4. Improving the Employability of Labour

4.1 Promoting a strong skills base, high rates of human development and a well-functioning labour market are essential components of a strategy to attract new labour-using investment. It is these same attributes that enable people to more fully participate in the labour market by identifying opportunities, whether in finding jobs or generating self-employment.

4.1.1 Education and Training

4.1.1.1 Professional Skills

4.1.1.1.1 The ‘apartheid wage gap’, a reflection of structural, apartheid-based inequalities in access to education, training and jobs, resulted in shortages of skilled personnel and an overabundance of unskilled labour. Recent surveys have shown that this wage gap remains high. The skills shortage must be addressed. It is a constraint on growth. Greater competition at the professional levels should help to restrain top-end salaries.

4.1.1.1.2 Although the longer term solution is to increase the numbers of locally-trained professional and managerial employees, in the short term a more open skilled immigration regime should be developed to address the current shortage of skilled labour.

4.1.1.2 Skills Strategy

4.1.1.2.1 The human resource development strategy, as reflected in the Skills Development Bill, aims to create an enabling environment for expanded strategic investment in education and training. The key elements include:

• 4.1.1.2.1.1 the promotion of partnerships in the prioritisation, design and implementation of education and training to improve its efficiency, responsiveness and quality
• 4.1.1.2.1.2 strategic planning for education and training, informed by appropriate labour market information
• 4.1.1.2.1.3 the introduction of learnerships, which is a more flexible alternative to the apprenticeship system, linking structured learning and work experience
• 4.1.1.2.1.4 the establishment of a National Skills Fund targeting the poor for training, with a focus on rural women, the youth and the unemployed

4.1.1.2.2 New institutional and financial arrangements that will be put into place to ensure the success of the strategy. These include the introduction of a levy grant scheme, the National Skills Authority, Sectoral Education and Training Authorities (SETAs) and Education and Training Boards (ETBs).

4.1.1.2.3 A special subsidy for skills development will be considered within the SDIs. This fund should be used to identify skills needs in SDI projects, facilitate in-service training, support the development of learning programmes and design the institutional and funding strategies to support learning.

4.1.1.2.4 A learnership wage is proposed to encourage increased training. This wage may also be linked to age in order to encourage youth employment. The learnership wage is a developmental approach, with greater chance of leading to future formal employment and less chance of enabling displacement of formal workers.

4.1.1.2.5 The Department of Trade and Industry and the Department of Labour are cooperating to pilot a skills programme in the clothing and textile industries, valued at R5.6 million for one year. This tri-partite programme will pilot industry-based ABE and skills training. The modules are being developed with a view to facilitating process and technological change and the promotion of industrial competitiveness.

4.1.1.3 The Education System

4.1.1.3.1 It is essential that all our people receive quality education, that the quality of schooling is high, that education helps school-leavers find jobs and that the educational system meets the needs of an industrialising economy.

4.1.1.3.1.1 We aim to improve the responsiveness of secondary and tertiary education to labour market needs. Interdepartmental work is currently underway to improve this coordination. We will be emphasizing improvements to:

• 4.1.1.3.1.2 incentives to study in relevant disciplines/subject areas
• 4.1.1.3.1.3 the teaching of maths and sciences in secondary school
• 4.1.1.3.1.4 the delivery of careers services
• 4.1.1.3.1.5 information systems that enable decision making

4.1.1.3.2 It is widely recognised that there is a crisis in the distribution of educational resources. While expenditure on education is high by international standards, the poor allocation of financial and human resources results in highly uneven teacher-pupil ratios, weak schools management, insufficient building maintenance and low book and materials purchases. These issues are being attended to at all levels of the education system.

4.2 Improving the Functioning of the Labour Market

4.2.1 Labour Market Regulation

4.2.1.1 We have a segmented, multi-tier labour market. Companies in some sectors and regions pay low wages and have poor working conditions; others pay relatively well and aim for internationally competitive levels of productivity and labour standards; and there are a wide variety of intermediate conditions. Much of this differentiation has its origins in apartheid, especially its white labour preference and its ‘homeland’ policies. Discrimination, especially on the grounds of race and gender, remain widespread. We have a situation where many formal sector employers are reluctant to take on new employees.

