Programme Director,
Premier of the Eastern Cape,
Members of the Executive Council of Provinces,
President of the Master Builders’ Association: Secretary-General of the Association,
Distinguished guests,
Ladies and gentlemen.

Thank you for inviting me to be part of your congress and I am indeed honoured to be here. Let me also take this opportunity to convey a message of support and good wishes from the Minister of Labour, Mildred Oliphant.

Ladies and Gentlemen, September marks the annual Heritage Month in South Africa when we as a nation, reflect, recognize and celebrate our diversity, celebrate our humanity; celebrate our cultural heritage and formation. Our country is blessed with abundant talent, creative expression that characterises us a people; we are proud of our historical legacy, of our multi-lingual communities, of our unique and varied traditional recipes we have inherited from our forebears. These are some of the ingredients that bind us together, that remind of us of our common destiny; that define us as a nation. It is indeed great to be a South African; we receive daily, numerous requests from people from all corners of the globe who seek South African citizenship. This on its own bears testimony to what a great brand South Africa has become.

Programme Director, it is no wonder that South Africa is home to eight of the 981 World Heritage Sites, recognised by the United Nations’ Educational and Scientific Organisation (UNESCO) as places of outstanding cultural and historical importance.

The first European known to set foot on South African soil was Bartholomew Dias. In December 1487 Dias sailed down the African coast, landing in among other places present-day Angola and Walvis Bay, Namibia. He named the Cape "the Cape of Storms" (Cabo das Tormentas), but King John II of Portugal later renamed it the “the Cape of Good Hope” (Cabo de Boa Esperanca). Perhaps the time has come to extend the compliment by King John II of Portugal and view South Africa as the country of “Good Hope”.

Ladies and gentlemen, it is instructive to note that despite tough global trading conditions in its traditional markets, South Africa’s tourism sector continued to show positive growth in 2013, reaching a record high of 9.6 million international tourist arrivals. People love South Africa, to paraphrase the words of our President in the June 2014 State of the Nation Address.
Let’s celebrate our heritage in every form fitting, let’s join hands as leaders in our different fields to move this country forward

Programme Director, sustainable development is premised on one’s ability to meet the current needs without compromising the ability of future generations to meet their own needs. What we do today and how we do it will determine the kind of society and the kind of economy we bequeath to our children and grandchildren. As we may all be aware, South Africa's economy was rooted traditionally in the primary sectors, as a result of the availability of mineral resources and favourable agricultural conditions.  However in recent decades we have seen a structural shift in output.  Since the early 1990s, economic growth has been driven mainly by the tertiary sector- which includes wholesale and retail trade, tourism and communications. The recent trends suggest that South Africa is moving towards becoming a knowledge-based economy, with a greater focus on technology, e-commerce, financial and other services.

Among the key sectors that contribute to the Gross Domestic Product and the sustenance of the economy, are manufacturing, retail, financial services, communications, mining, agriculture and tourism. Needless to say, the building and construction sectors remain an important catalyst in all of these.

Ladies and gentlemen, it would be amiss not to acknowledge the enormous role that this sector plays in the life of this nation.  From small home improvements to multimillion rand shopping malls and stadia, Industrial Development sites, Corporate Parks and billion rand airports; it is the building industry that provides the infrastructure.

South Africa has a long history in architecture. Many buildings from the 18th century and earlier still stand and have been renovated or refurbished.  As is the case with other sectors, the construction industry in our country is confronted with a myriad of challenges, however it must be stated emphatically that we have high quality professionals who over time have conceptualized and erected impressive and beautiful buildings that South Africans can be proud of. Let’s give them a round of applause.  In fact just to jog your memory on a couple of these.

The Carlton Centre in Johannesburg, is a case in point; whilst it may not be the most glamorous, it is still the tallest building in South Africa with 50 floors and 46 percent of the building is below ground level.

The Union Buildings is certainly another building that stands out in the South African architectural landscape made of light sandstone and has been declared a National heritage site.

11 Diagonal Street, which used to house the Johannesburg Stock Exchange, has an unbelievably elegant diamond shape that glows in the sun.

The Nelson Mandela Bridge in down town Johannesburg with the longest cable-stayed bridge in the country remains a complete work of art that is a marvel to look at especially at night.

The other notable accomplishment by this sector is the Southern African Large Telescope (SALT) in the Northern Cape which is the largest single optical telescope in the world.
In addition, South Africa has approximately 600 dams as it is among the 30 driest countries in the world.

