strikes.
From 2010 to 2011, 20 800 000 man-days were lost due to strike action25. According to the National
Treasury, mining strikes alone cost South Africa over 10 billion rand in 2012.
Although South Africa has a number of unique challenges the increase in the uptake of industrial
action is a global phenomenon. Europe has been shaken by a number of strikes disrupting travel and
affecting stock markets. Spain and Italy have seen the downing of tools in protest against austerity
measures. The violence and lawlessness surrounding strikes in South Africa has not been mirrored in
other countries.
Strikes which come about through the operation of proper labour structures have a lesser chance of
becoming violent or enduring for long periods. This is because notice is given of the strike, allowing
public safety officials to tailor appropriate responses. Importantly, the reasons for the strike are well
known to both the employer and employee, which will allow them to have a good understanding of
what the points of dispute are and consequently how to solve them.
Wildcat strikes are not protected strikes and should be stopped. Court interdicts have proven to be
ineffective in the prevention of wildcat strikes. The lack of accountability for wildcat strikes adds to
the lawlessness associated with strikes.
A proper balance must be struck in order to minimise costly strikes in South Africa while
respecting the right to strike.
This high level of industrial action is costly for South Africa, but the right of persons to strike must be
upheld. A proper balance must therefore be struck in order to minimise costly strikes in South Africa
while respecting the right to strike. Adjustments need to be made regarding the system of labour
relations in order to find this balance.
The DA proposes the following with regard to strikes:
Introducing a culture of democracy in union activity by adopting the proposed amendments to
section 64 of the LRA which would require unionised workers to vote (by secret ballot) approve a
strike before the union can go ahead with the strike.
Repealing section 67 of the LRA which protects unions from court action should they fail to
adhere to section 64 of the Act (including the requirement for unions to ballot before striking).
Holding unions accountable for damage caused during strike action by their members.
25 South African Institute of Race Relations “ South Africa Survey” (2012) at 406.
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Supporting the amendment of section 69 (sub-section 1) of the LRA which states that only union
members be allowed to join a supporting picket. This will mean that all participants at a strike
would be assumed under law to be union members – thus making it possible to hold unions
liable for damage caused during strikes, pickets or other gatherings.
5. The institutions supporting labour in South Africa
5.1. NEDLAC
The National Economic Development and Labour Council (NEDLAC) was established at the time of
South Africa’s first democratic elections. It was intended to be a forum for social dialogue, and the
platform for consensus-building around mechanisms to promote social development and economic
growth.
Through its four chambers (Business, Government, Labour and Community), NEDLAC considers
issues that are tabled either by Government or one of the constituencies of the four chambers.
Consideration is concluded through inquiries, studies, and analyses of economic and societal affairs
in South Africa, following which reports are presented to parliament for review in legislative
decisions.
NEDLAC has, however, been criticised from various quarters for its failure to deliver dynamic
economic policy proposals. Deputy President Kgalema Motlanthe has said that the quality of
participation in the forum has declined, Trade and Industry Minister Rob Davies has criticised the
entity, saying that it “takes too long and achieves too little”26 and the ILO Director for South Africa,
Vic van Vuuren, has said that NEDLAC has become ineffective27.
Of particular concern, is the slow pace at which decisions are taken and the fact that NEDLAC is
perceived to have become a negotiating ground for major unions, large business and government.
The voices of the unemployed and informal businesses are not heard or considered.
NEDLAC has, for example, dragged its feet in developing consensus on the issue of the proposed
Youth Wage Subsidy for first-time work-seekers and allowed COSATU to continue blocking NEDLAC
decisions on this crucial issue.
As South Africa continues to face considerable social and economic challenges, the role and
functioning of NEDLAC must be reassessed. NEDLAC must be more than a forum for big business and
labour. Safeguards must be built in to ensure that big unions cannot use the forum to block
progressive economic policy and that the plight of the unemployed is not ignored in NEDLAC’s
deliberations.
26 Jones, G. ‘The National Economic Development Council is under attack’, in Financial Mail. Available. [Online]: http://www.fm.co.za/economy/2012/11/21/nedlac-under-attack (May 2013). 27 Maswanganyi, N. 2012. ‘Nedlac chief wants overhaul of forum’, in Business Day. Available. [Online]: http://www.bdlive.co.za/national/labour/2012/10/09/nedlac-chief-wants-overhaul-of-forum (May 2013).
