Labour minister is in denial about SA labour laws: employers

South African Minister of Labour Mildred Oliphant is in denial about the country's labour laws, says an organisation representing thousands of employers.
South African Minister of Labour Mildred Oliphant is in denial about the country’s labour laws, says an organisation representing thousands of employers.

Has Minister of Labour Mildred Oliphant spent any time in a business, chatting to entrepreneurs about their challenges and opportunities? If not, let’s hope she urgently schedules some time in her diary to get first-hand accounts of what it will take to create employment – not for the business players who hope to make profits but for the many South Africans who desperately need jobs. As Gerhard Papenfus, chief executive of an organisation that represents employers, emphasises in this opinion piece, labour legislation is choking the economy. Laws have certainly made union leaders more influential but this doesn’t mean that their power is being put to use for the benefit of the many who would like to earn a living. The long-term implications of the short-term benefits in the law are extremely worry, as Papenfus outlines here. – JC

By Gerhard Papenfus*

labour laws
South Africa’s labour laws are a major obstacle to employment creation, emphasises Gerhard Papenfus of Neasa.

We cannot agree with recent comments by the Minister of Labour, suggesting that South Africa’s labour legislation is not to be blamed for the prolonged and often violent strikes that have hit various industries across South Africa. Speaking at the recent 2014 Mining Lekgotla, Minister Mildred Oliphant said that the lack of real transformation in mining and persistent inequality across the rest of the economy were the more likely drivers of labour instability and workplace discontent.

Whilst we agree that the current labour legislation is not a direct or the only driver of violent strikes, one should not shy away from admitting that South Africa’s labour laws play a huge role in exacerbating unemployment, poverty and inequality. Employers all over the world respond negatively, primarily by avoiding employment if at all possible, when governments over-prescribe to them how to run their affairs. Unemployment, a primary driver of poverty and inequality, will therefore continue as a result of South Africa’s labour law dispensation which is of a very interfering and prescriptive nature.

According to the Minister a quick fix or an emotional solution to the country’s bitter labour relations will not be sustainable. I agree with the Minister on this but there has been ample opportunity to consider fundamental changes which could stimulate business, especially SMME development, which would have resulted in addressing South Africa’s biggest challenges.

The latest changes to the LRA (Labour Relations Act), apart from the cosmetic and technical changes and changes to appease Cosatu, gave business very little to be excited about. The problem is that the ANC’s tripartite alliance partners, and to a lesser extend big business (which is in any event an over diplomatic criticism of government) in Nedlac, are the only ones to have the Minister’s ear.

The current labour laws are also detrimental to sustainable growth and development. The strict law on dismissals serve as a deterrent to job creation and, as an unintended consequence, also have a downward impact on wages; the higher the risk of employment, the lower the wage. But under pressure from the alliance partners, government refrains from addressing this problem.

Another issue is the fact that, although SMME’s play an absolute strategic role in government’s NDP-strategy, they have no voice in the LRA’s collective bargaining provisions. Changes in these areas will however require a huge amount of political determination. It will also require a willingness to differ with alliance partners such as Cosatu and the SACP on these issues, as well as an urgent realisation that the broader South African interest must have preference over short term political convenience.

During her address to the Mining Lekgotla, the Minister also said that the lack of real transformation, socio-economic equity, mutual respect and trust in the workplace have contributed to the anger and frustration that can be seen in the current industrial relations dynamics. What transformation is the Minister referring to?

Is she referring to the development of skills, improved education and the development of a new approach towards job creation? If that is what she’s referring to, we entirely agree with her. We suspect however, that this is not what she means with ‘transformation’.

The Minister suggests that the strikes were more about the ever-increasing wage gap between management and workers and the ‘appalling’ living conditions of workers. Poverty and inequality therefore, according to the Minister, played a role in the violent strikes. She might be right; but research all over the world has shown that the more government intervenes in the workplace, the more poverty and inequality increases. Prosperity is the result of freedom.

The Minister is right when she says that laws are not the answer. What she has in mind however, is to leave the current restrictive and business unfriendly laws unchanged, to bring no relief in this area and hope things will get better. It won’t! Doing nothing won’t bring a different result.

Since government’s excessive interference in the workplace is fuelling unemployment, poverty and inequality, South Africa needs to move in the opposite direction, towards less labour laws and less interference. This however requires a completely new mind-set, a new philosophy and a new understanding of the capabilities and constraints of business. Unfortunately, we’re not there yet.

The Minister maintains that the primary goal of the labour market legislative framework is to create an enabling environment and tools to address the harsh reality. The Minister is so right when she says that and labour legislation may have succeeded in putting exorbitant and unequal power in the hands of trade unions. But the LRA is not an enabler of business and, since the Act is not inviting ‘employer creation’, it will ultimately fail in ‘employment creation’.

Unless something drastic is done about it, our socio-economic challenges will increase. At some point we’ll have to face this reality and make radical decisions.

According to the Minister, the mediocre compliance with existing labour laws further contributed to the ‘militant stance’ of workers dealing with collective bargaining processes. What she misses here is that if there is a general mediocre compliance with laws, it is usually because such laws are against the common good of those affected.

For one, how can the Minister expect SMMEs to be enthusiastic about arrangements stemming from collective bargaining processes, when their powers are curbed as a result of bizarre and completely undemocratic labour law arrangements?

* Gerhard Papenfus is chief executive of Neasa (National Employers Association of South Africa).



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