A new period of labour stability?
Hopes are high that a new labour-stability package will calm SA’s fraught labour relations environment; but if it comes at the cost of jobs, it may not be a price worth paying
Organised business is hopeful that "ground-breaking" labour law amendments, which include the national minimum wage (NMW) bill passed by parliament last week, will usher in a period of labour stability. But with the economy continuing to shed jobs and with inter-union rivalry on the rise, labour-market peace may remain elusive.
Even more important in such a job-starved economy is whether the reforms will close off first-time job opportunities.
This is the primary concern of professor Haroon Bhorat, head of the Development Policy Research Unit at the University of Cape Town (UCT).
He was the lead author of UCT research that found that an NMW of about R20 an hour could cause more than 500,000 job losses.
"It is not clear whether a more stable industrial relations environment — amid a new legislative amendments environment that may threaten future job creation — is a step forward for our economy," he says.
But Business Unity SA (Busa) is bullish. In exchange for agreeing to an NMW of R20 an hour, business has achieved some big wins in the Labour Relations Amendment Bill, including the introduction of secret strike balloting, advisory arbitration and default picketing rules.
Of these, the requirement that unions conduct secret balloting before going on strike is most likely to reduce the propensity to strike. Though business may not interdict a strike that occurs without secret balloting, such a strike may give rise to the deregistration of the union by the registrar of labour.
Unions have six months from the commencement of the act to ensure their constitutions provide for recorded, secret balloting. Busa CEO Tanya Cohen hopes secret strike balloting will gradually become the norm as those unions that don’t ballot are sanctioned. Another improvement is the introduction of advisory arbitration. This will apply in the event of prolonged or dysfunctional industrial action; when there is violence, damage to property or a threat to constitutional rights; or when industrial action leads to a local or national crisis.
These cases may be referred — by either of the parties, the labour minister or the labour court — to a panel of three arbitrators that is chaired by a senior commissioner with the power to make a final decision in the event of a deadlock.
The panel must make factual findings as well as recommendations for the resolution of the dispute, and give reasons why the parties should accept its award. Employer bodies and unions will have seven days to consider the panel’s award and, though it is nonbinding, the parties must ballot their members before declining it.
The panel’s recommendations must be published, which will put public pressure on the parties to resolve their dispute.
"The idea is to provide a reality check and a way to end industrial action that has spiralled out of control or has no foreseeable closure," says Cohen.
Federation of Unions of SA (Fedusa) general secretary Dennis George says that had this provision been in place during the recent Gautrain strike, the industrial action would not have run on for 15 days.
Another new provision allows for generic picketing rules to be imposed if no such prior rules exist. This should help moderate pickets and strikes, which are often held without any rules stipulating what conduct is impermissible.
These legislative changes go together with a new code of good practice and an accord on collective bargaining and industrial action.
The code tries to shift SA’s fraught industrial relations in a more moderate direction by setting out practical guidelines for acceptable behaviour during collective bargaining, industrial action and picketing. Though the code is not binding it will probably be used by the courts as a benchmark of what constitutes an agreed standard of behaviour.
The code is bolstered by an accord that is a declaration against violence and damage to life and property, and includes an undertaking by signatories to abide by it.
A crucial part of the labour-stability package is the introduction of the NMW. There are roughly 6-million people who earn less than this, so it will raise the wages of almost half the labour force. About 4-million workers who earn between R2,200 and R2,500 a month stand to receive a monthly increase of about R1,000.
The hope is that together these measures will reduce the propensity to strike and the violence and length of strikes, and that they will bolster productivity as well as co-operation between business and labour – something all three credit-ratings agencies have said would support SA’s rating.
Busa president Sipho Pityana believes the bills will go a long way towards ensuring policy certainty, improving labour relations and boosting confidence. "These changes signal a move to greater accountability, while protecting basic constitutional rights — including the right to strike, to associate and to pursue economic activity," he says. "This will bring much needed labour stability, which was one of the areas the ratings agencies identified as a challenge."
Fedusa’s George says: "We think the code and the amendments will modernise and strengthen collective bargaining and that co-operation between the parties will improve."
Cohen believes it already has.
The bills, the accord and the code are the product of exhaustive negotiations among the National Economic Development & Labour Council partners that started in February 2015.
"The process we went through with the leadership of the unions had a profound impact with regard to understanding the limits of lawful industrial action, and there’s certainly a very different tone now to how labour’s leadership regards violence in industrial action," she says.
Cohen believes that had the code been in place during the recent Eskom wage dispute, the violence, damage to power stations and resulting blackouts might have been avoided. This is because the code enjoins employers and unions to train and capacitate their negotiators and ensure that respectful relationships between the parties are developed and maintained throughout industrial disputes.
"It’s when management and workers stop speaking that things often go wrong," she says.
The problem is that the accord and the code have been signed only by Cosatu, Fedusa and the National Clothing, Textile & Allied Workers Union.
The SA Federation of Trade Unions (Saftu), which represents 26 unions and claims to have 700,000 members under the leadership of Zwelinzima Vavi, was formed only in 2017. Vavi has been vocal in rejecting the NMW and the new labour-stability provisions, describing the secret strike-balloting provision as "suicide" for workers and the R3,500 a month NMW as "a slave wage".
Saftu wants R12,500 a month.
DA shadow labour minister Michael Bagraim fears that despite some welcome labour law amendments, the number of strikes could increase as inter-union rivalry and rising joblessness ups the pressure on unions. "We’re going to find unions are getting more desperate as jobs thin out," he warns, "Already Saftu has taken an enormous chunk of the membership of Cosatu. This inter-union rivalry means that one umbrella body has to outdo another. The [most effective] means of outdoing the other is to make an enormous show of your violent reaction during strikes."
The NMW bill establishes an NMW commission responsible for reviewing the wage annually. In deciding on the annual adjustment it must consider the cost of living, the alleviation of poverty and inequality as well as employment levels and economic growth.
If the NMW of R20 an hour causes extensive job shedding, as UCT fears, it will be up to the commission to adjust it.
Another built-in safety valve to prevent job losses is an exemption process. Firms that can show they can’t afford to pay R20 an hour will be able to apply to the department of labour for exemption.
Busa has been party to the development of the new, online exemption system and finds it "efficient and user friendly". Exemption certificates are issued immediately as long as there are no red flags over users’ documentation.
If red flags do go up, the application will be processed manually. "Our only concern is whether the system will cope with the manual case load. But the department has undertaken a 30-day turnaround in processing all exemption applications," says Cohen.
President Cyril Ramaphosa is expected to sign the bills into law in September, with a view to the NMW and exemptions process taking effect from October 1.