15
A national DA government would Amend the National Economic Development and Labour Council
Act 35 of 1994:
Section 3(4) will be changed so that members representing organised community and
development interests will be appointed by the Minister on nominations made by any registered
charity, NGO, or community organisation. This will increase the effectiveness of community
participation in NEDLAC.
Paragraphs will be added to Sub-Sections 2, 3 and 4 which that require the Minister to consult
the executive council when appointing representatives of business, labour, and civil society
according to the following requirements: they represent a significant community interest on a
national basis; they have a direct interest in economic development, employment creation and
poverty reduction; and they are constituted democratically. This will make Sub-Section 3(5)
obsolete, and it will consequently fall away. The additional requirements will ensure that
community aspects which entail the informal sector are given proper cognisance by NEDLAC.
Section 5(1) will be amended so that it reads: The Council shall (a) strive to promote the goals of
economic growth, employment creation, poverty reduction, inclusion in economic decision-
making and social equity. This addition will compel NEDLAC to consider job creation and poverty
reduction in its reports. This will as a consequence mean reports will include flexibility of the
labour market.
5.2. CCMA
The CCMA is the largest dispute settlement centre in South Africa. It was established under the
Labour Relations Act and has the function of conciliating and arbitrating labour disputes, establishing
workplace forums and deciding on the fairness of dismissals.
Within this dispute settlement there exists a number of codes of good practice, ranging in topics
from sexual harassment to dismissal. These codes of good practice have been developed by NEDLAC
and any interruption of the Labour Relations Act needs to consider the code of good practice.
Research shows that only 25% of commissioners refer to the codes of good practice when making
arbitration awards at the CCMA28. This means that arbitrators approach issues of fairness without
any guiding norms and consequently Labour Laws are applied rigidly without flexibility.
Approximately 80% of referrals to the CCMA deal with dismissal29. The costly and onerous
procedures for dismissal in section 189 of the Labour Relations Act were drafted with medium and
large businesses in mind. Small employers are discouraged from expanding their workforces when
they face the high costs of dismissing employees who are often initially appointed through relatively
informal human resource procedures (as opposed to the specialist recruitment departments found
in bigger businesses)30.
The DA proposes the following in terms of improving the effectiveness of the CCMA and its flexibility
in dealing with small businesses:
28 Benjamin P(2006), The Regulatory Efficiiency of the CCMA: A Statistical Analysis (UCT Working Paper 06/110) 29 Supra 30 Bagraim, M. 2011. ‘Increase Employment by Giving Small Firms a Break’, in T.A. Nolutshungu (ed). Jobs Jobs Jobs. Sandton: Free Market Foundation.
16
The Codes of Good Practice must be updated by a newly formed and structured NEDLAC. These
codes of good practice will then allow for a more practical basis for solving labour disputes as
input from the community and the unemployed would be added.
Amend Section 203(3) of the Labour Relations Act to maintain that no decision regarding the
Labour Relations Act will be valid unless the relevant code of good practice is considered.
Insert a Section 189B into the Labour Relations Act creating procedures for the dismissal of
persons working for businesses with less than 10 employees. These provisions would still
provide protection for workers, but have less onerous provisions on notice and consensus
seeking processes. Overall the regulatory burden on small business would be minimised. Section
189 of the Labour Relation Act would be amended to apply only to businesses that employ 10-
49 employees.
5.3. Labour inspectors
Business environment specialists SBP have noted that “South Africa is in the paradoxical position of
being both overregulated and under governed”31. This sentiment rings true in the labour market,
where under-resourced labour inspectors cannot properly monitor the legislative safeguards for the
rights and safety of workers.
The Department of Labour has admitted that the labour inspectorate has a very high staff turnover
that is losing skills, and that there is a general decline in its enforcement capabilities32. The
Department of Labour has also been chastised for not providing inspectors with sufficient resources
to do their jobs, including appropriate transport, telecommunications equipment, and IT equipment
and systems to log their findings.
There is no sense in creating legislation to protect workers that can not be appropriately monitored.
An efficient labour inspectorate would also remove risks from the system where anecdotal evidence
is used in blanket criticism of working conditions in specific sectors, without objective evaluation of
compliance with regulations.
A national DA government would:
Ensure that labour inspectors are appropriately trained to respond to complaints.
Invest in skills specialisation for labour inspectors to respond to the changing labour
environment.
