Date: 29/06/2005
Source: Department of Labour
Title: Mkosana: 18th Annual Labour Law Conference
Speech by Director-General of Department of Labour, Van Mkosana, at the opening of the 18th Annual Labour Law Conference, Johannesburg
Programme director
Esteemed social partners
Distinguished guests
Ladies and gentlemen
It is a singular honour and a privilege to be here today to open this historic gathering, the 18th annual labour law conference. This conference takes place when new concepts and phenomena are unfolding at a very fast pace in the world of work.
We are gathered here at the time when the very organisation of work is undergoing fundamental change, thanks to the technological development.
Information and Communication Technology is viewed as the most important technological revolution in the last 200 years. The impact of all these developments is such that no participant in the labour market can hope to be an indifferent onlooker. Of importance is to keep pace with these developments in the manner that allows us to tame our environment to be the handmaiden in the betterment of the lives of the citizens of our country.
Issues viewed from the perspective of an active participant in the labour market today it is becoming clear that there is no substitute for a purposeful social dialogue and continuous improvement of skills to be equal to the challenges of our times.
Never before has the knowledge worker been so crucial in the production process. I have no doubt in my mind that a failure to prioritise Human Resources Development Strategy (of which the National Skills Development Strategy is but one of its four pillars) would easily render our enterprises producers of poor quality commodities while the whole country would slide into becoming an ill-equipped global competitor.
The organisers of this conference have chosen the theme “Brokering a fair deal”. This theme is challenging us to think beyond the present happenings. It forces us to find solutions to the current challenges while we prepare ourselves for a better tomorrow.
For a worker, a fair deal entails a freely chosen productive employment, fundamental rights at work, and adequate income for the worker and their families to escape the sting of poverty and social protection in times of vulnerability.
For entrepreneurs, a fair deal entails safeguarding the bottom line of the business and ensuring the existence of environment conducive for business to flourish. Acting otherwise can easily negate the very reason for existence of business.
It is in the management of these divergent interests that the role of the Department of Labour comes to the fore as the broker and a maintainer of the needed equilibrium.
The Minister of Labour is required to preside over this unity of the opposites. Each side clamours that let us leave no door ajar to allow their interests to flow unhindered. We have constantly guarded against the temptation of taking any of the two extremes. It is neither deregulation nor rigid regulation that will make our economy function optimally in a manner that allows economic growth with employment creation and positive impact on the lives of the entire population of South Africa. A look back from the-not-too-distant past when adversarialism held sway conjures up gloom and melancholy. Industrial peace is supreme for business to thrive, in the same way that workers get an opportunity for all round development as social beings. Social dialogue as driven by the NEDLAC deserves support from all who stand to benefit from the philosophy it champions namely consensus and co-existence for the common good.
Ubunzima bomthwalo budala ugxekwano. When the challenges seem insurmountable, the tendency is to blame one another or even yield to “voluntaristic” temptations. Both tend not to bring solutions but further complications. Prompted by the challenge of unemployment in South Africa, which is viewed as having reached unacceptable proportions, a debate has emerged with a pointer to the fact that South African labour laws should be amended to remedy this. I need not remind you that legislation making in South Africa is a painstaking exercise, which we venture into with the consolation that when social partners reach consensus, the product of their debate is of a lasting quality.
There is a need to unleash our collective capabilities in search for solutions to the problem of unemployment. The starting point is to identify the root cause of the slow pace of employment creation and current rate of job losses.
There are those who say the Rand is over valued and this causes problems. Some say labour laws are rigid; there is a need for flexilisation. What has become clear is that there is no sameness of thought in this regard. The pronouncements thus far do not seem to be informed by any empirical data. Acting in this fashion may open us to making decisions with far reaching consequences based on well-articulated impulses.
In this search for solutions, I am not one of the advocates of panic. Urgent, this matter is, but panic may be too dangerous a route to choose.