4.2.1.2 We remain convinced of the need to regulate our labour market, especially to outlaw discrimination, introduce equity and guarantee basic employment standards. Our Labour Relations Act provides a framework for collective bargaining, regulates unfair dismissal, and promotes effective dispute resolution. Our new Basic Conditions of Employment Act protects the rights of the most vulnerable workers, lays down minimum conditions, and introduces more flexibility in the organisation of working time. And our Employment Equity legislation aims to eliminate discrimination at work and encourage a more representative workforce, and thus the more productive use of our human resources.

4.2.1.3 But such regulation must always be appropriate and sensitive to any negative employment impact. Together with our social partners, such laws must be reviewed from time-to-time to ensure that they are sufficiently flexible and allow adaptation to a continually changing environment. Work is changing, global conditions are changing, and our laws must adapt to such changes appropriately. We intend to propose the following amendments to labour legislation, which could lead to improved employment outcomes:

4.2.1.3.1 amendments to the provision regarding the extension of bargaining council agreements to non-parties. As the Comprehensive Labour Market Commission recommended, not only should the representative position of the parties be considered prior to their extension, but also the sensitivity of such agreements to both non-parties and to job-creation. In practice we wish to see agreements which accommodate the different circumstances faced by smaller businesses, various regions, and different sub-sectors.

4.2.1.3.2 a focus on using the CCMA as a mechanism of last resort, and encouraging aggrieved parties to exhaust internal channels before approaching it. Our aim is to decrease the CCMA’s caseload and to enable it to perform more preventative work.

4.2.1.3.3 a clearer outline of the probation concept relative to the LRA’s unfair dismissal provisions, to ensure that employees do not automatically gain full employment security before a reasonable trial period has elapsed. In practice we want to encourage employers to take on new job-seekers and to make entrance to the labour market easier for an initial period.

4.2.1.3.4 as already announced, we intend to review certain BCEA provisions once an analysis of its impact on small business has been finalised.

4.2.2 Active Labour Market Policies

4.2.2.1 It will be essential to strike a balance between poverty alleviation and improved efficiency in the economy. To this end, we propose to improve the co-ordination of social security and welfare services so that they are more cost-efficient, accessible and appropriate. This approach to social security focuses beyond providing a safety net: it extends to that which enables continuous labour market participation, prevents long term unemployment, reduces dependency, promotes human development and encourages labour market efficiency. Special attention will be devoted to vulnerable groups, particularly women, youth and the disabled. Such measures are particularly important in a context of globalisation and economic restructuring.

4.2.2.2 The Department of Labour plans to transform its 175 local offices into Labour Market Information and Careers Services Centres. Already, the Unemployment Insurance Fund (UIF) system has generated a substantial database on companies and unemployed persons. We are currently developing a strategy to optimise these existing resources in developing improved labour market matching systems. Ultimately, we aim to ensure effective integration of this system with that proposed by the DTI’s BRAIN.

4.2.2.3 We will be seeking the assistance of business in registering vacancies on this network and in assisting in the servicing of these centres. We will be seeking the assistance of educational institutions in registering educational opportunities on the system.

4.2.2.4 Agreement has now been reached on the provisions of the Social Plan. Establishment of Social Plan Technical Support Facility (SPTSF) to provide assistance to ‘Future Forums’ which enable the facilitation of ‘early warning systems’ in preventing, and/or addressing adjustment related to, retrenchments. The SPTSF will provide three types of assistance: sectoral studies where an industry faces large scale retrenchments; referral to government support measures; assistance to firms for the development of plans within an agreed framework.

4.2.2.5 Where retrenchments within a one year period are in excess of 500 people or 10% of the workforce (whichever is greater), a company must notify the Minister of Labour and may access assistance from the Department of Labour in enabling labour market adjustment.

