June 28, 2015

News:

Sex worker says rape accused ‘insane’ -

Friday, June 26, 2015

Mashinini encourages business progress -

Friday, June 26, 2015

Ntombela acts on corruption -

Friday, June 26, 2015

How crooks milked dept -

Friday, June 26, 2015

FDC, agencies told to help youths -

Friday, June 26, 2015

Alleged serial rapist caught thanks to blood tests -

Friday, June 26, 2015

‘Baby thief’ had miscarriage -

Friday, June 26, 2015

EFF says to champion Freedom Charter -

Friday, June 26, 2015

Sesotho name for dinosaur discovered in Free State -

Friday, June 26, 2015

Guards ‘steal’ from prisoner -

Friday, June 26, 2015

FS moves to fix municipalities -

Friday, June 12, 2015

Africa no get-rich-quick-scheme – CEO -

Friday, June 5, 2015

Hawks won’t probe Fifa bribe allegations -

Friday, June 5, 2015

SA falls out of Top 40 mining list -

Friday, June 5, 2015

Treasury to name assets for Eskom bailout ‘shortly’ -

Friday, June 5, 2015

Medical waste firm violates human rights -

Friday, June 5, 2015

Panel seeks ways to end lawsuits -

Friday, June 5, 2015

School shakes off racism label -

Friday, June 5, 2015

Eskom power cut deadline today -

Friday, June 5, 2015

Woman kidnapped, gang raped -

Friday, June 5, 2015

Anthea Jeffery

1on1-the-weekly

The South African Institute of Race Relations (SAIRR) this week released a set of proposals aimed at addressing the country’s high unemployment rate. The report which is carried in the latest issue of the SAIRR in-house publication @Liberty proposes a host of solutions to help alleviate the unemployment crisis. The report puts to the fore, ideas and policies that the institute believes would help restore balance to the country’s industrial relations system and liberalise the labour market – factors it says are the major reasons for the high level of unemployment. The Weekly’s Martin Makoni asked the SAIRR head of policy research Anthea Jeffery why they found it important to carry out the study and what they hope to achieve with the findings. Makoni also asked Jeffery which sectors the country needed to focus on in order to realise growth and reduce unemployment.
www.theweekly.co.za

The SAIRR has come up with a set of proposals to address the country’s growing unemployment levels in the form of a 10-point plan. What exactly is this 10-point plan?
The aim of the plan is to break the crisis of unemployment that the country has had for quite some time now. On the strict definition of unemployment according to Statistics South Africa, it stands at about 25 percent. On the expanded definition which includes those who have given up looking for jobs, the figure is about 36 percent.

That means almost four out of every 10 people are without a job. And when you look at youths between the ages 15-24 years who are not studying, the strict definition puts their unemployment rate at more than 50 percent and about 63 percent under the expanded definition. This makes unemployment a huge problem in the country.theweekly

The number of unemployed people has more than doubled since 1994. It now stands at about 8.7 million people. We need to act to reverse the crisis of unemployment and draw people into jobs. We also have a very high unemployment rate compared to other emerging markets. We have 26 percent unemployment on the strict definition but China for example has 4.0 percent, Brazil and Russia have 6.0 percent each and India, 9.0 percent. So, we are far out of sync with our developing market peers.

The consequence of course is that there has been huge human suffering and a huge burden on our economy and on the few relatives who are working and have to support their extended families.

What is the SAIRR seeking to achieve by coming up with this set of proposals?
This 10 point plan is designed to curtail violence in the workplace, replace coercion with democracy, lower barriers to market entry and remove obstacles to the engagement of workers. The rights to join trade unions and go on strike should be retained, but there should be a better balance between the interests of the unemployed, trade unions and employers.

How realistic are your proposals in terms of implementation, do see them being easily executed by government, labour unions and the corporate sector?
I don’t they will be easily addressed because we are recommending among other things that unions should be more accountable because for example there is a great deal of coercion, intimidation and sometimes physical violence to ensure that people go out on strike. But quite often, some of those people on strike would have preferred to go back to work.

A good example of this is what happened in the platinum strike which went for five months. So, there should be penalties to the organisers of the strikes if they turn violent. One of the ways of doing that is that a strike would lose its protected status if it is marred by violence so that the responsible employees may be dismissed. This means that unions have to be more careful about the way in which they organise strikes.

There should be amendments to prevent bargaining council agreements being extended to third parties to the negotiations or the agreements reached. We believe extending agreements to non-parties is an undemocratic and coercive practice which is drawing increasing criticism because it helps to protect the interests of big business and organised labour against small business and the unemployed.

As a result small businesses are compelled to pay wages that only larger firms can afford, leading to company closures, retrenchments and in some cases relocation to neighbouring countries where conditions are more conducive. Changing this won’t be easy because we expect a lot of resistance from labour unions. With Cosatu being part of the alliance, the ANC would want to maintain its relationship with them but at the same time the ruling party has wider responsibilities and should consider the plight of the nearly nine million people who are not employed. We have to start somewhere.

The report states labour restrictions as one of the reasons why we have high unemployment in the country, what sort of reforms would you want to see being introduced in the country in order to address the challenge job shortages?
I think there are two key problems which have been acknowledged in the past. Former reserve bank governor Gill Marcus and deputy president Cyril Ramaphosa said a few years ago that in comparison with other developing countries our wages are often too high.

