Issued by Ministry of Labour
4 April 2000
Madam Speaker, today I speak under inspiration. I am inspired, not by those who arrogantly see themselves as the sole repository of solutions to the challenges our country faces today. My inspiration hails not from those who naively seek to offer simplistic, ill-conceived and spurious theorems on how our country can raise levels of investment, promote economic growth, create more jobs and eradicate poverty.
Madam Speaker, I draw my inspiration today from an indigenous African philosopher, an aboriginal African prophet of unrivalled intellectual capacity.
Madam Speaker, I refer to a begotten son of the African continent, Ben Okri, who, on the eve of the Millennium wrote as follows:
"Let's be wonderfully awake
For what we are going to create,
To make happen,
In this mass co-scripting
Of the future"
(Ben Okri, Mental Fight, An Anti-Spell for the 21st Century)
What a challenge. As we South Africans co-script our future we are called on to be "wonderfully awake".
I interpret this to mean that we all have a profound responsibility to know the direct and indirect, intended and unintended, positive and negative consequences of our actions - not so that we are incapacitated by indecision, but so that we can script a truly wonderful future.
Nowhere is this more challenging than in the labour market - in the market place where people's labour is bought and sold. This market place is, in so many ways, so unlike the one where apples or tables or cars or similar inanimate objects, where things are exchanged. In the labour market people agree to work for others in exchange for wages. Such agreements are usually tempered by a limitation on the number of hours to be worked or the output to be achieved - the conditions of employment - because labour, unlike other things, is sold by ordinary mortals made of flesh and blood; and who therefore need to sleep and eat and recreate.
Some would have us believe that so sacred is this market place, that it should operate unfettered by ground rules. Let those that enter such agreements settle the terms between themselves, they say. But few ascribe to so radical a notion - hopefully no one in this House today, because many of us are "awake" to the fact that not everyone enters into such agreements freely and voluntarily.
Perhaps the clearest examples of such people are children. Our Bill of Rights enshrines the rights of children, amongst which is the right of every child "to be protected from exploitative labour practices". In other words, we have all agreed that children are not free to sell their labour and that laws that prevent them from doing so are appropriate.
The same would most likely apply to the worker rights contained in the Bill of Rights and those Conventions which are listed in the Declaration of Fundamental Worker Rights passed by the International Labour Organisation.
The majority would probably also agree that laws should be passed to protect people from agreeing to do work that is so dangerous that it directly threatens their lives.
If Mr. Mokoena, Mr. Mohamali and Mr. Mkhabela had known of a flaw in the plan to build the Njaka Bridge, would they have signed on in July 1998 for a day's casual labour? We'll never know - because they are dead as a result of the collapse of the bridge, together with eleven others.
The majority of us agree that the pursuit of profits cannot be allowed to endanger human life - indeed it is sub-human to behave in this way. So we have collectively agreed that such agreements cannot be freely entered into. We are "awake" to this.
However, beyond the protection of children and the protection of the lives of workers, once we enter the arena of "improving the quality of life of all citizens" (a phrase contained in the Preamble to the Constitution), there are distinct differences of view.
Take, for example, the Basic Conditions of Employment Act. This Act seeks to set a floor of rights - a minimum - below which freely entered employment agreements cannot go. The Act seeks to protect those who are notionally free but in practice are too vulnerable to protect themselves. These workers, such as domestic workers and agricultural workers, are too dispersed, too trapped by the daily grind of survival and too vulnerable in the hands of many unscrupulous and abusive "madams" and "masters" who deny them time to rest, worship or attend to their family responsibilities. It is our responsibility as government to ensure the employment contracts of those susceptible to exploitation are in harmony with the injunctions of our constitution.
The logic of this proposition is challenged by those seeking to lower their wage bill. Driven by greed and an insatiable appetite for profits, our detractors argue that desperate, hungry people should be free to work below this floor of basic employment conditions. They present economic models about wage 'elasticities' which claim to prove that, if wages and conditions fell to their lowest possible level, then there would be more jobs. They pontificate that any job, however bad, is better than no job at all. Let us not romanticise this argument - it means quite literally that more people should be free to work themselves to exhaustion and sickness, or even death, for another's profit!
