A look at the South African Labour Market in 2016
Chris Todd, Head Employment & Benefits Practice at Bowmans Cape Town
The challenges facing South Africa's labour market in 2016 have been evident in a number of recent judgements and in a variety of ongoing processes of engagement between social partners.
The introduction of a national minimum wage remains high on the policy agenda, although its relationship with job losses and job creation remains obscure. Numsa’s plans to launch a new trade union federation appear to have stalled, with the timing of the launch and its trade union composition still up in the air. Important court judgments on industry collective bargaining and affirmative action have been handed down, and the mining sector is still struggling to emerge from a period of industrial relations instability following a rupture in traditional union membership in the sector. All of this comes against the backdrop of a jobs crisis that shows no sign of abating.
The 2015 labour law amendments have no doubt offered improved protection and job security to a class of the most vulnerable workers, but there is evidence of a corresponding significant reduction in the number of jobs available. Whether this proves that better labour protection destroys jobs is hotly contested, but common sense suggests that there is at least some causal link. On the horns of a dilemma, government continues with attempts to demonstrate a commitment to worker interests. There have been no signs of change or a new path so far in 2016. It may be important not to overstate the extent to which labour laws and labour market policy can grow employment, but there is little evidence of government intervention in this area that will either stimulate employment or grow jobs in the short term.
There have been ongoing discussions at the National Economic Development and Labour Council (Nedlac) about the national minimum wage. Representations and public hearings on the issue took up a significant amount of time and energy in 2015 and have continued in 2016. The potential impact of a national minimum wage is that if it is set too low, in an effort to avoid destroying jobs in the lowest paid sectors, it will have little impact in higher paid sectors. On the other hand, if it is set too high, this may negatively affect jobs across the economy. The government’s public statements are, however, clear. While the appropriate wage level must still be divined, it will push ahead to introduce a minimum wage.
The form of increased regulation of strikes has also been under continuous debate this year. Government had, in the previous round of amendments to the LRA, proposed changes to the provisions regulating strikes, reintroducing compulsory strike ballots and increasing powers of the Labour Court to intervene in violent strikes. But these were withdrawn following trade union lobbing of the Parliamentary Portfolio Committee in 2014. Similar provisions are, however, the subject of a separate ongoing engagement process at Nedlac. There is still some prospect that improved regulation of strikes will emerge from this process during the remainder of the year.
The year has also produced ongoing contestation over the effect of centralised collective bargaining. Judgement in the Free Market Foundation challenge to the extension of collective agreements to non-parties was handed down in the North Gauteng High Court, and produced claims of victory all round. Despite some of the small print, the judgement does clearly endorse the basic structure through which the LRA regulates industry bargaining. But the precise relationship between decisions taken under these provisions and the Promotion of Administration of Justice Act remains somewhat obscure.
Judgment has also been handed down by the Constitutional Court in the appeal brought by the trade union Solidarity against the Department of Correctional Services in an affirmative action case. Solidarity had argued that employees in the Western Cape had been overlooked for promotion when the Department wrongly used national and not regional racial demographics in the hiring process. The case is one of a series of similar challenges brought by Solidarity against the use of national demographics and an ongoing system of race classification in hiring and promotion practices, particularly in the public service. The Constitutional Court agreed with Solidarity that the use of national demographics alone in that case was not consistent with the provisions of the Employment Equity Act. The decision has important implications for the application of race based affirmative action in a country in which there is no even distribution of “races” across different provinces or regions.
Earlier in the year Solidarity had been granted an interdict to halt all employment equity promotions and appointments within the South African Police Service (SAPS) pending the outcome of its dispute with the Correctional Services Department. The Constitutional Court’s decision will undoubtedly have far reaching implications throughout the public sector.
Further realignment of trade union affiliations appears inevitable. Whether or not this is good for workers is a matter of some debate. But for businesses, inter-union rivalry is likely to produce a period of industrial relations instability at least until the strength of new union formations has been established. The mining industry in particular has suffered severe labour relations instability since shortly before the Marikana tragedy, in August 2012, and the growing significance of a new mining trade union has presented very significant challenges to collective bargaining in the sector. The impact has spread to a number of other industries. It is unlikely that Cosatu’s proposal to compel industry bargaining will improve the situation, and there is little that law can do to stabilise the effects of intense inter-union rivalry in the workplace. Instead, a return to basic principles of labour management relations, and greater focus on effective industrial relations at the workplace rather than industry level is more likely to restore stability in the medium term.
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