Issued by Department of Labour
11 May 2000
The Congress of South African Trade Unions (Cosatu) this week embarked on national strike action, according to them, in pursuit of job creation and the protection of existing jobs.
The right to freedom of expression is guaranteed to everyone in the land by the Constitution. Section 77 of the Labour Relations Act regulates socio-economic protest action and Cosatu is within its rights in this regard.
Cosatu has put forward the following as its demands to address the unemployment crisis:
· Amendment to the LRA so that employers are obliged to negotiate on retrenchments
· The insolvency laws must be amended to alleviate the effects of liquidations on workers and their financial security
· Modifying and enforcing the National Framework Agreement to prevent job losses in state-owned enterprises
· Reducing tariffs only as far as required by international agreements.
Government acknowledges the harsh reality of the crisis facing the country as a result of high unemployment levels and has consistently demonstrated its commitment to effectively address poverty and job creation.
Job Summit
The democratic government has over the past six years formulated and implemented policies to reshape and restructure the economy inherited from the apartheid era.
Under apartheid, the country depended highly on labour-intensive mineral extraction, especially of gold, whose price in the world market has fallen substantially over the last decade. Other industries relied on all kinds of subsidies, a web of protectionist measures and incentives to survive. This is unsustainable.
Thus the government embarked on a programme to restructure the economy to ensure that all industries are able to successfully compete in a globalising world, at the same time as it instituted various measures to encourage the expansion of productive investment in the country.
As has been stated before, government is concerned that not enough jobs are being created. Indeed, the impact that this has on the lives of ordinary people in our country has placed job creation as a central challenge facing government.
In 1998, government took the initiative to call on all social partners, including labour, to meet at the Presidential Jobs Summit and address the problem of unemployment. Former president Nelson Mandela termed the Summit at the time "perhaps the most important event since our first democratic elections".
At this Summit, diverse constituencies came together to craft a series of measures that they agreed could reverse the trends in unemployment, underemployment and job loss. A range of activities was agreed to, including the convening of Sector Summits and the Social Plan.
To date a mining summit and a tripartite indaba of stakeholders in the agriculture sector have taken place. Preparatory work for a summit in the clothing and textile sector is being finalized and is planned for July this year while summits in other sectors are also planned. We are convinced that these summits will yield appropriate sectoral strategies.
The Integrated Provincial Projects in Coega, Lubumbo and the Wild Coast, which were among the key innovations of the Jobs Summit, have taken off, bringing together government departments responsible for infrastructure development with the private-sector investors and local communities.
An array of other projects and programmes aimed at creating employment opportunities has been implemented across the country, many targeted to benefit rural women, youth and people with disabilities. These activities relate to mass housing, tourism, small business development, the Social Plan, skills development and the training of the unemployed, interventions to improve efficiency in schools, social security, local economic development initiatives and the strengthening of customs and excise.
Government's special employment programmes - the Consolidated Municipal Infrastructure Programme, Working for Water, Community-based Public Works Programmes, Clean and Green Living Campaign, are proceeding apace. These are providing short-term jobs linked to infrastructure development, building partnerships with other social partners.
We also commend some of our social partners for having made important strides in effecting their obligations to the Jobs Summit through initiatives such as the Business Trust and labour's Job Creation Trust.
However, as we note some of these successes, we are cognisant of the reality that joblessness and poverty remain a great challenge facing our democracy and that, as social partners agreed at the Jobs Summit, we need to "combine our efforts, in new and innovative ways, to increase the number of jobs created in the South African economy".
Issues around employment creation
The stark reality is that there can be no quick fix solutions to this problem. Where then are the new jobs to come from? Government believes that they are to come from three segments of the labour market: formal sector growth, small business growth and supporting developmental initiatives.
In respect of formal sector growth, the President noted in his February State of the Nation address:
There is therefore a fundamental positive mood among current and potential investors that we are going in the right direction as a country.
But, left to itself, the formal sector could grow without absorbing the majority of the unemployed - what is often termed "jobless growth". Or the benefits could take too long to reach the unemployed and the poor.
Complementary strategies are needed to stimulate productive economic activity among the unemployed through the stimulation of the small and micro enterprises, the provision of government infrastructure and local economic development initiatives. A lot of new initiatives have been put in place since 1994, including new public procurement procedures and institutions to assist SMMEs and programmes for skills training. The Umsombomvu Fund, which will put close to R1 billion at the disposal of youth skills development programmes, SMME development and youth learnerships should start operating before the end of this year.
Further, public-private partnerships are emerging as a significant means to leverage private sector investment into these programmes, as in the restructuring of government's assets. One instance of this is the welcome progress that is being made to promote tourism and ensure that its benefits spread to all sectors of society, especially rural communities.
Government remains committed to minimising job losses in the process of restructuring state assets while also ensuring that state enterprises operate efficiently and effectively. The National Framework Agreement (NFA) has provided a useful mechanism for government and labour in this process. Government supports the need for a review of the NFA which would draw on the experience of its implementation over the past four years.
Legislative amendments
The President in 1999 commissioned a review to assess the extent to which the labour market legislative framework contributed to the achievement of government's economic and labour market objectives and to address any factors which could be seen to impact adversely on investment attraction and employment creation strategies.
Government has held meetings with Business South Africa (BSA), the National African Federated Chamber of Commerce (Nafcoc), the Black Business Council, Cosatu, Nactu, Fedusa and a delegation of organizations representing community and development interests in Nedlac. Detailed submissions were received outlining the constituencies' concerns and proposals.
The result of this process demonstrated in no uncertain terms that the fundamentals of our labour market policy are sound and that the overall thrust of the legislative framework remains correct.
However, the review identified aspects of the law which have led to unintended consequences and which therefore require adjustments and refinement, either through legislative amendments or other measures.
Areas being considered for amendment have arisen from concerns raised by our social partners, as well as changes identified by the Department of Labour to improve labour market efficiency.
For this reason, as announced by the President in February this year, a number of amendments to certain provisions of the LRA, BCEA and Insolvency Act will be introduced this year. Areas under review include, among others, dismissals and retrenchments, bargaining councils and small business, and working hours.
Cosatu's demands relating to retrenchments, including the amendment of section 189 of the LRA relating to dismissal for operational requirement, are under consideration in this process, as are mechanisms to strengthen the rights and obligations currently addressed in the LRA's code on retrenchment as well as in the area of the provision of information on retrenchments.
As I announced in February this year, the introduction of legislative amendments will of necessity pursue the normal legislative process, including negotiation with our social partners in Nedlac. A legal drafting team has over the past few months been working with my Department in preparing draft Bills.
Government remains committed to fulfilling its mandate in finding solutions to the problems of unemployment in the country.
None of us can do this alone, nor can this be achieved through confrontation. We therefore look forward to engaging labour in further discussions on the issue of job creation. In our view, the labour movement, along with business, is a partner in a process that is difficult and complex, but which should, ultimately, bear the kind of results that we all want.