So cunning are our detractors that they have established reactionary formations whose ulterior motive is to deceive the unemployed to support economic arguments that advance the interests of the greedy minority.
Those who demand that we should lower labour standards argue that employment opportunities will increase if workers are exposed to harsh and inhuman employment conditions. Research shows that there is no necessary link between legislating protection for workers and increasing unemployment. Put differently, there is no empirical basis to suggest that the lowering of labour standards results in a sustainable increase in job creation. We therefore do not believe that either more or less regulation will solve the crisis of unemployment.
But, just as we must not romanticise this argument, so too must we be vigilant of glib complacency. Of course, our critics allege that we are not sufficiently "awake" to the consequences for those without work. I accept that this is, and must remain, an issue of "red alert" for all of us.
Adrian du Plessis from Business South Africa was reported in The Star of 13 March 2000 to have said that ours is "a labour market vision based on employment in the formal sector, with rising wages offset by improvements in productivity and the development of a broad skills base". He went on to say that such a vision has produced "some unintended consequences. Primary among these is that rising formal sector wages and improved efficiencies have aggravated labour substitution, particularly of the unskilled and less skilled persons at the margin of the labour market." He however came to the conclusion that: "A low wage labour market model with a lower skills mix just wasn't on the cards" given "our particular history and the special constellation of forces in our society".
Adrian du Plessis is correct. This government has decided that instead of expanding the range of less-free agreements in the labour market, it has chosen rather to stimulate the growth of more and better jobs.
This should not be interpreted to mean that lower skilled and more labour intensive sectors are excluded. Quite the reverse, they are clearly to be encouraged if they bring jobs. But rather the argument is that in all sectors - be they more labour intensive or more capital intensive - there should be an upward productivity pull, not a downward poverty collapse. Because rising productivity will ultimately result in increased investment and wealth creation.
Employment creation
Where then are new jobs to come from? I believe that they are to come in three broadly defined segments of the labour market: formal sector growth, small business growth and supporting development sector initiatives.
In respect of formal sector growth, as our President noted in his State of the Nation address:
"we have never been better positioned than we are today to achieve the progress we have to attain. Many major indicators point to the excellent work that has been done to place our country on a strong growth path." Growth rates of between 3,5 and 6,5 percent are predicted for the next two years.
But, left to itself, the formal sector could grow without absorbing the majority of the unemployed in our country - so-called 'jobless growth' or 'job-few growth'. Or the benefits could take too long to reach the unemployed. Complementary strategies are needed to stimulate productive economic activity amongst the unemployed. Stimulation of small and micro enterprises is the second key element of such a strategy, and the provision of government funded or government enabled infrastructure and local economic development initiatives is the third. Public-private partnerships are emerging as an important means of leveraging private sector investment into these programmes, as is the restructuring of state assets. Government, as the largest employer in the land, can also influence economic behaviour through its procurement policies.
These three elements of an overall employment strategy are mutually reinforcing. Indeed at the heart of government's Reconstruction and Development Programme from the start has been the idea that positive synergies can be found between all three elements.
In all of these it is clear that labour market policies have a vital contribution to make to the success of the overall "orchestra" of macroeconomic, fiscal, monetary, industrial and development policies if rising employment is to be the outcome of this "co-scripting of the future".
Role of the Department of Labour
What then are the contributions to be made from the side of the labour market to economic growth, stability and employment creation in the formal, informal and development sectors?
For the purposes of this address I shall cluster the contributions of my department into four themes and address the contribution of each to employment stability and growth. The themes are: basic protection; management of opposing interests; insurance in the event of the loss of employment; and finally employment, productivity and equity promotion.
Basic protection
The first theme is basic protection. In the year ahead we shall continue to roll out the Basic Conditions of Employment Act. In addition to the sectoral determination for small business which modifies conditions of employment in certain areas such as overtime payment and hours of work, further determinations will be published which will seek to achieve a balance between accommodating the needs primarily of small employers and protecting the rights of workers.