Economists among whom Haroon Bhorat features prominently observe that between 1995 and 2002, one million six hundred thousand jobs were created. Economic growth reached 5.6% in the third quarter of 2004 and that generally the economy is on a sound footing, however, a matter of concern is that during the same period both GDP and new entrants in the labour force grew faster than the rate of employment growth. Besides snippets of popular writing, I have not been exposed to any thorough going comprehensive study upon which the claim of rigidity of labour laws is based, nor have I heard any of the social partners, namely, organised business, organised labour and community bringing such a concern to the attention of the social dialogue platform, the NEDLAC.
I have just returned from the 93rd session of the International Labour Conference in Geneva. One of the topics debated in Geneva was the promotion of youth employment. What is becoming clear all over the world is that youth are the hardest hit victims of unemployment. Currently it is estimated that 47% of the world unemployed are the youth at the staggering 88 million.
In South Africa, it is estimated that about 70% of the unemployed are people less than 35 years old. It is estimated in the world today that 238 million young people live on less than US $1 a day while 462 million youth live on less than $2 US a day.
Unemployed youth are not only a societal burden in economic terms but they become generators of, and at the same time victims of social ills in many ways. Prompted by this gloomy picture the ILO embraced the United Nations General Assembly resolution on “Promoting youth employment”
Having assumed its rightful place among the nations of the world SA must accept that while it influences others they too have an equal opportunity to influence it. It is our duty to embrace and adapt what is good practice from whoever we rub shoulders with. One of the most important lessons to emulate is, as long as employment creation is a by-product of other priorities we shall not conquer unemployment. It has become imperative that we must put employment creation at the heart of economic and social policies such that we reverse the tradition of seeing job creation as a matter by the way. It must be a national objective with clear targets for each key stakeholder to realise. Secondly, in addition to all that has been done it is clear that we need a comprehensive integrated approach with macroeconomic policy initiatives, sectoral policies, micro level initiatives and enabling regulatory environment all managed in well co-ordinated manner. It is in this integrated approach and smooth co-ordination that macroeconomic stability, trade liberalisation and labour market policies will have the maximum impact on economic growth, global competitiveness, employment creation and ultimately have the desired on the creation of wealth and reduction of poverty. The clustering of government departments is a move in the right direction. However similar arrangements perhaps sectorally all linked and monitored would in the fullness of time contribute meaningfully towards conquering the challenge of unemployment.
Thirdly, I had an opportunity to share the experience of Argentina on the question of managing regulation mechanism. According to them, they fell into the trap of moving from one extreme to another- from rigidity to almost total deregulation. This amounted to chaos. Yet employment creation expectations were not realised after deregulation.
Small business in South Africa judged by its contribution to the GDP, has potential yet to be unlocked hence the call - make it easy for SMMEs to do business. The search for solution to the challenge of unemployment in SA must, of necessity, take into consideration the exclusion of the majority of the people of SA. It is in inclusion of those in the periphery of the second economy and those in the “nothingness” of the unemployment that the full potential of the SA economy will be unlocked. In this regard short cuts can only yield short-term solutions. We need long term enablers which include appropriate policies, access to capital and other resources as well as access to markets. Informal economy is by its nature hard to regulate. However appropriate regulation is imperative for the sake of small business itself and to regulate relations between SMMEs and big business. Without this we run a risk of having big business being the ultimate beneficiary out of the informal economy terrain. It is with this caution in mind that we should engage in the debate for deregulation.
In the recent past we have been part of the piecemeal efforts to respond to SME’s cry for space to do business. A number of bargaining councils exempted some SME’s with the hope that this would enable them to employ more people. Thus far this has yielded little of the expected.
On the skills levy exemption; we are beginning to see unintended consequences. Out of 368 254 companies registered for skills levies 145 215 companies of less than R250 000 pay roll are exempted and they are not registered for PAYE too.