4.2.2.6 The Department of Labour already provides R108 million to unemployment training schemes, through the Provincial Directorates of the Department. In addition, a National Skills Fund will be established, with an expected R200 million contributed from the budget in 1999. This Fund will grow in subsequent years and will be financed from the skills levy from the year 2000. The social plan will link into the National Skills Fund for retraining.

4.2.2.7 The UIF will be reviewed to improve its support of retrenchees, considering the possibility of: strengthening the link between unemployment insurance payments, training and job search; and reducing the payments to contributors resigning and sponsoring an increase in payments to retrenched contributors

4.2.2.8 Transport plays a key role in enabling job search, affordable travel to work and services, and access to education. Yet, public transport fares in South Africa are 32% higher than the world average, taking into account purchasing power parity and subsidies. Currently 13% of urban residents cannot afford access to any form of transport. Of these, 42% are school-going age children, and 45% are unemployed, mainly township residents. Almost 30% of urban residents are ‘captive’ to public transport; about 17% are totally dependent on the cheapest form of transport available. The Department of Transport aims to ensure that no more than 10% of disposable income is spent on transport: currently, about 1/5 of urban residents spend more than this.

4.2.2.9 Currently, with long distances and low densities causing low levels of capacity utilisation(22% on rail, 52% on buses, 48% on taxis); For example, there is some concern that limited coordination with the Department of Housing results in the establishment of housing projects built on low cost land, but far from employment opportunities and social services: hence, the real cost of building is not accounted for in planning activities.

4.2.2.10 A more coordinated and efficient approach to spatial and land-use patterns will be pursued, emphasizing greater densification to encourage the proximity of housing projects and social infrastructure to areas of economic agglomeration: this approach should improve efforts at job search, reduce the cost of transport to work, and enable better access to social services.

4.3.1 Women

4.3.1.1 Women are affected by direct and indirect forms of labour market discrimination. Direct forms of discrimination place barriers to women’s access to jobs socially considered to be ‘mens’ work’. Women tend to have less favourable employment conditions, more often in casual, temporary or part-time positions. These forms of discrimination often result in lower pay and lower rates of unionisation for women. This leads to unequal access to benefits such as training schemes and social benefits.

4.3.1.2 Indirect forms of discrimination against the full participation of women in the labour market are related to the gender division of labour: a disproportionate degree of domestic responsibilities fall on women in all types of households. These responsibilities hinder the ability of women to effectively embark on job search and reduce womens’ access to secure and equal job opportunities.

4.3.1.3 Limited affordable accommodation is available to female work-seekers or workers in the urban areas. This is particularly important for female-headed households not relying on the social support mechanisms of a nuclear or extended family network. In such cases, women are particularly reliant on jobs associated with 'tied housing' including domestic labour and agricultural labour.

4.3.1.4 We have made some strides in addressing the position of women in the labour market. These include improved employment practices with respect to maternity, improved access to training and the introduction of explicit regulations governing the handling of sexual harassment in the workplace.

4.3.1.5 We recognise that the situation for women in the labour market could still be dramatically improved. In this light, consideration will be given to:

• 4.3.1.5.1 improving access to training and accreditation opportunities to unorganised and contract women workers
• 4.3.1.5.2 developing strategies to explicitly address the perception of traditional work on the basis of gender. We will aim to raise a greater awareness in disadvantaged communities to a wider set of vocational possibilities and non-traditional role models
• 4.3.1.5.3 improving the accessibility of child care and health services
• 4.3.1.5.4 addressing the lack of safe, affordable accommodation for women as an ongoing challenge.

4.3.2 Youth

4.3.2.1 Youth unemployment is a serious problem: those aged between 15-29 account for 28% of the population, but over half of total unemployment. Many school-leavers wait years before getting their first job. It is essential to ensure that young people find it easier to get into jobs and that a new generation of long-term unemployed is not created.

4.3.2.2 The Department of Welfare will implement a pilot skills development programme for youth to improve their capacity to access the job market and contribute effectively to society by the age of 18 years. This programme aims, over a 15 month period, to build capacity in 80 communities, 60% of which would be rural or semi-rural, reaching a minimum of 25 000 young people.