These determinations shall be in sectors which include significant numbers of small employers, including domestic and farm workers, retail, hospitality and clothing.
We are also seeking to develop statutory minimum levels of remuneration and conditions for people employed in job creation projects and for people engaged in learnerships in the hospitality industry - the new form of learning to promote access to the labour market for the young.
This year will also see us finalising a comprehensive programme of action against the elimination of child labour in line with the ILO convention on eradicating the worst forms of child labour which this parliament ratified recently.
Also related to the imperative of basic protection, I wish to bring parliament's attention to the policy developments in the area of occupational health and safety. Cabinet has resolved to promote a more integrated approach to health and safety across the labour market and across the government departments responsible for this, namely the Departments of Labour, Minerals and Energy and Health, to enhance efficiency and effectiveness. Task teams have been established to develop proposals and plans to give this decision force and effect.
Management of opposing interests
Under the second theme, the management of opposing interests, a framework for reaching employment agreements, which has been put in place by the Constitution, the NEDLAC Act and the Labour Relations Act amongst others, is addressed.
We have a created a set of bargaining institutions such as NEDLAC, bargaining councils and workplace forums on the one hand and mechanisms to manage conflict such as the CCMA and the Labour Court on the other, which we should be proud of.
However, the question I want to pose is whether we are using these institutions to the best of our collective ability? Are we using them effectively to achieve our vision of economic growth and wealth creation?
My assessment reveals that, while each of these institutions contributes towards achieving our vision, there is still room for improvement. My department will explore, in the course of the year, mechanisms to enhance the effectiveness of these important institutions.
Insurance against the loss of employment
The third theme is insurance against the loss of employment. For workers the threat of unemployment is often close to a life and death issue. The loss of income associated with the loss of a job means no food on the table, no money for schooling or education for the kids, no transport money to find new jobs and so on. Two strategies have traditionally been adopted with different emphases at different times. The first are passive labour market measures, and the second are more active ones. Both seek to make times of change, particularly times of job loss, less difficult. By making them less difficult it is hoped that the people will be more willing to change - and hence there will be greater flexibility and room for repositioning and adjustment.
At the centre of passive labour market interventions is the provision of insurance against unemployment - which in South Africa translates into the Unemployment Insurance Fund. As the Honourable Members are aware, we have recently published a new draft Bill which is currently before NEDLAC. Public comment closed on 31 March 2000. The new Bill seeks to address problems of sustainability of the Fund. It also seeks to widen the scope of coverage, graduate the benefit schedule, de-link maternity and unemployment benefits and strengthen compliance and enforcement measures.
The second 'passive' labour market measure managed by my department is compensation for occupational injuries and diseases. This fund continues to be used to provide compensation to workers who are more or less incapacitated at work.
On the more 'active' side, my Department has begun, in partnership with the National Productivity Institute, to implement the Social Plan Agreement. This Agreement was reached at the Job Summit in October 1998. It provides in the first phase for measures which seek to avoid retrenchment through the promotion of Future Forums at work which can anticipate threats which may lead to job loss. In addition, through the Social Plan Technical Support Facility housed at the National Productivity Institute, help is provided to firms facing productivity challenges which threaten jobs. Where retrenchments are unavoidable, my Department has geared itself to provide assistance at the point of retrenchment through the provision of information and advice and by providing training opportunities to help retrenchees find work in other sectors. In partnership with the Department for Local and Provincial Government, we are also engaged in assisting communities that have been severely affected by large-scale retrenchments. In the latter circumstances my Department seeks to provide employment and skills development services that support initiatives for new economic development. In the year that lies ahead the application of the Social Plan to the restructuring of state assets will be the most challenging.
Another active labour market measure is employment and skills development services, which I will deal with under the theme, employment, productivity and equity promotion, to which I now turn.