With the new threshold recently set by National Treasury, i.e. R500 000, about 294 472 companies will also be exempted from skills levies and PAYE. Some SETAs will be shaken badly in terms of contributing members.
With the R500 000 threshold, Services sector companies will reduce from 93 616 to 13 187 (86% reduction). Wholesale and Retail sector will be reduced from 44 209 companies to 8 667, i.e., 80% change.
Construction will be reduced from 27 685 companies to 5 606, i.e., 80% change.
Whether the innovations will help SMMEs do better business and create more jobs, it is still too early to tell.
However it is important to state the fact that appropriate regulation is necessary for both formal and informal economy. Regulation that does not stifle business innovation and yet able to level the playing ground.
Programme director, ours is not a simple task, for we must at times ensure that the wagon does not tilt to the one side at the expense of the other. Currently I am concerned about the dwindling number of workers who are unionised. South Africa remained for some time being one of the few countries whose workforce is organised into trade unions. This has recently changed.
What concerns me is that where the labour force is not organised we can hardly hope for sound social dialogue and benefits thereof. Furthermore, as we move towards developing the informal economy concurrently with the reduced regulation, the role of the trade unions becomes more prominent. Informal economy is as hard to regulate, as it is hard to unionise.
We are signatories of the International Labour Organisation (ILO) conventions, which uphold international labour standards. We subscribe to the philosophy of decent work, which recognises workers rights to freely choose productive employment, adequate income to escape poverty and to be afforded social protection in times of vulnerability.
This is the philosophy, which recognises that workers are social beings; they need time to work, time for family, time for recreation and time for creativity and all around development.
On the other hand we need growing economy globally competitive and able to expand wealth creation, economy with growth coupled with employment creation. For all this to happen we need open minded leadership capable of seeing beyond the current and look deep into the future. It all starts with work. Productive work is the point of convergence for government, business and labour.
I take this opportunity to wish this conference frank and constructive deliberations capable of unlocking innovative thinking to address the current labour market challenges.
I thank you.
Issued by: Department of Labour
29 June 2005
Source: Department of Labour
Title: Mkosana: 18th Annual Labour Law Conference
Speech by Director-General of Department of Labour, Van Mkosana, at the opening of the 18th Annual Labour Law Conference, Johannesburg
Programme director
Esteemed social partners
Distinguished guests
Ladies and gentlemen
It is a singular honour and a privilege to be here today to open this historic gathering, the 18th annual labour law conference. This conference takes place when new concepts and phenomena are unfolding at a very fast pace in the world of work.
We are gathered here at the time when the very organisation of work is undergoing fundamental change, thanks to the technological development.
Information and Communication Technology is viewed as the most important technological revolution in the last 200 years. The impact of all these developments is such that no participant in the labour market can hope to be an indifferent onlooker. Of importance is to keep pace with these developments in the manner that allows us to tame our environment to be the handmaiden in the betterment of the lives of the citizens of our country.
Issues viewed from the perspective of an active participant in the labour market today it is becoming clear that there is no substitute for a purposeful social dialogue and continuous improvement of skills to be equal to the challenges of our times.
Never before has the knowledge worker been so crucial in the production process. I have no doubt in my mind that a failure to prioritise Human Resources Development Strategy (of which the National Skills Development Strategy is but one of its four pillars) would easily render our enterprises producers of poor quality commodities while the whole country would slide into becoming an ill-equipped global competitor.
The organisers of this conference have chosen the theme “Brokering a fair deal”. This theme is challenging us to think beyond the present happenings. It forces us to find solutions to the current challenges while we prepare ourselves for a better tomorrow.
For a worker, a fair deal entails a freely chosen productive employment, fundamental rights at work, and adequate income for the worker and their families to escape the sting of poverty and social protection in times of vulnerability.
For entrepreneurs, a fair deal entails safeguarding the bottom line of the business and ensuring the existence of environment conducive for business to flourish. Acting otherwise can easily negate the very reason for existence of business.
