The Portfolio Committee on Labour sat to hear submissions on the National Minimum Wage Bill (NMWB), the Basic Conditions of Employment Amendment (BCEA) Bill and the Labour Relations Act (LRA) Amendment Bill. Concerns were raised at the start of the meeting about the rushed nature of the hearings given the importance of the legislation and the proposed May 1 implementation date for the NMWB.
The Instititute for Economic Justice praised the introduction of a national minimum wage, but expressed concern that the bill did not reflect the National Economic Development and Labour Council (NEDLAC) agreement. It said the NMW must be part of a package of policies aimed at reducing inequality, changing the wage structure, eliminating poverty and aiding economic development. It raised further concerns about the removal of sectoral determinations in the bill and the implications for vulnerable workers. Members of the Committee said they were worried about the cost of the NMW and the potential for job losses because of its introduction.
The Casual Workers Advice Office criticised the NMW for not being a living wage and locking workers into working poverty. The amendments to the BCEA were criticised for amounting to a limitation on workers’ right to strike. Members expressed concerns about violent strikes, but did not deem some of the provisions, such as the strike ballot, to be an attack on the workers’ right to strike.
The Shukumisa Coalition highlighted the plight of care workers and the non-profit sector, and the implications of the NMWB on this sector. It called on the government to increase funding to NPOs for them to comply with the NMWB, or to provide a temporary exemption to the sector in order to avoid job losses and the shutting down of essential services.
The Confederation of Associations of the Private Employment Sector also asked for an exemption to be applied to the welfare sector, but also to ease the process to obtain exemptions, particularly for small to medium enterprises.
A presentation from a combined union delegation praised the introduction of the bill, echoing some of the sentiments of the IEJ, but they cautioned against loopholes that could be exploited by employers and the eroding of the value of the NMW through employer deductions, or through increases not keeping pace with inflation.
A delegation from FishSA highlighted that fishermen/seafarers were excluded from the BCEA and as such should not be excluded from the provisions of the NMWB. It also highlighted work practices which made time-based wages difficult to adhere to, as established practice in the fishing industry was to work solely or partially on commission-based remuneration.
The Commission for Conciliation, Mediation and Arbitration dealt with some of the amendments to labour law which would expand their jurisdiction and responsibilities, and require amendments to legislation and an increase in organisational capacity. It estimated the NMW would increase its work load by 15%, but a Member suggested it would probably at least double.
The Free Market Foundation placed emphasis on how the process of developing the Bill had significantly excluded the unemployed. People were not going to be employed after the implementation of the Bill. The minimum wage should be increased by 100%, but that could not be done because there were constraints on businesses. This law was going to restrict potential investors in this country, and this would be counter-productive. What was the Constitution doing for the unemployed? There was no doubt that long-term unemployment encroached on the rights of people. The state went to great lengths to try and protect the employed, but it had done very little to protect the unemployed.
The Labour and Enterprise Policy Research Group focused its comments on the National Economic Development and Labour Council (Nedlac), and said that the approach adopted by the Department of Labour towards Nedlac was surprising and sharply at odds with its stated commitment to social dialogue. It represented a major and unacceptable shift from the process adopted with regard to previous amendments or new labour legislation.
Forestry South Africa, as a representative of timber farmers, including 25 000 small scale farmers, appealed for the Bill to be phased in over a three year period for the industry. That would assist small scale farmers prepare for the foreseeable financial implications and ensure that no significant loss of employment would occur. It indicated that 40% of operational costs were labour costs because the industry was labour intensive, so there was no doubt that the Bill would have a significant effect on employment.
Members asked whether Forestry South Africa supported the Bill if it were to be phased in over three years; the implications of the Bill for the Fourth Industrial Revolution; and whether the Labour Enterprise Policy Research Group had considered the impact the legislation would have on employment, and to what extent it would reduce or improve employment in the country;
Concerns over process
The Chairperson referred to concerns from the Opposition and other interested parties about the rushed nature of the process, and said she had taken the concerns into consideration and decided to extend the period to allow more time for the Committee to do justice to the process.
The Chairperson elaborated on the procedure for the day’s meeting. The programme would deal with the public hearings first and then give an opportunity to Members of the Committee to respond and ask questions. She asked for input from Committee Members before proceeding with the presentations.
