ADDRESS BY THE MINISTER OF LABOUR: HONOURABLE MN OLIPHANT, AT THE 26 th ANNUAL LABOUR LAW CONFERENCE

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1 1 ADDRESS BY THE MINISTER OF LABOUR: HONOURABLE MN OLIPHANT, AT THE 26 th ANNUAL LABOUR LAW CONFERENCE Delivered by Mr. Les Kettledas, Deputy Director General: Labour Policy and Industrial Relations SANDTON CONVENTION CENTRE TUESDAY, 30 TH JULY 2013 EMPLOYMENT, THE ECONOMY AND GROWTH: IMPLICATIONS FOR LABOUR LAW Programme Director Judge President of the Labour Court and Labour Appeal Court Social partners Distinguished Guests Ladies and gentlemen It is a pleasure to again have the opportunity to address the Annual Labour Law conference on such an important theme as the one that you have chosen for this year. Employment, the economy and growth and their implications for labour law are vital issues for government together with its social partners in South Africa today. Globally, economic prospects remain sluggish and labour markets are struggling to absorb new entrants and cope with continuing high rates of unemployment, especially among young persons. The ILO Global Employment Report of 2012 indicates that 400 million jobs will be needed in the next decade to avoid a further increase in unemployment. 1 In many regions, there has been a growth in the 1 ILO, Global Employment Trends Geneva, page 9.

2 2 number of workers who are in vulnerable employment and the majority of these workers are women. High unemployment and low wage growth in developing countries has reduced demand for goods and services. Reduced demand, in turn, has a negative impact on business confidence and companies are then hesitant to invest and expand employment. The difficult conditions globally continue to affect our own economic development and labour market prospects. Growth estimates for the South African economy have been revised downwards to 2 percent. While there has been a small increase in employment in the first quarter of 2013, the number of unemployed has increased even more. There are now 4.6 million unemployed persons in the South African labour market. And of these unemployed, about 2.3 million are discouraged work seekers persons who have more or less given up hope of finding work. At the end of March 2013, unemployment was at 25.2 percent in the South African labour market. For young persons, unemployment is at 41 percent. We know that youth unemployment is a global problem, but in South Africa the scale of the problem is much bigger. The only bright light to be seen is that jobs have been gained from early 2011 to the end of March But we should remember that 1 million jobs were lost during the recession in There is no doubt that economic growth needs to be speeded up and, in particular, growth in jobs. The difficult economic and labour market conditions that we see in South Africa today, not only in the mining sector, but in a number of sectors, has placed pressure on both employers and trade unions and therefore also on collective bargaining. An

3 3 expression of this can be found in the unprecedented number of legal challenges to the extension of collective agreements. Over the past three years, South Africa has experienced an increase in strikes and especially in the number of workdays lost due to strike action. The average loss of workdays due to strike action has been 3 million over the 2011 to 2012 period. In the context of these challenges, it is appropriate to reflect on the implications for labour law. One of the purposes of the Labour Relations Act is, after all, to advance economic development. The same purpose is contained in the Basic Conditions of Employment Act. While our labour legislation should certainly be supportive of economic growth and employment, it is important to recognize that our law is not focused on securing employment for citizens of the country. Labour legislation is principally concerned with providing the employed with basic protections against unfair labour practices, unsafe working conditions and a decent living wage. There have been many calls over the past year for a review of labour legislation and many seem to think that simply changing the law will solve all our labour market problems. I wish it was as simple as that. Labour relations involve buyers and sellers in a highly contested terrain. In South Africa, this terrain still bears the burden of a legacy of oppression and racial discrimination and there continue to be extreme income and wage inequalities. Achieving the necessary social and economic objectives will be a challenge that goes well beyond the law, particularly given the competing interests of reducing mass unemployment, raising living standards and closing the earnings gap. There are also some who are clearly of the view that our labour legislation is too restrictive and that the South African labour market is over-regulated. It will not be helpful at this time to fall back on old debates about labour law being the cause of actual or perceived rigidity in the labour market. As government we are committed to a policy and legislative approach that is captured by the concept of regulated