It is in the management of these divergent interests that the role of the Department of Labour comes to the fore as the broker and a maintainer of the needed equilibrium.
The Minister of Labour is required to preside over this unity of the opposites. Each side clamours that let us leave no door ajar to allow their interests to flow unhindered. We have constantly guarded against the temptation of taking any of the two extremes. It is neither deregulation nor rigid regulation that will make our economy function optimally in a manner that allows economic growth with employment creation and positive impact on the lives of the entire population of South Africa. A look back from the-not-too-distant past when adversarialism held sway conjures up gloom and melancholy. Industrial peace is supreme for business to thrive, in the same way that workers get an opportunity for all round development as social beings. Social dialogue as driven by the NEDLAC deserves support from all who stand to benefit from the philosophy it champions namely consensus and co-existence for the common good.
Ubunzima bomthwalo budala ugxekwano. When the challenges seem insurmountable, the tendency is to blame one another or even yield to “voluntaristic” temptations. Both tend not to bring solutions but further complications. Prompted by the challenge of unemployment in South Africa, which is viewed as having reached unacceptable proportions, a debate has emerged with a pointer to the fact that South African labour laws should be amended to remedy this. I need not remind you that legislation making in South Africa is a painstaking exercise, which we venture into with the consolation that when social partners reach consensus, the product of their debate is of a lasting quality.
There is a need to unleash our collective capabilities in search for solutions to the problem of unemployment. The starting point is to identify the root cause of the slow pace of employment creation and current rate of job losses.
There are those who say the Rand is over valued and this causes problems. Some say labour laws are rigid; there is a need for flexilisation. What has become clear is that there is no sameness of thought in this regard. The pronouncements thus far do not seem to be informed by any empirical data. Acting in this fashion may open us to making decisions with far reaching consequences based on well-articulated impulses.
In this search for solutions, I am not one of the advocates of panic. Urgent, this matter is, but panic may be too dangerous a route to choose.
Economists among whom Haroon Bhorat features prominently observe that between 1995 and 2002, one million six hundred thousand jobs were created. Economic growth reached 5.6% in the third quarter of 2004 and that generally the economy is on a sound footing, however, a matter of concern is that during the same period both GDP and new entrants in the labour force grew faster than the rate of employment growth. Besides snippets of popular writing, I have not been exposed to any thorough going comprehensive study upon which the claim of rigidity of labour laws is based, nor have I heard any of the social partners, namely, organised business, organised labour and community bringing such a concern to the attention of the social dialogue platform, the NEDLAC.
I have just returned from the 93rd session of the International Labour Conference in Geneva. One of the topics debated in Geneva was the promotion of youth employment. What is becoming clear all over the world is that youth are the hardest hit victims of unemployment. Currently it is estimated that 47% of the world unemployed are the youth at the staggering 88 million.
In South Africa, it is estimated that about 70% of the unemployed are people less than 35 years old. It is estimated in the world today that 238 million young people live on less than US $1 a day while 462 million youth live on less than $2 US a day.
Unemployed youth are not only a societal burden in economic terms but they become generators of, and at the same time victims of social ills in many ways. Prompted by this gloomy picture the ILO embraced the United Nations General Assembly resolution on “Promoting youth employment”
Having assumed its rightful place among the nations of the world SA must accept that while it influences others they too have an equal opportunity to influence it. It is our duty to embrace and adapt what is good practice from whoever we rub shoulders with. One of the most important lessons to emulate is, as long as employment creation is a by-product of other priorities we shall not conquer unemployment. It has become imperative that we must put employment creation at the heart of economic and social policies such that we reverse the tradition of seeing job creation as a matter by the way. It must be a national objective with clear targets for each key stakeholder to realise. Secondly, in addition to all that has been done it is clear that we need a comprehensive integrated approach with macroeconomic policy initiatives, sectoral policies, micro level initiatives and enabling regulatory environment all managed in well co-ordinated manner. It is in this integrated approach and smooth co-ordination that macroeconomic stability, trade liberalisation and labour market policies will have the maximum impact on economic growth, global competitiveness, employment creation and ultimately have the desired on the creation of wealth and reduction of poverty. The clustering of government departments is a move in the right direction. However similar arrangements perhaps sectorally all linked and monitored would in the fullness of time contribute meaningfully towards conquering the challenge of unemployment.