Ensure that labour inspectors use a standardised approach in evaluating and reporting on
complaints and that these are logged in an integrated information system.
Ensure that labour inspectors have the equipment they need to perform their jobs effectively.
Enhance the educational role of labour inspectors in support of a pro-active approach to
promoting compliance with labour regulations.
31 SBP. 2012. ‘Current State of Legislation in South Africa’. SBP Occasional Paper. Available. [Online]: http://smegrowthindex.co.za/wp-content/uploads/2012/08/SBP-alert-08.12_digital.pdf (May 2013). 32 Department of Labour. 2012. Presentation to the Select Committee. 19 September 2012. Available. [Online]: www.pmg.org.za (May 2013).
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6. Vulnerable workers
6.1. Migrant mine labour
Migrant labour is the “labour market infrastructure” on which apartheid-era industrial relations and
the Bantustan system were built33. Migrant labour has traditionally been concentrated in the mining
industry of South Africa34 and includes both labourers coming into South Africa from neighbouring
countries, and internal movement, normally between rural communities and urban areas.
The apartheid system brought about a system of circular migration in which workers would
temporarily and repetitively move between their homes and place of work. Mine workers would
spend eleven months at their place of work and then one month back with their family. With the
end of the apartheid system, little has changed regarding the circular migration system. This system
adds to the poor living conditions of many miners, as the double burden placed on their salaries do
not allow them to reside in proper conditions.
Other countries with remote mines (e.g. Australia and Canada) face similar issues around migrant
labour35. They have eased migrant labour problems by reducing work intervals and allowing miners
to return home more often.
Traditionally miners have lived in single sex mining hostels, many of which provided poor living
standards. In order to remedy this, mining houses started to give “living out” allowances which were
supposed to be used by miners to fund their living arrangements outside the mine. The unintended
consequence of this was the creation of informal settlements outside of mines, where many miners
have a second household and often a family unit36. This means that miners often have two families
to support on one salary, creating an untenable socio-economic situation and an environment
conducive for labour unrest.
In national government, the DA would explore the following options with regard to migrant labour:
Shorten work cycles in continuous operations: Investigate the possibility of implementing a two
months’ work/ten days leave cycle that mine workers must be given a choice to opt in for. This
will allow workers time to go back to their families and relieve some of the stresses of the
double economic burden placed on them.
Overhaul of the transport network for migrant workers: Reducing the travel time for migrant
workers in returning home by investing in transport infrastructure and involving businesses in
the mining industry in securing safe, efficient transport between the homes and workplaces of
migrant labourers.
Modernise mine hostels: Ensure that mining hostels provide better living conditions for miners
and, where possible, reversing the trend of informal settlements sprouting up next to mines.
33 Hartford, G. 2012. The Mining Industry Strike: What are the causes and what are the solutions? Available. [Online]: http://us-cdn.creamermedia.co.za/assets/articles/attachments/41878_2012_10_03_mining_strike_wave_analysis.pdf (May 2013). 34 Jonathan Crush, Alan Jeeves, and David Yudelman, South Africa’s Labor Empire: A History of Black Migrancy to the Gold Mines (CapeTown: David Philip, 1991) 35 Hartford, 2012. 36 Kapelus, P. 2012. ‘Migrant labour still a part of social dynamics of mining’, in Business Day. Available. [Online]: http://www.bdlive.co.za/opinion/2012/08/24/migrant-labour-still-a-part-of-social-dynamics-of-mining (May 2013).
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This could ease the economic burden of maintaining two households. Mining houses can be
encouraged to modernise their hostels through a monetary incentivisation programme.
Engage with financial institutions to improve the facilitation of money transfers to rural areas to
support the livelihoods of rural households who are dependent on the salary of a migrant
worker.
Strengthening the participation of municipalities in providing services and infrastructure in
residential areas around mines. This would include a specific focus on engaging with mine
houses in the development of Integrated Development Plans for municipalities with mining
operations.
Promote responsible business practice by encouraging compliance with the King III framework of
corporate governance, specifically the provisions around the place of business in society, the
role of corporate boards in engaging with stakeholders, and reporting on the social sustainability
of a business, as part of an integrated Annual Report.
6.2. Farm labour
The DA strongly supports the important improvements in the labour rights of farms workers since
the early 1990’s. In 1993 farm workers were included under the provisions of the Unemployment
Insurance Act and the Basic Conditions of Employment Act. The Basic Conditions of Employment Act
and the revisions passed in 1997 prescribes the maximum working hours, vacation, sick leave
allowances, and overtime payments for workers covered by the Act37.