Mr M Bagraim (DA) said that he was glad the Committee were being given more time, but there was still not enough time for Members to digest, cross-examine, compare or contrast the information. There was the risk that Members would go into discussions blindfolded. He felt that some of the issues raised by the submissions were ground-breaking and that the 20 minutes allocated to some submissions would not be enough time for reports to be presented adequately. He felt that the process was too rushed, noting that National Economic Development and Labour Council (NEDLAC) had taken months to come to an agreement.
He had 30-40 questions on the first report alone which needed time, expressing concern that the Committee was going through the motions to rubber stamp the decision, rather than providing oversight. There may be a need to ask certain presenters to comment on other submissions and to cross-examine submissions which would be difficult with the time constraints. It was important legislation with far-reaching implications, and the Committee needed to do justice to the process.
The Chairperson noted his concerns and said the Committee would proceed as planned and re-assess where the Committee was by the following day before plotting a way forward.
Mr D America (DA) felt it was regrettable that only two parties were present. He asked how the Chairperson had taken on the concerns raised about the process. On many public platforms, ANC Members had said that the national minimum wage would take effect on May 1, yet public participation had been scheduled for that day and the following day, with one more plenary session being held the following Tuesday. He asked if it was her intention to have the legislation before the plenary on Tuesday, since this would mean that Members would not be able to go on recess. It would still have to go through the National Council of Provinces (NCOP) processes in April. He felt that there was no way to have the legislation take effect by 1 May without it being a rushed process. He asked the Chairperson to take Members of the Committee along with her, since it did not seem as if the Committee was moving together and that Members could help mitigate the obstacles the bill faced.
The Chairperson said that she had considered concerns and realised that it would not be possible to place the bill before the house for debate and adoption before 27 March. There would be more time to deliberate on the bill, but the Committee would need to decide the way forward. The process would have to be prolonged, but she wanted the Committee to see where it was by the following day, suggesting that it move forward and start the public hearings. She stressed that the public hearings were a clarity-seeking process and that there was no need to debate the matter.
Institute for Economic Justice
Mr Neil Coleman, Director: Institute for Economic Justice (IEJ), clarified that although he had been the lead negotiator for labour in 2015, he was presenting on behalf of the IEJ. The IEJ welcomed the introduction of the national minimum wage (NMW), as it could be the most important intervention in the labour market since 1994. Internationally it was considered a highly popular and successful policy for its ability to address extremely low pay, citing opinion polls in the UK which showed NMW to be the most popular policy since the Second World War. The IEJ was focusing on what the NMW was meant to achieve -- to transform the apartheid labour market and introduce a national wage policy. The legislative policies would be assessed against this intention.
The IEJ was considering the bill against agreements, namely the February 2017 NEDLAC agreement, stating that the defect in the bill was that it failed to take forward the February 2017 agreement in spirit and letter. This would need to be reviewed to prevent the positive reform becoming a massive controversy which he felt appeared to be happening. This would need to be corrected in the bill, to avoid undermining NEDLAC, which he called the premier institution of social dialogue.
Mr Coleman said that the NMW was not an isolated intervention and was part of a strategy to achieve structural change in the apartheid labour market. He referred to the Ekurhuleni Declaration of 2014, which mandated the negotiations and made clear that the process was meant to go beyond the establishment of a NMW floor, and overhaul the entire wage structure. The negotiators were also tasked at considering comprehensive social security, addressing income poverty and the role of employment equity in combating wage and other inequality. The NMW was meant to be part of a new national wage policy to eliminate working poverty and overcome the apartheid cheap labour policy and to change the apartheid labour and wage structure. NMW must be part of a broader socio-economic transformation agenda.
The IEJ’s written submission referred to the impact of raising the purchasing power of over 4.3 million workers which would have a major progressive impact on the economy if appropriate policies reinforced that effect. While the NMW could not achieve these objectives on its own, he felt that it would substantively move the country in this direction. If the NMW were to retard those objectives it would become a problem and as such he would outline some concerns.
Mr Coleman reiterated his concern that the draft bills did not reflect the NEDLAC agreement. Negotiations had been contested and virtually deadlocked for the first 18 months since it struck at the heart of the apartheid political economy – the cheap labour system. Major interests in the economy had done everything in their power to block the introduction of the NMW and delay progress in the negotiations. He also expressed concern that the draft bills undermined significant agreements reached at the negotiations and were introduced without engagement on their content to NEDLAC.