Thirdly, I had an opportunity to share the experience of Argentina on the question of managing regulation mechanism. According to them, they fell into the trap of moving from one extreme to another- from rigidity to almost total deregulation. This amounted to chaos. Yet employment creation expectations were not realised after deregulation.
Small business in South Africa judged by its contribution to the GDP, has potential yet to be unlocked hence the call - make it easy for SMMEs to do business. The search for solution to the challenge of unemployment in SA must, of necessity, take into consideration the exclusion of the majority of the people of SA. It is in inclusion of those in the periphery of the second economy and those in the “nothingness” of the unemployment that the full potential of the SA economy will be unlocked. In this regard short cuts can only yield short-term solutions. We need long term enablers which include appropriate policies, access to capital and other resources as well as access to markets. Informal economy is by its nature hard to regulate. However appropriate regulation is imperative for the sake of small business itself and to regulate relations between SMMEs and big business. Without this we run a risk of having big business being the ultimate beneficiary out of the informal economy terrain. It is with this caution in mind that we should engage in the debate for deregulation.
In the recent past we have been part of the piecemeal efforts to respond to SME’s cry for space to do business. A number of bargaining councils exempted some SME’s with the hope that this would enable them to employ more people. Thus far this has yielded little of the expected.
On the skills levy exemption; we are beginning to see unintended consequences. Out of 368 254 companies registered for skills levies 145 215 companies of less than R250 000 pay roll are exempted and they are not registered for PAYE too.
With the new threshold recently set by National Treasury, i.e. R500 000, about 294 472 companies will also be exempted from skills levies and PAYE. Some SETAs will be shaken badly in terms of contributing members.
With the R500 000 threshold, Services sector companies will reduce from 93 616 to 13 187 (86% reduction). Wholesale and Retail sector will be reduced from 44 209 companies to 8 667, i.e., 80% change.
Construction will be reduced from 27 685 companies to 5 606, i.e., 80% change.
Whether the innovations will help SMMEs do better business and create more jobs, it is still too early to tell.
However it is important to state the fact that appropriate regulation is necessary for both formal and informal economy. Regulation that does not stifle business innovation and yet able to level the playing ground.
Programme director, ours is not a simple task, for we must at times ensure that the wagon does not tilt to the one side at the expense of the other. Currently I am concerned about the dwindling number of workers who are unionised. South Africa remained for some time being one of the few countries whose workforce is organised into trade unions. This has recently changed.
What concerns me is that where the labour force is not organised we can hardly hope for sound social dialogue and benefits thereof. Furthermore, as we move towards developing the informal economy concurrently with the reduced regulation, the role of the trade unions becomes more prominent. Informal economy is as hard to regulate, as it is hard to unionise.
We are signatories of the International Labour Organisation (ILO) conventions, which uphold international labour standards. We subscribe to the philosophy of decent work, which recognises workers rights to freely choose productive employment, adequate income to escape poverty and to be afforded social protection in times of vulnerability.
This is the philosophy, which recognises that workers are social beings; they need time to work, time for family, time for recreation and time for creativity and all around development.
On the other hand we need growing economy globally competitive and able to expand wealth creation, economy with growth coupled with employment creation. For all this to happen we need open minded leadership capable of seeing beyond the current and look deep into the future. It all starts with work. Productive work is the point of convergence for government, business and labour.
I take this opportunity to wish this conference frank and constructive deliberations capable of unlocking innovative thinking to address the current labour market challenges.
I thank you.
Issued by: Department of Labour
29 June 2005
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