Due to the lack of unionisation in the agricultural sector, collective bargaining cannot reasonably be
established. The Minister of Labour therefore started setting a minimum wage for farm workers in
2003.
Studies have shown that the introduction of a minimum wage in agriculture has led to a slowdown
of permanent jobs created in the sector at a time when output has been expanding, and that
significant numbers of jobs have been lost38.
Calculations by the South African Institute of Race Relations show that the agricultural sector has
shed 331 000 jobs over the past 12 years, with the number of farm workers declining from 969 000
in 2000 to 638 000 in 201239. Following the 52% increase in minimum wages for farm workers
announced in February 2013, analysts predicted that as many as 200 000 more jobs could be lost
over the next five years40.
The DA supports measures to ensure that farm workers earn a living wage. A study by the Bureau for
Food and Agricultural Policy study into farm worker wages found that even at a minimum wage of
R150 per day, the average farm worker cannot afford a basket of food that supports sufficient
calorie intake and nutritional diversity41.
37 Tregurtha & Vink, 2008. 38 Tregurtha & Vink, 2008. 39 City Press. ‘Farm worker lay-off the tip of the iceberg’, 10 April 2012. Available. *Online+: http://www.citypress.co.za/business/farm-worker-lay-offs-the-tip-of-the-iceberg/ (April 2013). 40 City Press, 2012. 41 Bureau for Food and Agricultural Policy, 2012.
19
Training lay-off schemes can be an effective mechanism to buffer workers against short-term dips in
agricultural profits. Wage subsidies of as much as 75% can be made available for limited periods as
long as workers are given the opportunity to upskill.
The farm labour strikes in the Western Cape in December 2012 and January 2013 also highlighted
issues with regard to seasonal migrant labour in the agricultural sector.
Seasonal work teams come to farming areas for harvest periods or other activities (e.g. planting or
pruning) that require high labour inputs during certain times of the year.
The key issue around seasonal labour in agriculture was the wage differential between temporary
and permanent workers. In some instances there were, however, also concerns around the living
conditions of seasonal labourers, and reported xenophobic tensions between local workers and
migrant labourers from outside of our borders.
A national DA government would:
Favour progressive wage increases that avoid sudden spikes that put undue pressure on input
costs and lead to unnecessary job losses.
Carefully specify the circumstances under which multi-year wage agreements can be re-
negotiated, and ensure that affordability is considered in the determination of minimum wages.
Ensure that deductions in municipal service costs to the poor (e.g. in terms of minimum
electricity use and water usage) are extended to farm workers.
Facilitate the national roll-out of the Youth Wage Subsidy Programme as a mechanism to
alleviate the unemployment crisis facing South Africa’s youth.
Support the full roll-out of training lay-off schemes and accompanying awareness campaigns to
educate farm workers and farm workers on their options in this regard.
Protect temporary employees through a well-regulated employment agency sector. This will be
aligned with the introduction a redesigned and better resourced Labour Inspectorate featuring a
computerised database of registered labour brokers; improved oversight capacity in each of the
nine provinces; power to search premises and issue notice; and improved coordination with the
SAPS, including information sharing where appropriate.
Support the development of agri villages that could include temporary accommodation for
seasonal workers. This will allow for improved access to services such as electricity, sewage,
water, health, and social services. Funding for temporary accommodation in agri villages could
be mobilised from industry bodies in the agricultural sector, supplemented with any relevant
housing subsidies. There will be a limitation on the period per year that a specific individual
could make use of the temporary accommodation facilities.
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6.3. Domestic workers
There are around 53 million domestic workers in the world, of which 83% are women42. In South
Africa, it is estimated that around 1.1 million people are employed as domestic workers in private
households (of which three-quarters are female)43. In 2010 the sector was the country’s third largest
employer of women, employing approximately 15.5% of all women workers44.
These workers have historically enjoyed only the most tenuous of rights. There has been significant
progress in the formalisation of the rights of domestic workers in South Africa. This has been driven
by, among other things, the inclusion of Domestic Workers in the Basic Conditions of Employment
Act, the adoption of the minimum wage and Sectoral Determination for Domestic Workers in 2002,
the processes preceding the formal ratification of the International Labour Organisation (ILO)
convention on domestic work,45 and the development of a union movement for domestic workers.