4.3.2.3 We are determined to address the problem of youth unemployment and skills development through a bold package, with the support of our social partners. Measures which need consideration in finalising such a package include among others: a youth learnership wage, a youth training subsidy, appropriate probation and employment security requirements, measures to avoid the displacement of existing workers if new young employees are taken on, improved careers services in schools, internships, and improved vocational training.

4.3.3 Disabled

4.3.3.1 The Integrated National Disability Strategy is the responsibility of the Office of the Deputy President and seeks to ensure that disabled persons are enabled to develop optimally. An investigation is currently underway to assess the social security requirements of people with disabilities. Consideration will be given to improving delivery in respect to the promotion of training and income generating opportunities to the disabled through mainstream policy programmes.

4.3.4 To summarise we aim to improve the level of human development and the functioning of labour markets. To make the labour market more efficient, we will make relevant amendments to labour market policies, improve labour market information, formulate a more comprehensive approach to social security and welfare, implement measures to enable continuous labour market participation, reduce the cost of looking for and getting to work and implement special measures for vulnerable groups. Improvements to the education system and the implementation of our skills development strategy will be essential to the success of the ESF. These efforts will enable people to participate more fully in the labour market, whether in finding or creating jobs. At the same time, we will become a more attractive location for labour absorbing investment, whether domestic or foreign.

5. The Development, Implementation and Monitoring of the ESF

5.1 The Establishment of a Cabinet Employment Cluster Committee (CECC)

5.1.1 A Cabinet Employment Cluster Committee (CECC) will be established, to be chaired by the Minister of Labour. This Committee will ensure that government’s Employment Strategy commitments are met. A central function will entail an ongoing review of the employment impact and potential employment enhancing measures of all major policy areas. It will be responsible for improving policy coordination and monitoring progress on key programme commitments. This committee will ensure that no policies are passed through Cabinet without an assessment of their employment implications.

5.2 Higher Spending on Employment Promoting Projects

5.2.1 Government will establish the Umsobomvu Trust with an initial capitalisation from the proceeds of the demutualisation process. We will support the Trust with further contributions from the fiscus. The income from this Trust will be applied to key programmes in the Employment Strategy, focusing on a range of job creation, training and youth employment oriented programmes. The business community, union investment arms and the donor community will be requested to make supplementary contributions to the Umsobomvu Fund.

5.2.2 Public Works Programmes will not be financed from the Umsobomvu Fund, but will instead be allocated funds through the MTEF process. Government has already dedicated about R1 billion in the current fiscal year, rising to about R1.8 billion by the year 2000/2. We will be committed to substantially increase the allocation to the Special Employment Programmes: the actual amount will be determined through the budgeting process.

5.3 Statistical Monitoring

5.3.1 The Cabinet Investment Cluster Committee (CICC) is actively developing a database of new and intended investments in South Africa. Ultimately, this database should enable us to track investment and therefore gain a better understanding of the impact of different incentives on investment over the long term.

5.3.2 The Central Statistical Services (CSS) will upgrade the provision of labour statistics by releasing two quarterly economy-wide surveys of formal concerns, a quarterly household labour force survey to measure formal and informal employment and unemployment and an annual survey of occupations at the establishment level to monitor changes in the occupational structure. These surveys will improve on the existing samples by widening coverage to all sectors, including professional and business services, private health and community services, cultural and recreational services and the personal services industries that are not currently covered.

6. The Role of the Social Partners in the Employment Strategy

6.1 An Overview of Government’s Commitments

6.1.1 Government is committed to the achievement of a labour absorbing economy that relies on sustainable employment opportunities in the production of higher value-added goods and services.

6.1.2 The Employment Strategy aims to improve both the demand for, and the employability of, labour. Improved policy coordination to achieve a critical mass of economic activity and maximise employment multipliers will be essential to the Strategy’s success. A combination of short term and long term measures is required: we must move to a longer term developmental trajectory and yet we recognise that people need jobs now.

