A BROADER VIEW
NEWS ANALYSIS: Is labour law reform short sighted?
The jobs crisis in SA continues unabated. But analysts suggest that focusing too narrowly on labour law may divert attention from important debates about policy and macroeconomic variables
Using the most recent amendments to the Labour Relations Act, temporary workers who found themselves out of jobs turned to the commission for conciliation, mediation & arbitration (CCMA) and the labour courts for help.
They claimed they had been unfairly dismissed, explaining that the amendments to the act — requiring employers to hire temporary workers permanently after three months of employment — had led to their sacking, as companies did not want to oblige.
The amendments relate to the contentious issue of labour brokers, which created friction in the ruling alliance. Cosatu had demanded that President Jacob Zuma’s administration ban labour brokers entirely. The ANC took the compromise position — requiring the permanent employment of qualifying workers after three months’ contract employment — which has been given effect in the amendments.
The CCMA has confirmed an increase in cases lodged by temporary employees after amendments to SA’s labour laws
The constitutional court will most likely have to rule on the bigger issue: what happens to labour brokers after those three months are up.
The CCMA says it has recorded an increase in cases lodged by temporary employees since the amendments were made in 2015.
Though there have been no major changes to the laws regulating mining employment — with the exception of a new benchmark for higher wage increases — the CCMA says it has also received referrals from 36 mining companies that have filed section 189 retrenchment notices since the beginning of the year.
This all points to a worsening jobs crisis in the country, as retrenched workers are statistically unlikely to be re-employed in the near future.
Proposed solutions to the "jobs bloodbath" and high unemployment rate have always been controversial due to the different outlooks of the people involved.
Deputy president Cyril Ramaphosa earlier this month suggested that economic regulations should be relaxed to spur job creation. Addressing delegates at the annual conference of the National Economic Development & Labour Council in Ekurhuleni, Ramaphosa said: "As government, we have taken measures to reduce the regulatory burdens of investing in the country and improve the ease of doing [business]."
His sentiments are likely to find favour with organisations such as the National Employers’ Association of SA (Neasa), which has legally challenged some labour laws, especially those governing collective bargaining, saying they are stifling business and leading to job losses.
The other side of the debate features the trade unions and federations. They have argued for even stricter labour laws in light of mass retrenchments. They attribute the job losses to the ease with which business was able to resort to an investment strike when the economy went south.
However, labour analyst Dale McKinley is not convinced. He describes the shift around regulation as "political electioneering", where ideological cards are being played on issues that should have been revisited by the likes of Ramaphosa years ago.
McKinley believes there is a need to review the country’s macroeconomic policies, but he says this is not a new revelation.
In an interview with the Financial Mail, labour minister Mildred Oliphant has expressed similar sentiments.
Oliphant refers to the struggling economy as the real stumbling block to job creation — not the labour laws. "There are challenges when it comes to the economy," she says, "but why should we always focus on labour laws rather than to say how we should grow the economy?"
The minister defends the laws, explaining that public perceptions about their rigidity and inability to protect jobs don’t recognise that they are in fact "most flexible", even when compared with those of other countries.
In his new book, SA’s Corporatised Liberation, McKinley backs this notion: he says contract employment has increased by 500% in the public sector over the past 15 years as a result of a more casual and flexible labour market environment.
However, Ramaphosa says this casualisation of employment is "trapping many people in jobs with few benefits or prospects for development".
A study published by the International Labour Organisation 10 years ago cast doubt on how wise it is to exempt medium to small enterprises from key regulations in SA: "This is problematic as it means that millions of workers are excluded from the protection of labour law."
Neasa CEO Gerhard Papenfus is quick to tell the Financial Mail about the effect of collective bargaining laws, which he says have led to the closure of small businesses.
In the engineering sector, where members of his organisation trade, a 7% wage agreement concluded recently was boycotted by all but one employer body. This was because the wage increase was unaffordable and would lead to retrenchments, Papenfus says.
McKinley says this argument has been used globally to push for flexibility of labour laws. But he says attacks on labour laws are "barking up the wrong tree". Instead, trade, monetary and fiscal policies need to be scrutinised, as well as macroeconomic variables.
If these are not changed, McKinley says, the country will lurch from one crisis to another. This could set a dangerous stage, with the anger, frustrations and disillusionment of the unemployed and marginalised giving rise to social unrest.