NATIONAL ASSEMBLY CAPE TOWN, 27 MARCH 1997
Madame Speaker, Honourable Members,
The overwhelming opinion of South Africans is that the Minister of Finance and the Cabinet have produced a People's Budget, the first budget, in many years, to score well on the issues of budget control and strategic social development expenditures. Once more, the Minister of Finance deserves congratulations for this sterling effort.
One of the key components of economic policy is the labour market. There are as many views about the role of the labour market and its main participants in job creation as there are different schools of thought on any policy matter.
Often, those who pretend their perspectives are ideology-free are, as Keynes put it, "slaves of some defunct economist".
In the debate about labour market policy there are indeed many defunct economists who call for deregulation as the way to improve flexibility and, through that, job creation.
They equate inflexibility with the regulations that enhance workers' security and which enable them to negotiate meaningfully with employers about wages and working conditions.
We reject this argument. Because it does not address the real roots of inflexibility in South Africa. And because it ignores the fact that unemployment does not arise from the nature of the labour market alone, but from the overall structure of the economy and its performance.
The key causes of labour inefficiencies in South Africa do not lie in progressive regulations. They are a consequence of many factors.
Weak education and training systems make it difficult for people to move between jobs because they lack broad-based skills and formal certificates.
Discrimination still leads too many employers to ignore the talents and capabilities of most workers while relying too heavily on an overpaid minority. And it fosters rigid management styles and work organisation. Most companies still use archaic apartheid-based grading and wage systems.
In any case, the regulatory framework is not as rigid as some commentators believe. I refer honourable members here to the International Labour Organisation (ILO) study of 1996.
For instance, wage determinations already exempt micro enterprise - and their rates average well under a quarter of the average wage.
Too often, deregulation arguments resist the extension of minimum protection to low-wage sectors, such as agriculture and domestic labour. These are sectors that historically were excluded from the main labour laws.
It appears, the deregulationists do not want the efficiencies gained through collective bargaining. Rather, it seems, they long for the apartheid days, when employers controlled workers and workers had very little mobility.
Creating employment at decent pay represents the central challenge to our society. Today still, South Africa is one of the world's most unequal societies.
Almost two thirds of our national income goes to the richest 20 percent of households and 10 percent of our workers earn less than R500 a month. At the same time, a third of our people who want work cannot find it.
To address the challenge of job creation and growth which we face, the Ministry of Labour is adopting facilitative power.
We will support policies and activities which encourage greater and more productive use of labour, without undermining worker security and basic employment conditions.
We favour bargained and co-operative solutions to setting labour-market outcomes and the new Labour Relations Act (LRA) sets in place the overarching framework for these bargained relationships to unfold.
The new LRA commits us to developing effective sectoral bargaining. Industrial councils currently cover only about one in five formal employees. Too often, these Industrial Councils are based on only fragments of sectors, such as hairdressing or millinery, and negotiate overly detailed and rigid agreements.
We will encourage sectoral bargaining based on well-defined and coherent industries, where negotiations centre on minimum conditions, social wages and long-term policy issues.
As the GEAR requires, we will extend agreements only where clear procedures exist for granting exemptions to new and smaller enterprises.
Since the LRA began to operate in November last year, dispute-resolution has also improved. The Commission for Conciliation, Mediation and Arbitration (CCMA), which the LRA established, has reduced unresolved labour disputes from about three quarters to about a third. The savings to the country far outweigh the substantial budgetary commitment the Department of Labour has made to this process.
Through the Employment Bill, which we have submitted to the Cabinet system, we aim to develop a uniform floor of realistic minimum conditions of employment for all workers.
The Bill gives employees reasonable normal working hours, with higher pay for overtime to encourage employment creation. And it will improve pregnancy and annual leave.
The Bill enables employers and employees to define working time more freely within overall limits. It establishes a body to monitor basic employment conditions, including wage determinations, so that the floor of minimum conditions are appropriate to our changing society.
We have also tabled Green Papers on a new strategy for skills development and employment equity.
The skills development strategy will enhance skill skills development for workers. This should enhance workers' prospects for career advancement and fulfilment. The strategy addresses the skills bottlenecks that now inflate the cost of skilled labour.
The employment equity strategy encourages employers to work with employees and other stakeholders to review work organisation, define jobs and decide on hiring, training and promotion opportunities. It requires more transparent and accountable decision-making about personnel. And it calls for employers to initiate accelerated measures to afford Black people and women access to new employment opportunities, from which they were formerly barred.
But, no matter how flexible, the labour market will not overcome unemployment, by itself.
Job creation flows from the investment structure and macroeconomic policies, which define demand for labour. More jobs also flow out of factors that influence the cost and productivity of workers.
These areas lie outside the competence of the Department of Labour. So we are working with other Departments to develop an employment strategy.
Critical areas of this strategy include enhanced support for labour-intensive industries and small and micro enterprise; reducing the cost of living; and increasing investment in human capital and local economic development programme.
We have drafted a framework for this strategy, which we will present to Cabinet soon and which we will discuss with Parliament during my budget debate.
When we have developed this strategy into a fully-fledged employment strategy, we expect it will form a central part of the government's input into the Presidential Summit on Job Creation in September or the last quarter of the year.
This process should enable us to engage with all tiers of government and to ensure broad consultation with civil society.
This budget offers us a unique opportunity to transform the style of working in the public service, improving accountability, ensuring that budgeted amounts are spent, delivering services to our people. Let us seize this important moment which is being presented to us.
Thank you, Madame Speaker.