4 4 flexibility. Regulated flexibility accepts the necessity of regulation, but also accepts the need for flexibility. The key issue is finding the right balance. As Benjamin, Bhorat and Cheadle have argued and I quote: South Africa s labour market is neither exceptionally over-regulated nor, indeed, under-regulated. This holds true globally and in relation to the sample of middleincome economies. This result reinforces our view that labour market policy debates in South Africa should be about nuance, rather than substance. 2 The challenges of employment creation and economic growth in South Africa raise many difficult issues and these require proper investigation and debate. But let us make progress by focusing on the details and on striking the right balance in our labour legislation. At this point in time, it is also necessary to recognize that we are in the middle of a major process of amending a number of our labour laws and introducing a new Employment Services Bill. The Basic Conditions of Employment Amendment Bill was passed in the National Assembly on 21 st June 2013 and the Labour Relations Amendment Bill is still in the parliamentary process. So are the Employment Equity Amendment Bill and the Employment Services Bill. On 19 th July 2013, I published the Unemployment Insurance Amendment Bill for tabling in NEDLAC and for public comment. The Department is also working on amendments to the Occupational Health and Safety Act and the Compensation for Occupational Injuries and Diseases Act. At a general level, the current legal amendments are intended to have two effects. First, to improve security of employment for vulnerable workers. The regulation of non-standard employment, or labour broking, is clearly about putting a stop to the abuses that have been associated with this practice. But it is certainly also our intention to promote security of employment. Achieving greater security of 2 P.Benjamin, H.Bhorat & H.Cheadle, The cost of doing business and labour regulation: The case of South Africa. International Labour Review, vol 149 no.1, page. 87.

5 5 employment addresses a key decent work deficit in the labour market. We hope it will also reduce conflict in labour relations and reduce the stress and low job commitment that has been shown to be associated with insecure working arrangements. The second effect that the amendments aim for is to improve social protection. The equal treatment for workers in non-standard employment will extend social protection. The proposed amendments to the Unemployment Insurance Act aim to extend the coverage of the Act, to improve benefits and improve the legal framework for active labour market measures. The Employment Services Bill will be complimentary to the UI amendments in relation to active labour market measures. These two effects are very important when considering the relationship of labour law to employment and growth. Security of employment should contribute to stable labour relations and promote conditions conducive to enhancement of productivity in the workplace. On the other hand, better systems of social protection enhance income security and provide improved protection for workers in difficult economic times such as we find ourselves in at the present. Our legal framework has been lacking in both respects and I hope that the amendments that are in process will lay a stronger foundation for growth, development and stable labour relations. The events of 2012 were a reminder of the difficult history of labour relations in South Africa. The strikes in the mining sector, in the road freight sector and the protest action by farm workers in the Western Cape were a reminder of just how important labour relations are to the country and to the economy. Despite these setbacks, we should not lose sight of the progress that has been made in our labour relations system. But what the events of last year have highlighted is the critical need to strengthen respect for our legal dispensation, to ensure adherence to processes and

6 6 procedures that govern labour relations on a day to day basis in workplaces and to pursue fundamental rights in the workplace. This is not a challenge for labour law. It is a challenge to better implementation of law, improved understanding of law and upholding the values that underpin our law including the value of dialogue and non-violent solutions to workplace conflict. The Framework Agreement for a Sustainable Mining Industry entered into recently by organized labour, organized business and government under the guidance of the Deputy President serves as a good example of the types of interventions that we should consider. These are interventions that aim to find solutions to problems that give rise to conflict in the mining sector and where improved processes can assist in stabilizing labour relations. Let me share just three examples taken from the Framework Agreement that relate to commitments made by government. They are: Within the framework of the law, work with business and labour to fast-track resolution of disputes over membership status, verification of membership figures and recognition agreements; Stabilise the current labour relations environment through working together in developing a protocol for verification of union membership. Work in partnership with business and labour to develop capacity of union leaders and workers on labour relations matters and economic realities facing the industry and the country. These are issues of concern to workers, employers and government and while they will not be resolved overnight, making progress in these areas could have a very positive impact on labour relations in the sector and hence on growth and employment.

7 7 There is no doubt that South African labour relations face a number of challenges. Our ability to deal with these challenges will certainly be a factor that will affect the economic and labour market prospects of the country in the next few years. In dealing with these challenges, labour law will have to provide the framework within which solutions are found. Our laws can also serve as a resource to assist in resolving problems, but it will not be a magic bullet. If we lean too heavily on legal solutions to what are fundamentally social and socio-economic challenges, we will not be creating sustainable solutions. Finally, in considering the implications for labour law of employment and growth, we should be mindful of where we want to move to. In relation to the labour market, the Department of Labour will continue to strive for a labour market which is conducive to investment, economic growth, employment creation and decent work. Appropriate labour legislation and regulations that are conducive to a responsive labour market remain a critical means for us to achieve our vision. In conclusion, we should acknowledge that we are in a difficult phase economically and in our labour relations. We should however remember the road that we have travelled together in re-shaping our labour relations dispensation. We should also be mindful of what vision we want for the future. And let us then rise to the challenge of engaging constructively and ensuring that the end result will be a growing, inclusive economy based on sound labour relations and a set of statutes that assist in addressing some of our national and workplace imperatives. I wish you a fruitful and successful conference. I thank you.

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