JAUNDRÉ KRUGER: Government’s job reservation red herring

President Cyril Ramaphosa’s cabinet has signed off on an ANC proposal that jobs in some sectors of the economy must be reserved for South African citizens — a move the governing party claims will reverse the country’s high unemployment and increasing workforce inequality.

Job reservation is not unique to SA, but with the official unemployment rate at 34.9%, there is increased pressure on government to come up with a policy that might solve the immense jobs challenge.

It is unclear which sectors will be affected, and there are concerns that the introduction of quotas on jobs might be viewed as xenophobic, particularly as the violent 2015 anti-immigrant attacks still loom large in our economy’s rear-view mirror.

The Consolidated Employers Organisation of SA (CEO SA) has also raised a number of potential difficulties on this issue with its members and stakeholders, including the fear that foreign investors may react negatively and that employers may be unfairly targeted by “job quota vigilantes”.

Is there is a need for another law to reserve some jobs for South Africans, or do we need the existing laws to work or be enforced more effectively? The short answer is that we already have the necessary legislative framework to favour SA citizens over foreign workers with equivalent skills in the workplace. The requirements are clear when employing foreign nationals; they just need to be complied with and monitored by the department. This is something we stress to our employer members regularly.

The Labour Relations Act, Basic Conditions of Employment Act and Employment Equity Act provide the parameters for fair and equitable employment in SA. We believe the legislation is not the problem, but rather an inclination by employers to lean away from the employment of labour in general. Employers — particularly small and medium-sized enterprises — are constantly placed under pressure by the National Minimum Wage Act or by the near-impossible requests from organised labour during negotiations.

This opinion was evident when CEO SA ran a recent snap poll of its members on two questions, among others:

• Do the National Minimum Wage Act or minimum wages in your sector affect your decision-making when hiring new employees? The majority, 63%, responded in the affirmative.
• Do the demands made by unions during negotiations affect your decision-making when hiring new employees? Here, a resounding 71% of responding employers that have union members in their employ answered “yes”.

The impact of the National Minimum Wage Act, implemented in January 2019, on SA’s unemployment rate is undeniable — the rate was 26.9% at the end of 2018 and has since risen to a staggering 34.9% at present, with some economists projecting a rise to 35.5% in the first quarter of 2022.

Further to this — the most disturbing statistic for CEO SA as an organisation — is the youth unemployment rate (job seekers aged between 15 and 24) reaching a record high of 66.5%. This clearly reflects employer reluctance to hire new employees.

It must be acknowledged that a majority of employees fall into a historically vulnerable group and their rights must be protected, but employers are increasingly seeking ways to “fill the gap” created by a loss in cash flow and with the burgeoning fourth industrial revolution, and are using technology to relieve the labour burden. CEO SA also asked its members how likely they were to employ new employees if a valid technological alternative was available? 50% of our snap poll respondents indicated that it was highly unlikely.

The Commission for Conciliation, Mediation & Arbitration (CCMA) approach further fuels the trend of employers choosing to avoid labour. Even where an employer follows the correct process with regard to schedule 8 of the Labour Relations Act employees can still revert to the CCMA, where employers are invariably advised to rather settle. And even when employers are successful there is no reimbursement for revenue lost due to time spent away from the business by the employer and/or witnesses, thus leading to a pure loss by the employer regardless of the outcome.

This became clear when CEO SA members responded to the question does the CCMA affect your decision-making when hiring new employees?  Here, 71.6% of responding members who recently attended matters at the CCMA responded “yes”.

New job reservation laws are unlikely to lead to the level of job creation the governing ANC envisages. There needs to be a monumental mindset shift and acknowledgment that unemployment in SA will only be relieved when there are more private sector employers, and those employers are encouraged to revert to the lawful employment of labour.

• Kruger is national manager of the Consolidated Employers Organisation of SA