Whilst domestic workers rights have been formalised, they often still suffer as a result of weak
enforcement mechanisms, the informal nature of the employment relationship, and the lack of
awareness about legal rights on the part of both employers and employees46. Critically, domestic
workers in South Africa also remain excluded from protection under the Compensation Fund that
would make them eligible for compensation were they to become injured or disabled because of
work.
To ensure that domestic workers are protected and can enjoy their full rights as employed South
African citizens, the DA strongly supports:
The expansion of Compensation Fund coverage to include domestic workers;
A national information campaign to inform domestic workers and their employers of their rights
– including the Sectoral Determination on minimum wages;
The effective regulation of labour brokers in the domestic work sector to prevent the
exploitation of workers;
Effective partnerships between the government and civil society organisations for capacity-
building projects to develop the skills of domestic workers; and
The extension of support under the Youth Wage Subsidy Scheme to all domestic workers in the
relevant age bracket who work on a full-time basis for a single employer (to be administered
through the personal income tax system).
42 International Labour Organisation. 2013a. ‘Domestic Workers’. Available. *Online+: http://www.ilo.org/global/topics/domestic-workers/lang--en/index.htm (November 2013). 43 International Labour Organisation. 2013b. Domestic workers across the world: Global and regional statistics and the extent of legal protection. Geneva: ILO. 44 International Labour Organisation, 2013b. 45 International Labour Organisation. 2013c. ‘South Africa ratifies four international labour Conventions’. Available. *Online+: http://www.ilo.org/global/standards/information-resources-and-publications/news/WCMS_216613/lang--en/index.htm (November 2013). 46 International Labour Organisation. 2013b.
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7. Labour and redress
7.1. Workplace inclusion
Rapid economic growth and the improvement of educational outcomes will create more
opportunities for South Africans and in turn promote the objective of diversifying participation in all
sectors of the economy.
The DA fully supports the constitutional provisions for corrective action and the objectives of the
Employment Equity Act (Act 55 of 1998) to promote redress in the South African labour market.
The provision for affirmative action in Section 9(2) of the Constitution implicitly recognises the
formal removal of discriminatory and exclusionary labour laws as a necessary, but insufficient
precondition to the process of achieving equality. It allows for “legislative and other measures
designed to protect or advance persons, or categories of persons, disadvantaged by unfair
discrimination”.
The constitutional provisions in support of redress recognise that identical treatment can sustain
inequality in circumstances where people start off from a position of disadvantage and that the
repeal of formal legislated barriers preventing the enjoyment of equal rights and opportunities does
not in itself give people the qualifications or experience to compete equally and to overcome
prejudice.
We must continue to find a balance between the constitutional principles of non-racialism and
equality and the constitutional provisions for redress based on historical disadvantage. Corrective
action that finds this balance is consistent with the liberal principles of social justice and with the
DA’s vision of an Open Opportunity Society for All.
We therefore support appropriate measures to advance workplace inclusion. This means the
following:
We support balanced, qualitative processes to promote diversity which may include racial
preference, but excludes racial quotas.
We support dedicated efforts to invest in the long-term potential of staff and to promote
diversity through training, mentoring, and career pathing.
In order to advance diversity, persons from previously disadvantaged groups should enjoy
favourable consideration when they are as well qualified for appointment as the next man or
woman, or when they show comparable promise47.
We have a very strong preference for an incentive-based system of encouraging appropriate
corrective measures, rather than punitive measures to impose racial representivity.
As a party, we have always supported the need for corrective action, but oppose the drive to enforce
demographic representivity in employment outcomes. The Constitution and the objectives of the
47 Reference from the position paper on Equity and Corrective Action prepared by Dene Smuts MP and adopted by the DA Federal Council in 2005.
22
Employment Equity Act of 1998 do not require racial quotas or demographic representivity, and
expressly prevents employers from establishing absolute barriers to the employment and
advancement of non-designated groups. The Employment Equity Act requires that positive steps
must be taken to advance workplace diversity over time.
Our approach is consistent with the conceptualisation of Employment Equity in the National
Development Plan, which frames the intent of the Employment Equity Act as the need for “firms to
develop their own human potential, spending time and resources mentoring and developing staff”.
It also resonates with the definition of corrective action supported by the Black Management Forum,
namely that: “Affirmative action is a planned and positive process and strategy aimed at
transforming socio-economic environments which have excluded individuals from disadvantaged
groups, in order for such disadvantaged individuals to gain access to opportunities, including
developmental opportunities, based on their suitability”.