6.1.3 To improve the demand for labour, we will:

6.1.3.1 create jobs directly through the strengthening of Special Employment Programmes, with more financial resources, better coordination, more regular flow of income and more emphasis on the building of sustainable assets. The key programmes will include the Municipal Infrastructure Programme, Working for Water and Community Based Public Works Programmes. Two new programmes will be introduced: the Clean Cities Campaign and the Land Care Campaign.

6.1.3.2 preserve jobs in the private sector by means of:

6.1.3.2.1 programmes to enable existing firms to shift into higher value added, more competitive product niches and to adopt more competitive methods of work organisation.

6.1.3.2.2 targeted interventions in mining, agriculture, construction, and vulnerable sectors in manufacturing such as motors, clothing and textiles, footwear and the petrochemical-plastics pipeline.

6.1.3.2.3 strengthen and refocus some of the existing investment promotion policies and programmes. Some programmes have only recently been introduced, but have already begun to show results. However, some of these programmes will be under review in the coming year including the Manufacturing Development Programme (MDP), the suite of SMME support services and key aspects of the NCPS.

6.1.3.2.4 fast-track movement into new labour absorbing industries by:

• 6.1.3.2.4.1 improving attention to the promotion of ‘non-tradables’ and service industries
• 6.1.3.2.4.2 supporting the identification and promotion of key labour absorbing industries, in agriculture, manufacturing and services
• 6.1.3.2.4.3 promoting cluster initiatives which enable the identification of industry strategy initiatives, particularly in services
• 6.1.3.2.4.4 promoting innovation in technology use and work practices
• 6.1.3.2.4.5 leveraging investment into the South African economy through the Industrial Participation Programme
• 6.1.3.2.4.6 reducing the cost of investing in productive activities with the MDP, the SDIs and the IDZs, restructuring commercial transport services and addressing key areas of crime.

6.1.3.2.5 Finally, SMMEs will be promoted by way of:

• 6.1.3.2.5.1 establishing local business service centres, which will be electronically integrated.
• 6.1.3.2.5.2 strengthening delivery in the financial services sector, particularly in the lower end of the market
• 6.1.3.2.5.3 intensifying land reform and extension services
• 6.1.3.2.5.4 strengthening the implementation of local economic development and local programme delivery

6.1.3.2.6 To strengthen the employability of labour, policy will focus on education and training, improving the functioning of the labour market and devoting special attention to vulnerable groups. A strong package of ‘active labour market policies’ will be introduced to strengthen labour market matching and the skills base. We aim to:

6.1.3.2.6.1 Strengthen the availability of skills by:

• 6.1.3.2.6.1.1 enabling easier access to work for non-South African skilled personnel
• 6.1.3.2.6.1.2 transforming the training boards into SETAs and the promotion of an impressive increase in private sector expenditure on industrial training
• 6.1.3.2.6.1.3 augmenting skills and infrastructural development through the Infrastructure and Employment Investment Programme
• 6.1.3.2.6.1.4 improving the interface between labour market needs and the education system
• 6.1.3.2.6.1.5 improving the allocation of resources in education

6.1.3.2.6.2 Improve the functioning of the labour market by:

• 6.1.3.2.6.2.1 revising labour regulation where necessary, in consultation with the Social Partners, to improve the criteria related to the extension of agreements, to loosen provisions related to probation and to reduce the load carried by the CCMA while increasing its preventative role
• 6.1.3.2.6.2.2 establishing a national network of Labour Market Information and Career Services Centres to guide workseekers towards jobs
• 6.1.3.2.6.2.3 formulating a more comprehensive social security and welfare safety net
• 6.1.3.2.6.2.4 enabling adjustment through Social Plan activities including the establishment of the Social Plan Technical Support Facility, a review of UIF provisions to improve service to retrenchees, and by providing a social plan fund to public sector retrenchees
• 6.1.3.2.6.2.5 improving coordination in the planning of housing schemes and the provision of low cost transport services

