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).

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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.