The Black Management Forum clarifies this definition as follows: “Affirmative action therefore
implies meritorious empowerment of individuals through opportunity and development. Assessment
of merit should be based on fair, objective and non-culturally biased standards”.
Constitutional provisions for diversity in appointments to public bodies (such as the judiciary,
Chapter 9 institutions and public administration), also require that the need for such bodies to
broadly reflect the gender and racial composition of South Africa “must be considered” when
appointments are made. It thus requires the “consideration” of diversity, but also upholds the equal
right of all South Africans to serve and be chosen for appointment.
The goal of demographic representivity is also not supported by the Employment Equity Act (1998).
Section 15(1) of the Act provides for redress measures “designed to ensure that suitably qualified
people from designated groups have equal employment opportunities, and are equitably
represented in all occupational categories and levels in the workforce of a designated employer”.
Two aspects of this formulation are important: Firstly, the reference to “equitable” representation
means that this representation must be just, right and fair. Secondly, the Act clearly states that
candidates must be “suitably qualified” for the role to which they are appointed, a provision that
clearly advocates against appointments that do not consider merit.
It is also important to note what is included under the rubric of corrective action measures outlined
in Section 15(2). There is reference to:
The elimination of barriers, including unfair discrimination, which adversely affects people from
designated groups;
Measures designed to further diversity;
Reasonable accommodation for people from designated groups to ensure that they enjoy equal
opportunities and are equitably represented;
Measures to ensure the equitable representation of suitably qualified individuals; and
Measures to retain and develop people from designated groups and to implement appropriate
training measures.
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Section 15(3) explicitly states that whilst numerical goals can be set, this must exclude quotas that
set an absolute barrier to the employment of persons from non-designated groups.
A firm’s compliance with employment equity legislation is not determined by the level of equity that
has been achieved, but by the extent to which they have taken steps to promote diversity over time,
including the development of a plan for corrective action, establishing a consultative workplace
forum on diversity, appointing a manager to take responsibility for corrective action and submitting
reports to a commission responsible for monitoring workplace diversity.
We support both the objectives of the Employment Equity Act of 1998 and the majority of
procedural compliance measures outlined in the Act as positive steps to promote diversity.
In government, we would, however, initiate processes to move away from the punitive employment
equity process and to align corrective action with the incentive-driven Broad-Based Black Economic
Empowerment policy and Codes of Good Practice. This will entail the following:
Developing a Workplace Inclusion Act that outlines procedural compliance measures (for
example: having a corrective action plan in place, establishing a consultative forum on workplace
diversity, appointing a manager to take responsibility for corrective action and submitting
reports to a commission responsible for monitoring workplace diversity);
Making points in a “Workplace Inclusion” element of the B-BBEE Scorecard conditional on
procedural compliance to the Workplace Inclusion Act (similar to the manner in which points in
the “Skills Development” element of the B-BBEE Scorecard is currently conditional on
compliance with the Skills Development Act);
Awarding points in the “Workplace Inclusion” element of the B-BBEE Scorecard both for
compliance to the procedural aspects of the Workplace Inclusion Act, and for progress towards
building a workforce that is broadly representative of the South African population (aspirational
targets for black participation on different levels of an organisation can be set in the scorecard,
with businesses getting recognition for their progress towards these targets).
In our approach, individuals would be allowed to self-identify as being black (as is the practice in the
current Broad-Based Black Economic Empowerment Codes and Employment Equity processes). If a
dispute arises, the affected individuals will have to make a case that he or she has been
disadvantaged as a result of apartheid legislation. Government has no business defining race, and
our approach does not require it.
In addition, we believe that the positive contributions of diverse employers should be recognised. To
that end we believe that an annual list of the Top 20 most diverse employers in each sector of the
economy should be published in a special newspaper supplement. By providing positive publicity for
top-performing firms, the list can incentivise employers to develop their own innovative methods to
develop a diverse staff component.
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7.2. Economic Inclusion
Our approach to Employment Equity dovetails with our support for broad-based measures to
promote economic inclusion.
Core principles of our approach include the following:
Our starting point is that a rapidly growing economy will create many more jobs and open more
opportunities for people to get a foothold in the economy and build their careers. A declining
economy will reduce opportunities and result in an increasingly bitter battle for a shrinking
number of jobs. Sustained, rapid, job-creating growth is therefore essential if we wish to secure
a better life for all. And this, in turn, is essential to create the conditions for non-racialism to
flourish in South Africa.