Employment, productivity and equity promotion
Having addressed the question of core rights, having described the enabling environment for collective bargaining and having put in place certain active and passive measures which seek to protect workers when they lose their jobs, some might say - surely that is the 'total package' of labour market measures. In South Africa these measures are indeed the necessary elements of a labour market policy portfolio - but they fall short of being sufficient.
Over and above these basics, there is a powerful imperative to actively promote employment, productivity and equity in our country. In all instances the market, on its own, has failed to adequately address these issues. Our country is plagued by inequality and a low skills base by virtue of its history. This legacy must be turned around if we are to achieve our goal of a rising standard of living for all. To do this it is necessary for a "mass co-scripting of the future" to take place. This is about reaching into the future, defining where we want to be, and then putting in place the plans we need to move step-by-step towards their achievement.
Setting goals and defining implementation plans backed up by people and other resources is the key. We are all painfully aware of the levels of inequality that characterise our society in general and our labour market in particular. And, without intervention, the situation seems to be getting worse. Recent research commissioned for the Department of Labour has shown that over the 25-year period from 1970 to 1995, there were NO net new jobs for African workers! New jobs, such as there were, went to Indian, Coloured and White workers. So the market on its own cannot correct the wrongs of the past - indeed it appears to mirror them! The drawing of Employment Equity plans - the setting of targets and developing strategies to correct historical inequities - is a key mechanism this government is promoting to address the problem.
By June this year, we will receive the first Employment Equity reports from employers. We hope that we will be able to identify both the extent of compliance with the Act as well as the racial, gender and disability profile of our workplaces and the good and bad measures that employers are taking to bring these profiles in line with national and regional demographics. These reports should further assist us to establish whether indeed these measures are moving towards the target of a more just labour market.
A similar approach is to be adopted in relation to Skills Development. Again we know that South Africa's workforce has skill levels that reflect the shameful outcome of apartheid education and training policies. It is estimated that a mere 20% of our workforce could be called skilled or highly skilled while the skills levels required in the formal sector have risen dramatically over the past 25 years. As such, there is an absolute mismatch between the skills demanded and the skills available on our labour market.
This fact is inhibiting new investment, slowing down the diffusion of new technology and new productivity enhancing forms of work organisation and even stultifying the expansion of the small business sector.
Of course there is a fundamental need to enhance the education system and improve the quality of learning that new entrants bring with them when they enter the labour market. But this strategy needs to be augmented by interventions which seek to improve the match of skills developed to those needed.
The Skills Development Strategy seeks to fill this gap. It seeks to put in place a financial incentive, through the levy-grant system, and a set of industry-owned change agents known as Sector Education and Training Authorities, that will drive changed behaviour in large as well as small firms right away.
The key point in relation to both the Skills Development Act and the Employment Equity Act is that the process of plan writing and plan implementation is the means we intend to use to change the profile of our labour market. Together with the active participation of all social partners, we must change our labour market from one which is characterised by low skills and high levels of inequality, to one which has rising skills linked to rising productivity, competitiveness and employment and the complete eradication of all discrimination.
Skills development and employment equity are also intended to help those that are currently unemployed or who are students about to leave full-time learning and enter the job market. Recruitment and selection criteria will need to favour those previously disadvantaged. And 20% of the levy funds collected are to be dedicated to helping these vulnerable groups to build their skill base to a level where they can enter or re-enter the labour market - in the formal sector, in a small or micro business or in a development project.
Skill and equity targets with plans at the level of workplaces, skill and equity targets with plans at the level of economic sectors, skill and equity targets with plans within communities and provinces, skill and equity targets with plans for the nation!
Madam Speaker, in this way we have begun to "mass co-script" a truly wonderful future for our country.
At the heart of the success of all of these plans is the commitment and energy of our people. The labour market need not only be the place where alienated individuals buy and sell their labour power within a set of basic rules which hold back the market jungle, it can also be the place where organised people with vision and commitment for a greater future are able to envision a dream and then put in place concrete and practical steps to reach it step by step. As Ben Okri puts it:
"We are, more or less
The makers of the future.
We create what time will frame."
I thank you.