SA shares France's labour law challenge
April 4, 2006
By Membathisi Mdladlana
In the past few weeks we have been hearing about demonstrations in France over that country's proposed dual labour market system. It would seem from these demonstrations that there is unprecedented opposition by the masses towards the proposal to divide their labour market regulatory system into two parts: one for the youth and the other for the rest of the labour force.
What is being experienced by France is not the only and isolated case, it is the latest. We have seen similar situations in other countries such as Argentina, Brazil and Mexico in the recent past.
The common thread is the balancing act between proponents of a labour market that should be totally flexible and allow both employers and employees to do as they like when they wish, on the one extreme, and those advocating more security, protection and laws governing every employer/employee activity in the workplace, on the other. Each of these extremes is not sustainable on its own, but the balancing act between them is also not easy. We know from our history that sitting on the fence has never been a comfortable thing, but in 1996 we consciously decided that on this issue, we are going to sit on the fence.
In February 2005 the president conveyed to the country the government's intention to do a comprehensive review of the regulatory environment of small and medium businesses. Following this decision, a number of mainly desktop and concept papers covering labour laws, sector-specific regulations, municipal regulations and by-laws, and tax law and administration were commissioned by the government.
Halton Cheadle, in his concept paper, argues that "regulated flexibility may be put to good use in extending protection to those who most need it and limiting intervention, particularly judicial intervention, where there is no appreciable gain in protection". He concludes that there are elements of the labour market system that require attention for us to abate employer and investor perceptions of rigidities in the South African labour market.
Cheadle proposes that small, medium and micro enterprises (SMMEs) be exempt from the regulatory framework if they have an annual certificate on their turnover from the SA Revenue Service; that SMMEs still be bound by provisions relating to unfair dismissals but be excluded from the statutorily entrenched procedures in section 189 of the Labour Relations Act; that a separate code of good practice for small business that incorporates the principles of a fair dismissal under section 188 of the act be developed; that the growth of "atypical" forms of employment requires attention; and that the Labour Relations Act and the Basic Conditions of Employment Act be amended to permit sectoral agreements to reach beyond the contract of employment and apply to all forms of dependent labour.
Paul Benjamin argues that the Commission for Conciliation, Mediation and Arbitration (CCMA) is not providing "simple, non-legalistic and non-jurisdictional procedures" in dispute resolution as envisaged.
The Labour Relations Act, as amended in 2002, has attempted to ease procedures on dismissals in a manner that should favour small businesses. Section 188A now provides for an agreement for predismissal arbitration where an employer may, with the consent of an employee, request a council, an accredited agency or the CCMA to conduct arbitration. We do not know yet whether these amendments have achieved the desired effect, or whether the problem is institutional either from the CCMA side, the employer side or the employee side.
Shane Godfrey, Jan Theron and Johann Maree indicate in their paper that there has been a significant rise in the number of exemption applications received by bargaining councils between 2000 and 2004, with a success rate above 70 percent. The largest proportion of exemption applications came from small firms.
My department has also found that bargaining councils have limited coverage within the private sector. There are 51 bargaining councils covering about 2.3 million workers of the total South African workforce of 11.6 million. More than 60 percent of these workers fall within the five public service bargaining councils, the local government bargaining council and a council covering a single parastatal, Transnet.
Godfrey et al conclude that the employers' organisations on councils need to be more representative of small businesses in numerical terms and that this should translate into effective representation of small business interests in council negotiations.
These papers have implications for our legislative work but, more importantly, they can assist us in unblocking challenges experienced in rolling out the government's programme on job creation and economic growth.
We have said and continue to say that deregulation does not automatically lead to increased labour market efficiency and in certain instances may lead to inefficiency. We are therefore clear and resolute in our decision not to deregulate the labour market.
It is clear that our information base remains weak. In debating these issues we need to be conscious of these gaps and seek to ensure that processes are put in place to deal with them.
I have called a round-table discussion with researchers, statutory bodies, social partners and officials from my department and other government departments on April 12 to debate the issues raised here. The engagement must identify specific areas showing information gaps and consequently requiring further empirical research. I am looking forward to an open debate that will guide us in possible interventions in the labour market to ensure the development of SMMEs in particular, and our job creation efforts generally.
* Membathisi Mdladlana is the minister of labour. On Wednesday next week, the department of labour will host a round-table debate on the effect of labour laws on job creation and small business development at Emperor's Palace
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