Economic growth requires policy certainty, clean government, good education, skills-training,
and health care, and the reliable and efficient delivery of other basic services, such as electricity,
water, sewage, refuse removal, roads, and storm water.
This means government has a central role to play in creating conditions to achieve rapid,
sustained economic growth.
We also recognise the need to promote economic inclusion with a specific focus on previously
disadvantaged individuals who faced legislated and institutionally organized exclusion.
The DA believes that that the business community can play a pivotal role in promoting economic
inclusion and broad-based economic empowerment.
We accept the use of an appropriate empowerment scorecard for public procurement as a tool
to incentivise business practice that supports economic inclusion and broad-based economic
empowerment. We believe the scorecard must be amended to ensure that empowerment is 1)
genuinely broad-based; 2) incentivizes business to promote economic inclusion, education,
skills-training and broad-based ownership; 3) that it encourages the growth of new businesses;
and 4) introduces “equity equivalents” to encourage a range of positive contributions to
economic growth and opportunities for all.
We do, however, believe that the prescription of racial quotas, and specifically the ethnic breakdown
of racial targets for the employment equity element of the scorecard into categories of previously
disadvantaged people (as proposed in the 2013 amendments to the Codes of Good Practice) will
undermine equitable redress.
We believe that diversity will be best promoted through dedicated efforts to attract, develop and
retain talented staff from a diversity of backgrounds. We believe that greater alignment between
the Codes of Good Practice for Black Economic Empowerment and a procedure-driven Workplace
Inclusion Act (as outlined above) can establish an incentive structure in support of appropriate talent
and diversity management strategies that will ultimately promote diversity.
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7.3. Executive pay
Wage disputes often relate to the enormous disparities in wages as well as the high wages paid to
executive managers.
Managers and owner-managers have a right to be rewarded for their entrepreneurial inputs, their
unique skills and qualifications, the responsibility that they take on, and the risks that they take.
Conflict around executive pay can, however, be diffused by increasing transparency around
executive pay.
A national DA government would:
Amend the Companies Act to improve transparency around executive pay and boost shareholder
activism in this regard. For example, the critical performance criteria used to determine levels of
fixed and variable pay must be circulated to shareholders and citizens alike and executive pay
hikes must be subject to shareholder oversight. This kind of transparency will serve to moderate
executive remuneration and help to bridge the divide between workers and managers.
Consider changes to labour legislation to include a requirement for union leaders and executives
to disclose their pay packages to union members and allow for oversight by its members over
these packages.
8. Building the skills base
Unemployment in South Africa is exacerbated because work-seekers are not equipped with the
necessary skills to participate in the labour market.
In 2012 Adcorp estimated that there were more than 829 000 unfilled positions for high-skilled
workers, including senior management, professions (medicine, engineering, accounting and law),
technical occupations (technicians and artisans) and agriculture48. Despite the fact that South Africa
has one of the highest unemployment rates in the world the country has one of the lowest
unemployment rates for skilled professionals (around 0.4%)49.
South Africa faces the duel challenge of increasing the number of jobs available and increasing the
number of people who are appropriately skilled to fill the available jobs.
South Africa therefore faces the duel challenge of increasing the number of jobs
available and increasing the number of people who are appropriately skilled to fill the
available jobs.
From a labour perspective the ANC government has addressed the skills development challenge
through 21 Sector Education Training Authorities (SETAs). SETAs are regarded as one of the key role-
players in the broader National Skills Development Strategy and are expected to deliver “sector-
specific skills interventions” that contribute to a “skilled and capable workforce” and address
48 Adcorp. 2013. Adcorp Employment Index, March 2013. Available. [Online]: http://www.adcorp.co.za/NEws/Documents/Adcorp%20Employment%20Index%20-%20201304%20final.pdf (May 2013). 49 Pike, R. 2011. ‘Labour Market Review – Problem Analysis’, in T.A. Nolutshungu (ed). Jobs Jobs Jobs. Sandton: Free Market Foundation.
26
employer skills demands50. The National Skills Development Strategy envisions that SETAs will
develop sector skills plans that “outline current and future learning and qualifications needs” and
“improve the match between education and training supply and demand”51.
