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    M Mdladlana: Annual Labour Law Conference

    Speech given by Minister of Labour Honourable Mr Membathisi Mdladlana at 21st Annual Labour Law Conference,
    Sandton Convention Centre 25 June 2008

    Programme director
    Leaders of organised business and organised labour
    Academia
    Labour law specialists
    Distinguished guests
    Ladies and gentlemen

    Friedrich List the 19th-century German economist wrote in 1841 that – "It is a very common clever device that when anyone has attained the summit of greatness, he kicks away the ladder by which he has climbed up, in order to deprive others of the means of climbing up after him". Today, those that have been deprived have also learnt something about this 'common clever device' – and that they need to kick this ladder before 'anyone has attained the summit of greatness'.

    Ladies and gentleman, our people are restless and as we have been told before – 'when you have robbed a man of everything, he is no longer in your power, he is free again' and we all know what that means.

    Can we afford to talk about legal compliance and competitive advantage when our people continue to die in their workplaces at the rate at which they are currently dying in mining and construction? Can we talk about competitive advantage and legal compliance when our people are working longer hours with less pay, no leave, no Unemployment Insurance Fund (UIF) and no permanent employment? We are leaving in a world where more workers are earning wages that cannot even put food on the table.

    Workers are increasingly unable to afford their own transport costs to be able to work, let alone clothe and entertain their families. A Human Sciences Research Council (HSRC) Student Pathways study has found that 50% of students who enrol in higher education programmes do not complete their studies and drop-out due to poverty and lack of finances – costing government R4,5 billion in lost grants, 70% of the students who drop-out are 'extremely poor with monthly household income between R400 and R1 600' and most of them are black. Can we therefore afford to talk legal compliance and competitive advantage in this context? The ladder has become shaky and no one can attain the summit of greatness.

    My department recently looked at the issue of minimum wages and its effects on household poverty and we have found, through research conducted by the Development Policy Research Unit (DPRU) that 'wage income is not a major income source for the poor'. The majority of our people are increasingly reliant on state grants and self-employment. Less than half of the poor and ultra poor workers will benefit from minimum wages. This raises the issue of compliance, which I shall return to later. Lastly and more importantly that, 'the fact that poor households are larger in size compared to non-poor households adds further concern about the effectiveness of minimum wages in reaching the poor. For every R1 gained in a poor household, over five people have to share that income (approximately 20c each)'.

    The study then concludes by reminding us of what we have always known and it is that "poverty levels are likely to decline if employers comply fully with minimum wage regulations". Allow me to add to this conclusion and say that no employer can gain any competitive advantage from employing hungry workers.

    Bargaining councils are also not creating any competitive advantage for our workplaces. First their coverage is very weak. Studies show that, according to the DPRU, whilst in 1995 about 15 percent of those in private formal employment were covered by bargaining council agreements – this had declined to 13 percent in 2005. This translates to just over one million private sector workers. Secondly, similar to the finding on sectoral determinations I mentioned earlier, there "did not appear to have been any significant remunerative advantage associated with bargaining council membership in either 1995 or 2005".

    Therefore, "in both 1995 and 2005, the aggregate estimates indicate that membership of a bargaining council was not associated with higher mean earnings". In this same period, using statistics from the Labour Force Survey (LFS), there has been an increase in the number of hours worked of approximately 1,5 hours, from 47,6 hours in 2000 to 49,1 hours in 2005. Productivity South Africa also points to a 3,2% per annum increase in private sector productivity since 1996 largely spurred by 3,6% labour productivity. Let me put this in another way our people are working harder, longer, for less.

    Yet we continue to be told that our labour market is rigid and needs to be reformed. We are told that we scare investors away and that our labour force is not productive. How can our workers be more productive when they have no means of coming to work in the first place? How can they be more productive when they come to work on hungry stomachs? Productivity depends on investment. It is only when we invest more in our workers that we can demand more from them. We must realise our goals of achieving a forty hour week, we must train our workers and must reward them accordingly.

    When we promulgated the Labour Relations Act and the Basic Conditions of Employment Act more than ten years ago, we had hoped that ten years later these problems would not be persisting. But clearly we were wrong and the actions of our people on the ground are confirming this. In the last five years we have witnessed working days lost to strikes increasing from 79 working days lost per 1 000 employees in 2003 to 753 in 2007.

    In the last two months we have also seen our people being easily misled into believing that their genuine concerns on poverty and unemployment are caused by our fellow brothers and sisters from Africa. Our own analysis on labour migration has shown that South Africa gains economically from entry by fellow Africans. In 2004, based on figures from Statistics South Africa (Stats SA), spending in South Africa by visitors from Africa and the Middle East exceeded the combined expenditure of visitors from the Americas.

    According to the South African Tourism Strategic Research Unit in 2005 seven of the top ten spending countries in South Africa were from Southern African Development Community (SADC) – Mozambique, Zimbabwe, Botswana and Lesotho. It is therefore a misconception to conclude that migrants steal jobs from South Africans. The opposite is actually true. They are job creators, first for themselves – and for the rest of us. However, the rumblings by our people are all signs of a ladder beginning to shake. People don't want to hear carrot and stick anymore because the carrot is not working, now is the time for the stick to come out.

    Researchers from the Sociology of Work Programme at Wits University are telling us that "there is very little merit in the assertion that they, qualified blacks and women were not out there". A separate study by the HSRC has also found that our labour market continues to discriminate against graduates from historically disadvantaged institutions, thus choosing not to employ black graduates possessing similar qualifications to their white counterparts. Therefore employers must stop telling us that they cannot find any qualified black people to employ.

    Legal compliance, competitive advantage! How can that be, when 332 workers died in their workplaces in the last year and continue to die even today - and many remain unregistered according to Compensation for Occupational Injuries and Diseases Act (COIDA) and struggle to have their claims processed quickly and efficiently by the compensation fund.

    Compliance can no longer be an option when half of our workers – 5, 8 million according to Stats SA – are not registered for UIF and 4, 1 million of them do not even have paid leave entitlement in their places of work.

    We must also regularise migration – which is predominantly based on labour. It does not benefit anyone, whether it is an illegal migrant labourer or an employer, to allow illegal migration to persist. It only encourages exploitation on the part of the migrant worker and risk on the part of an employer. We should encourage legal entry of fellow Africans into our country and ensure that all migrant labourers are properly documented like any other South African and that the laws of the country should equally apply to them.

    After all the constitution talks about everyone in a number of areas, the Labour Court recently ruled that even undocumented migrants and refugees have the same labour rights as enshrined in the Labour Relations Act (LRA) and Basic Conditions of Employment Act (BCEA) if they are in a working relationship. They are also protected by the constitution. Everyone has a right to fair labour practices. There is therefore no escaping compliance by anyone, whether employing South Africans, legal migrants or illegal migrants.

    Ladies and gentleman let me however conclude by making a very personal plea. The issues I have raised here are not about legal compliance anymore. Neither are they about the labour market exclusively. They are about human dignity, mutual respect and ubuntu – all the ethos that we seem to all be increasingly forgetting in our rush to climb up the proverbial ladder in pursuit of the summit of greatness. It is only when we regain these values and abide by them, both as employers and workers, that we can truly regain our competitive advantage.

    I thank you.

    More...
    Last edited by duncan drennan; 02-Jul-08 at 08:02 AM.

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