THE bargaining council system is much hated by smaller businesses who believe that it is being used by large companies as a way of killing off competition.
The large companies agree with large unions on the bargaining councils to such high wage packages that only large companies can afford them.
In terms of the Labour Relations Act, the agreement is then sent to the Minister of Labour, who makes it law for the entire industry. This effectively means that only those businesses that can afford corporate pay packages can survive.
In many cases, struggling small employers are being persecuted for failing to pay luxury perks such as holiday bonuses to their workers. But the most damaging effect of the cartel-forming bargaining council system is invisible. It renders entire industries not worthwhile to start a business in.
Rather than being encouraged to start businesses from scratch and to create jobs, entrepreneurs are told: you may only create a job if it pays a holiday bonus and full corporate perks.
Many entrepreneurs know this is too risky, and so they stick to their corporate careers and never start a business. The result is 40 percent unemployment in South Africa.