SETAs are expensive to administer, now sapping around R8 billion per year from the national budget.
Over the past ten years, South Africa has spent more than R57 billion on SETAs52. As mentioned
above, the Minister of Higher Education and Training, Blade Nzimande, agrees that the country has
little to show for this massive investment53.
The National Planning Commission found that SETAs currently face poor governance, administration
and financial mismanagement, inadequate resources, inadequate monitoring and evaluation
system, and that they have not integrated sufficiently with the post-school training sector54.
The National Development Plan also points out that the SETAs have around R3 billion in surplus
funds (collected through levies on employers) whilst other training institutions are financially
constrained55.
The DA proposes the following:
Moving away from centralised, bureaucratic control over the development of courses and
training programmes to allow training institutions to respond to real skills demands. Scarce skills
identification will be included in the mandate of the Department of Higher Education and
Training to ensure that the development of courses approved through the National
Qualifications Framework are aligned with actual skills needs.
Encouraging greater flexibility in the application of the National Qualifications Framework to
allow educational institutions in South Africa to offer internationally recognised qualifications.
Disbanding SETAs to allow businesses and industry bodies to engage directly with higher
education institution (including Further Education and Training [FET] colleges) in order to
develop skills development programmes.
Improving the management of the National Skills Fund to ensure that financial support is
provided to underfunded sectors and emerging skills areas.
Allowing public providers (such as FET colleges and universities) who are offering training
opportunities in identified priority areas to gain funding from the National Skills Fund.
Encouraging the appointment of young-work seekers through the Youth Wage Subsidy
Programme and ensuring that subsidies are conditional on a commitment by the employer to
provide appropriate workplace skills training.
Introducing an Opportunity Voucher scheme that would allow young adults more freedom in
choosing the training they wish to pursue. The vouchers will be allocated according to strict
requirements based on an assessment of the skills needed to accelerate economic growth. They
50 Department of Higher Education and Training. 2011. National Skills Development Strategy III. Available. [Online]: http://www.info.gov.za/view/DownloadFileAction?id=163950 (May 2013). 51 Department of Higher Education, 2011. 52 Ramutloa, 2013. 53 Ensor, L. 2012. ‘Little to show' for Seta funds – Nzimande. in Business Day. Available. [Online]: http://www.bdlive.co.za/articles/2012/03/07/little-to-show-for-seta-funds--nzimande;jsessionid=A2C3D100C57F094D0F0CFAF73905380D.present1.bdfm (May 2013). 54 National Planning Commission. 2012. National Development Plan. 55 National Planning Commission. 2012.
27
will be available to individuals who have completed matric, and will be designed to help pay for
further education and boost the small business sector. The voucher would entitle the graduate
to (a) a partial subsidy of university or FET college fees; (b) seed capital to establish small or
micro enterprises subject to a well-formed business plan; and (c) a state guarantee to cover
loans extended by commercial banks to graduates to establish small or micro enterprises subject
to a coherent business plan and other requirements.
Progressively up-scaling the expanded public works programme (EPWP) to employ 2.5 million
people on a contract basis by 2025. The programme will provide temporary relief from
unemployment and will include a skills development component.
Establishing a government internship programme to promote skills development and bridge the
divide between studying and finding a first job. This involves a comprehensive government
internship programme across all departments based on the highly successful Western Cape
model. The programme will hire 18 000 interns on 6-month contracts at a rate of R 1200 per
month.
Amending the skills development component of the Broad-Based Black Economic Empowerment
scorecard so that contributions to skills development initiatives benefitting any South African
earning less than R15 000 per month will be recognised and given due credit. Recognition of
skills development contributions for non-employees will provide businesses with an additional
incentive to invest in equipping South Africans to participate in the formal economy. In its
current form, the scorecard only recognises contributions to skills development for an entity's
own employees. This excludes South Africa's large unemployed population from capacity-
building initiatives initiated by the business community.
9. Conclusion Unemployment contributes to serious socio-economic challenges in South Africa, including
unacceptably high levels of poverty and inequality.
To create jobs, the South African economy must be globally competitive and must grow to deliver
more opportunities over time.
When government makes the laws and regulations that control employment relations it can choose
to establish an enabling environment for growth and job creation, or it can set up a regulatory
system that acts as an inhibitor for the expansion of economic opportunities.
We believe that our labour policy proposals support a labour regime that promotes job creation and
establishes the conditions for more South Africans to be empowered through employment.
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