It also boasts mega building and construction masterpieces such as Moses Mabhida Stadium in Durban,  Soccer City in Gauteng also known as the Calabash, Green Point Stadium in the Western Cape, and of course The Coega Development Project right on our door step in Port Elizabeth.

These works are just a mere sample of some of the greatest innovations and accomplishments. All of this would not have been possible without a solid building and construction industry. Let’s give them another round of applause.

Programme Director, government identified infrastructure development as one of the key catalysts for stimulating the economy for higher growth, inclusivity and ultimately job creation. Accordingly, Cabinet established the Presidential Infrastructure Coordinating Commission (PICC), whose mandate is to:

• Develop a single common National Infrastructure Plan that will be monitored and centrally driven.
• Develop a 20-year planning framework beyond one administration to avoid a stop-start pattern to the infrastructure roll-out.
• Co-ordinate, integrate and accelerate implementation.

President Zuma, in his State of the Nation Address in June of 2014, stated, and I quote, “We are a nation at work. …we will continue to implement the successful National Infrastructure Plan, under the supervision of the Presidential Infrastructure Coordinating Commission, throughout the country”. This has far reaching implications for the building and construction industry, as it is central to this Plan.

The President pointed out that during the past five years, the country invested about R1 trillion in new infrastructure to provide water, energy, transport, sanitation, schools, clinics and internet connections.  Further our President confirmed that over the next three years, government will spend R847 billion on the infrastructure and several other projects.
The question for all of us in this congress is to what extent has the local building and construction industry played a meaningful role in pursuit of these noble goals? To what extent are we part of shaping the future of this country as an industry?

It is said that developing countries around the world such as Taiwan, Pakistan, and the Philippines all report massive revenues, multiple projects and generally a boom in their construction industry. On the other hand the contention is that South Africa is at pains to postpone projects thereby trying to prevent the industry from going bust.

There are a number of reasons that are advanced for this and they include, but not limited to:

• That South Africa was hit hard by the global recession and is still trying to recover from the effects.
• Construction projects that were already ongoing had to be cancelled immediately due to rising costs.
• The competition to land contracts began to get tighter and this gave rise to collusion. One of the construction company executives even admitted in public that certain arrangements have been part of the business for decades and were even accepted as a norm.
• The increasing frequency of accidents and fatalities on-construction sites. Many of these accidents could have been preventing with if companies strictly adhered to regulations on occupational health and safety measures.
• Contractors at times take short cuts or just disregard the need to implement certain safety measures in the hope of saving money or time. In fact, not all contractors have an occupational health and safety (H&S) manual for its workers to follow.
• Increasing costs of doing business and fluctuating materials prices.
• Inefficient logistics management.
• Some contractors use substandard materials to save money not only in the construction materials but also in the equipment used by the construction workers.
• Lack of skilled and experienced work force. 

Ladies and gentlemen, we do have challenges as a country and as the industry.  In South Africa, 2013 will always be remembered as the time in which anti-competitive behaviour in the industry came under the spotlight and exposed. More than 15 major construction groups were found to have been involved in bid-rigging and collusion, and were fined a total of almost R1.5 billion. The results of the investigation also revealed that there have been over 300 projects worth almost R30 billion that were subject to rigging by these companies. Many of the industry leaders that were implicated have since offered their apologies and made commitments to stamp out such behaviour in future.

It is said that for almost 10 years, various construction firms met secretly to form a cartel-like arrangement in which they knowingly allocated tenders to specific companies, established set profit margins of 17.5 percent, and also arranged for a “loser’s fee”, effectively rigging the tendering process so that everyone in the cartel “won”, irrespective of who was awarded the contracts. There were 69 bid rigging incidents in total, many of which were for 2010 Soccer World Cup stadiums and infrastructure upgrades. This cannot be the right way of doing business as it will no doubt undermine government’s efforts on social and economic transformation.

Many of us observed with keen interest the headlines in the mainstream media during these investigations.  Media houses chose their headlines very carefully and there was nothing as strong as branding this behaviour in the building and construction industry as corruption, a term that is used frequently if not loosely, when government is the target. If it is the private sector that is involved, it is called a cartel–like arrangement, but when it is Government that is the main target then it is called corruption. This congress has a responsibility to provide leadership and develop best practice to avoid a repeat of what I consider to have been the most embarrassing moment for the industry.

Ladies and gentlemen, South Africa has a concrete plan and it is captured in the New Growth Path, the Industrial Policy Implementation Plan and the overarching National Development Plan (NDP).  What is the Industry’s NDP-specific action plan?