They make our goods and services uncompetitive and in particular the inexperienced new entrants to the labour market actually cost the employer much more than their labour is worth because the employer has to spend a significant amount of money on their training. Ramaphosa such a scenario means we are actually locking young people out of the labour market.

To address this we need more flexibility on wages. One way of doing this is by not extending bargaining council agreements to non-parties. Let bargaining councils set agreements only for those who are party to them and not those outside because it puts financial pressure on the smaller businesses as they will not be able to pay the higher wages that big businesses can afford. Marcus also said that the labour laws make it difficult to dismiss poorly performing workers or to retrench them where a business needs to downsize.

Under present laws, the employer has to prove that they were done for good reason otherwise they will be automatically deemed unfair. This has to be reviewed so that it becomes easier for employers to hire and dismiss employees.

Looking broadly, labour regulations are not the only reason for the high levels of joblessness, what are some of the factors that the study found?
Our country has had a very low growth rate. The economy only grew by 1.5 percent last year. If our economy was growing by at least seven percent per year like China, the size of the economy would nearly double every 10 years.

This means there would be many more jobs because businesses would be expanding. South Africa cannot effectively address the high unemployment rate unless the economy grows by about five percent a year. Power cuts have also presented a major challenge to employers because if there is no electricity, companies cannot be expected to be fully productive. Companies will be forced to invest in generators in order to keep running, yet that money could be used to hire new staff.

Then there is the skills problem… it’s a tragedy because since 1994 we have not dramatically improved our education system the way that we should have done.
About 80 percent of public schools are said to be dysfunctional and we have a very low matric pass rate. Agriculture which used to absorb most of the unskilled people has been shedding jobs and so has the mining sector. The financial sector has been growing but it needs people with very good matric results, if not degrees as well. These issues need to be addressed together with our labour laws.

The SAIRR has for many years, been a strong critic of the country’s Labour Relations Act of 1995, what exactly is your problem with this piece of law?
We believe the labour laws create barriers to the labour market. They actually lock people out of the labour market, particularly young and inexperienced people. We shouldn’t be having such laws in a country with unemployment such as ours. It should be easier for people to gain access to the labour market.

The former reserve bank governor Gill Marcus is quoted in the report as having said in the past that South Africa couldn’t compete in skilled sectors because it lacked the skilled and that it couldn’t compete in unskilled sectors because of high costs. But at the same time, labour unions suggest that South African workers should be paid a living wage, who is telling the truth here?
I think there are various factors at play here. Rising inflation and the deteriorating value of the rand make it more difficult for people to afford things. But what also adds to the fact that wages are too low is the fact that rate of dependency is too high. That again is a product of unemployment. The few that have jobs have to take care of a whole lot people who don’t have jobs. But if you have more people working, even if the wages were low, everyone would be better off. And also, the more people we have working, the more the employers would have to compete to pay them better. That’s what happened in China.

The wages were at one point very low but as more employers came in and started competing for workers, the wages went up. We need to get that kind of virtuous cycle working here. It shouldn’t just be government saying wages must be increased. Improved market conditions should make it normal practice.

The stringent labour laws affect large corporates differently compared to smaller companies. Can you break down how these different players are affected by some of the regulations?
Let’s take the bargaining council agreement, for example. In the clothing industry the big firms in the big cities would agree on a certain wage with labour and then seek to extend that agreement to the smaller firms that were not party to it. But the smaller firms would find it very difficult to afford what larger firms can.

The bigger companies have a larger market share and can use the economies of scale to foot the new wage bill unlike the smaller companies. When it comes to dismissals, the bigger firms normally have fully fledged human resources departments and can delegate their managers to deal with any labour disputes at the Commission for Conciliation, Mediation and Arbitration (CCMA). But for smaller firms, the owner/manager who has to be out on the road trying to generate more market share will be forced to spend the day sitting at the hearing. You will find that the more stringent rules we have, the more the companies will be reluctant to employ more people.

Given the urgency to create jobs and the economic situation obtaining in the country mainly characterised by stunted growth, should South Africa focus on growing labour intensive or skill intensive sectors in order to kick-start job creation?
I think we need to start by reversing the job losses in mining and agriculture which have been going on for years.
There is a great deal of uncertainty about mining rights.

Mining has become hugely unattractive for investors so much so that many companies are trying to get out of South Africa. Where they are expanding they are looking at expanding outside South Africa yet we have one of the largest non-oil mineral resources in the world. We ought to be thriving but we are struggling. We need to reform our mining laws. In agriculture, the land reform programme has been very slow.

There is a huge demand for land for housing in urban areas and for farming in the rural areas but there must be a balance. People should not lose jobs as a result of the land reforms. Our services sector, particularly the financial sector has potential. Just like Hong Kong is the financial gateway to China, we could be the financial gateway to the rest of Africa but we need good skills for that. Overall, we should change our focus from redistribution to growth.

Discussions are currently underway for the country to come up with a national minimum wage of which the figure is likely to be above the current sectorial limits set by government. How do you strike a balance between having a national minimum wage accepted by workers and one that is also affordable for employers?
The introduction of a new minimum wage could make the situation a bit difficult. The inexperienced workers trying to break onto the labour market would find it more difficult to do so as employers would rather hire experienced people on whom they don’t have to spend more on training. There would be a larger pool of unemployed people meaning, any gains made with the introduction of the minimum wage could be lost by increasing unemployment and increasing the burden on those who have jobs.

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