6.1.3.2.6.3 Vulnerable groups will receive special attention, by:

• 6.1.3.2.6.3.1 reducing direct and indirect discrimination against women in the labour market by improving access to child care services, accommodation in areas of economic agglomeration, skilling opportunities and occupations not normally considered to be ‘women’s work’.
• 6.1.3.2.6.3.2 promoting youth employment and skills development with the consideration of a discounted youth learnership wage, a youth training subsidy, a temporary holiday from unfair dismissal provisions, measures to avoid the displacement of existing workers if new young employees are taken on, improved career services in schools, internships, and improved vocational training.
• 6.1.3.2.7 To fulfill the aims of the Employment Strategy it is essential that improvements in public service delivery be achieved. The reallocation of expenditure and of personnel to areas that add social value will require the introduction of more flexible employment practices.
• 6.1.3.2.8 In all relevant aspects of policy, attention will be devoted to improving delivery at the local level and improving overall coordination of efforts to maximise the potential impact of policy. In particular, we seek to improve the dynamic interface between the provision of infrastructure, information services, social services, SMME support services and other economic strategies such as the SDIs, IDZs or targeted industrial promotion activities.
• 6.1.3.2.9 To provide a vehicle for fiscal support of innovative programmes aimed at stimulating employment, we will establish the Umsobomvu Trust, to be capitalised initially from a charge on demutualisation. These initiatives may receive further support from the Budget.
• 6.1.3.2.10 A Cabinet Employment Cluster Committee will be established to ensure that government’s commitments are implemented and to oversee a review of the key policy areas.
• 6.1.3.2.11 We must recognise that human and financial resources are limited. We therefore challenge the Social Partners to join us in making this plan work. More particularly:

6.2 We Challenge Business

6.2.1 We recognise the contribution made by Business to social development, in the establishment of corporate responsibility and the contribution to the National Skills Fund. We further challenge business to make a meaningful contribution to employment promotion through demonstrable and tangible commitments to:

• 6.2.1.1 building capacity at the local level by establishing a nation-wide "Managers Service Programme". Skilled professionals would volunteer their time to assist in the development of capacity in local and provincial government financial management, the development of Local Business Service Centres, the Social Plan Technical Support Facility, schools management and upgrading and public works projects.
• 6.2.1.2 promoting education and training with a "Schools Adoption Programme", which would systematically finance the upgrading of schools and the purchase of books and materials.
• 6.2.1.3 funding partnerships in support of the programmes of the Umsobomvu Trust and other employment generating initiatives.
• 6.2.1.4 promoting youth employment.
• 6.2.1.5 facilitating small business entry.
• 6.2.1.6 enabling progressive workplace change.
• 6.2.1.7 helping reduce conflict on the shop-floor.
• 6.2.1.8 addressing the need for improved trauma support to survivors of violence.

6.3 We Challenge Labour

6.3.1 We recognise the contribution made by Labour to social development and participative democracy. We further challenge labour to make a meaningful contribution to employment promotion through demonstrable and tangible commitments to:

• 6.3.1.1 contributing to the Umsobomvu Fund.
• 6.3.1.2 making it easier for young people to get into jobs.
• 6.3.1.3 wage bargaining appropriate to productivity gains and rates of inflation and which does not contribute to job loss.
• 6.3.1.4 developing a realistic labour regulation framework, which enables the restructuring required in both the public and private sectors and supports an environment for employment creation.
• 6.3.1.5 helping reduce conflict on the shop-floor.

7. Conclusion

7.1 To fight against unemployment is our central challenge. And we want sustainable jobs. But we must be under no illusions. There are no magic solutions and no quick-fixes. Unemployment is a deep, structural problem. New sustainable jobs will not be generated overnight, at least not in the numbers we need. Fighting unemployment will be a long haul.

7.2 As government we are focussing on getting the policy environment right – including promoting growth, investment and the building of infrastructure, pursuing sound macro-economic policies, improving the quality of our human resources and revising a range of policies which may impact negatively on the employment environment. And if we are to be successful we will need the help of our social partners, and indeed of all organisations in our society. Business has a particular role to play. Most jobs, now and in the future, will be in the private sector, in businesses large and small.

7.3 This document presents some of the initiatives being considered, or already underway, within government. Some are short-term, others long-term. All form part of an employment strategy that must be made to work. If we pull together we will succeed.