The private sector has endorsed the NDP as the way to go for the country.  In fact in every platform that I have attended in the recent past, where the captains of the industry speak, their support for the NDP is unequivocal, yet none of the private sector leaders have pronounced on what they are doing specifically in pursuit of the key objectives of the NDP. This congress would have failed the nation if at the end of its deliberations; there is no Industry-Specific NDP action plan. Unemployment, poverty and inequality are the three stubborn challenges confronting this nation.  A plan to deal with at least unemployment would be a welcome development.

Central to the commitment of a sustainable South Africa, is the attainment of a better life for all its citizens. This can be done by achieving a high level of economic growth and development. The creation of equal society cannot be the sole prerogative of the state. Employers have a role to play and must do more in this regard. This democracy has served the private sector very well and the time for the private to reciprocate by initiating programmes to empower the society is long overdue.

Programme Director, as I pointed out earlier on we are deeply concerned about occupational health and safety standards in this sector. Lately, we have witnessed too frequently the collapse of buildings, resulting in many people losing their lives.  We have also just a few days ago witnessed the collapse of a building in Nigeria killing many people many of whom were South Africans. According to the Department of Labour’s report on occupational health and safety incidents in 2013/14, there were 230 fatal incidents, 780 non-fatal incidents and 12 non-casualty incidents.

This is totally unacceptable: one death on the construction site is one too many, as some of these can be prevented if the industry complies with the minimum standards and desist from taking short-cuts.  It has become so dangerous to work in the building and construction sector that a number of workers are still working there out of sheer desperation; if they had a choice they wouldn’t come anywhere near a construction site.

Building and construction is an important industry not only from an economic perspective, but also from a social point of view.   For this reason I truly encourage the industry to ensure compliance and adherence to health and safety policies and procedures thereby eliminating the dangers that are associated with the trade.  A safe and healthy environment will make construction jobs more desirable and continue to contribute towards skills development.

Ladies and gentlemen, the Minister of Labour issued a notice to investigate the building Sector with a view to establish a Sectoral Determination for the sector. At this point, let me convey my deepest sense of gratitude for your immense contribution to the public hearings that were conducted by the Department of Labour and we are also grateful for your written submissions in this regard. Some of your members assisted the Departments’ officials with site visits to gain access to employees so as to solicit inputs from the workers, and we thank you for that.

This exercise emanated from the Civil Engineering sector investigation conducted by the Department of Labour in 2012.  That investigation looked at the feasibility of extending the scope of application of the Civil Engineering Sectoral Determination to cover the building sector.  The Employment Condition Commission recommended to the Minister that it was not appropriate to extend the scope of application to the building sector and recommended that a building sector-specific investigation be conducted instead.

The Building industry has different regimes currently in operation such as:

• Bargaining Councils with collective Agreements extended to non-parties;
• Bargaining Councils operating without the Collective Agreements or with agreements that are not extended to non-parties;
• Bargaining councils that have ceased to be representative and some are just shells;
• Voluntary Bargaining Forums; and
• plant level collective bargaining between individual employers and trade unions/employees.

It follows therefore that the reality on the ground is complex and if not dealt with carefully, it could quite easily lead to undesirable outcomes. The Department of Labour is compiling a report which will be tabled before the Employment Conditions Commission (ECC) for consideration and recommendations.  When crafting recommendations to be considered by the Minister, the law requires that the Commission should consider, inter alia: the ability of employers to carry on their business successfully; the impact of sectoral determination on small, medium or micro-enterprises, and new enterprises; the likely impact of any proposed condition of employment on current employment or the creation of employment; and the cost of living as well as alleviation of poverty.

The Deputy President of the Republic, Cyril Ramaphosa announced that he will be convening the Labour Relations Indaba in November 2014 to engage social partners on the modalities of introducing a national minimum wage in South Africa.  Stakeholders are encouraged to use this platform to air their views on the concept in general and the possible architecture that will be appropriate for South Africa

You may also be aware that the Parliamentary Portfolio Committee on Labour has commenced public hearings on the national minimum wage to gauge public opinion on the concept. The Department of Labour will initiate its own public hearings on the matter and the dates will be announced shortly. Your contribution and participation in these events will be highly appreciated.

I thank you for your time and wish you well in your deliberations and,

We look forward to receiving a copy of your resolutions including your Industry NDP-Specific interventions.

I thank you.

Issued by: Department of Labour