read tape committee and labour law

[duncan drennan]

Over the past 6 months or so there has been talk of changing the labour law to be less restrictive. There has also recently been talk of a "red tape" committee which will attempt to reduce the difficulty in doing business in SA.

So, if we would like to contribute to this somehow where can we start?

[Dave A]

Hi Duncan,

My take right now.

Red tape.
The SBP report on red tape and its effects (particularly on growth and small business) has been floating around government circles since early 2005. At the moment government is talking up a storm on the issue, but other than SEDA and perhaps SARS, there seems to be little real movement from government's side to seriously improve the situation.

If anyone is interested in the actual report, I'll set up a link to it in my blog by the end of tomorrow. It makes horrific reading - particularly if you're a small business owner.

Labour laws.
Also well and truly being condemned as restrictive for the economy. But very good for gathering votes. The relationship between the ANC and labour seems under increasing strain. IMHO it will take a bold leader to weaken the grip of the labour legislation right now and risk the political fallout.

I think there is little chance of breaking the status quo until a new President is securely installed. Even then, if he/she is prepared to look at the labour legislation - it's going to take a bold leader.

Way forward.
It might be an idea to focus some attention on getting more "bang for our buck." It's not just the red tape and labour laws that are stifling, it's the difficulty in getting a productive response to our investment.

Filling in all the paperwork is one thing - waiting for the paperwork to be processed - the inefficiencies - just makes it all so much worse.

We as business minded folk know about cutting to the chase and improving efficiency - I think an approach based on offering this strength could go far.

Ultimately, we are learning that moving government is about linking in to something they've identified as a political priority. To me the best hook right now would be based on obstacles to BBBEE - probably priority number 2 right now.

Forming a representative group that can start engaging these issues meaningfully starts with building numbers and giving business a truly democratic voice.

To me, formal business is going to have to unite to the extent that we can rival the taxi industry in influence. But let us not go as far as the security industry please.

[duncan drennan]

Ultimately, we are learning that moving government is about linking in to something they've identified as a political priority.

So really, in all things, we need to identify the political priorities. Currently I would say the major political priorities (i.e. that which will get them elected again) of the government are

• Creating employment
• Economic empowerment (currently mainly of blacks, as they are the majority)
• Basic services
• Housing

The difficult thing when approaching something like the relaxation of labour laws is to be able to motivate that these laws potentially reduce employment, instead of creating it.

Currently the problem is that the laws are there to entrench workers, rather than increase productivity. Nobody benefits from an entrenched worker - the employers funds are tied up, and nobody has the opportunity to "compete" with them.

Potentially, being able to easily dismiss someone and put a more productive person in their place will create more jobs. The employer is getting a better ROI, which creates funds for finding more good people.

Anyone know of anything to back up this theory? Or blow it away...

[Dave A]

I don't know if this counts, but some stats I saw a couple of months ago showed a distinct shift towards term contracts (where previously the posts were filled by permanent staff) - particularly in larger organisations.

And large organisations haven't been that great at creating massive new employment. Again, the numbers tend to show the opposite.

Big business seems fearful to commit to their staff... it has to be from their view of either the legislative or economic climate.

Duncan, you're points make sense to me, but I admit at this stage it's largely an intuitive response. Let's hope some hard evidence turns up.

I guess we keep scratching.

[duncan drennan]

I guess we keep scratching.

Any idea where to start scratching?

[Dave A]

I think we really need to focus a bit on what we would want to see changed.

In terms of labour legislation, what are the most troublesome parts? For me it's bargaining councils, but for others it might be something quite different.

Same applies to red tape. Personally I see the SDL mandatory grant system as a total waste of time and money. It could be far more productively applied directly into training.

But what other areas are there that could be streamlined?

Once focus areas are identified, perhaps a strategy can be developed.

[duncan drennan]

I don't have any experience in this regard (having just started my business recently), but from an "outside" point of view one of the biggest challenges seems to be how labour law favours the employee strongly over the employer.

Unfortunately most of what I've been exposed to is anecdotal evidence from the employer side (how labour law screwed them), and little from the employee's side.

I really do think that the hiring/dismissal process could be improved to allow businesses more room to move. A lot of people would rather not have any employees just to avoid being exposed to the risk that is involved.

The difficult thing is to find the razor blade edge where both employer and employee are protected and able to function to their full capacity.

To those who have employed and dismissed people, what are the biggest challenges and advantages of the current legislation in this regard? Try to be balanced in your comments.

[Dave A]

Maybe a small ray of light coming from this story on the post security guard strike analysis.

Meanwhile, Mdladlana said that his department is looking "at the lessons" learn in the recent three-month strike -- which ended this week.

Mdladlana, a former trade unionist and former teacher, said that the secretaries of the various affiliate unions in the Congress of South African Trade Unions (Cosatu) needed to be brought together to talk about the problems around collective bargaining in the country "and the way we handle ourselves in strikes".

I think Alan's comment is so insightful:

These gaurds will have to work for 20yrs+ to make up the lost wages during the strike.

I messed up my maths. I worked out that it would take three years, but I failed to take into account that 7% was on the table from the employers anyway.

Bottom line, the strike actually moved the employees' financial cause backwards - they are worse off for the forseeable future than if the strike had never happened. And then there are the lost lives....

So will give government and the unions learn the real lessons in all of this?

For a time in the UK, if a union called a strike, they paid the lost income of the striking workers. Maybe something like that would make unions think twice before calling for strike action.