Months of engagement made marginal difference to the content of the bills which had been introduced without the involvement of social partners, nor consultation on new elements in the bill. In previous labour bills, social partners had representation on the drafting team, which was not done in this case. There was no consultation on new elements in the bill, such as the phasing out of sectoral determinations (SDs). Important elements of the February 2017 agreement, such as annual increases and a medium-term target, had not been taken forward adequately in the bill. This had been challenged in the negotiations but not corrected in the bills. He stressed that Parliament should not assume that what was contained in the bills represented the NEDLAC agreement. The NEDLAC report gave parties the right to raise their differences and concerns with the bills.
The main clauses within the bills were incoherent. One aspect of the bill, promoting minimum wages was undermined by another, such as terminating the role of the Employment Conditions Commission (ECC) and eliminating SDs. Pages 5-15 of the submission looked at the main clauses of the bill and whether the bill advanced the objectives which he spoke about.
Mr Coleman, addressing the level of the NMW, said that the figure of R20 per hour must be supported as it was what had been negotiated and would be an advance for 4.3 million workers, including farm workers and domestic workers. This figure was lower than the R26 demanded by labour, but far higher than the R11.50 proposed by business. While it was a significant improvement, it remained a very low figure compared to the minimum living level of R6 000 a month. Those who argued that the R20 an hour was too low were correct. The question was whether it could be a meaningful starting point from which to negotiate for a higher national minimum wage. This was the position the IEJ was taking, since this was a compromise reached by social partners. As such, he felt that Parliament must support a progressively higher national minimum wage in the years to come.
He raised questions around hours worked and increases, stating that the notion of an hourly NMW was a new idea which had certain advantages. The IEJ felt that the NMW should be a combination of hourly, weekly and monthly rates. He referred to concerns raised about the impact of the bill and the notion of an hourly minimum wage, such possible abuse through a reduction in working hours for workers. There should be a provision for a minimum daily payment of five hours. In many SDs workers working less than eight hours a day were paid a premium. The recommendation was that the National Minimum Wage Commission (NMWC) should include hourly, weekly and monthly rates and include a table in schedule 1 of the NMW bill to assist workers and businesses to calculate the national minimum wage. The bill should include transitional provisions, as agreed to in the negotiations, mandating the Commission to investigate an increasing payment for minimum hours, from four to five hours. The Commission should also investigate other mechanisms to counter abuse of part time work, including a sliding scale of premium payments and requirements for weekly and monthly payments over a certain number of hours. All the recommendations in the attached annexure to the IEJ submission should be captured in amendments to the bills. There would be no point having general agreements which had no binding effect.
Mr Coleman said that the annual increase in the minimum wage should not lead to an erosion of the value of the NMW and should not be lower than inflation, as stated in the NEDLAC agreement. Many SDs had a provision for increases at higher than inflation rates. The IEJ proposed that the Commission must progressively improve the value of the NMW to change the wage structure and reduce inequality. Increases in the NMW should be above inflation, with inflation being calculated not just at the level of the Consumer Price Index (CPI), but at the lived experience of a low-income worker. Numerous studies showed that inflation, as experienced by a low-income worker, was higher than the CPI level. The minimum living level of a family should be one of the key considerations when determining increases.
Mr Coleman addressed the issue of the medium-term target, stating that with the NMW being at a low level, the package must be designed in a way to ensure a progressive increase in the value of the NMW in the medium term – three to five years. The NEDLAC agreement stated that the Commission must establish a medium-term target for the NMW, based on the agreed benchmarks. The bill did not take forward this agreement in any meaningful way – it did not require specific targets nor did it guide the Commission on what benchmarks should be used in determining the target. Benchmarks discussed in the negotiations included a ratio between the NMW and the average wage which would be set at a certain percentage, as well as the minimum living level. The IEJ amendments recommend stipulating the level that the target must reach within three to five years, and using appropriate benchmarks and International Labour Organisation (ILO) instruments, such as those previously mentioned.
Mr Coleman addressed the issue of SDs and the ECC. SDs were the major instrument which covered unorganised and vulnerable workers. SDs currently dealt with minimum wages within sectors, but also with working conditions and non-wage benefits. The IEJ was shocked at the proposal to phase out SDs within the bill. It had not been discussed before in NEDLAC. The basis for dropping SDs was unclear. Despite extensive engagement and problems being identified, the Department of Labour (DOL) consistently refused to change certain elements of this. Although tweaks had been made, these had been inadequate for reasons outlined in the written submission. The Committee of Principals, which oversaw the negotiations, had agreed that SDs could not be dropped after three years and that there should be provisions which protected them after three years. If collective bargaining arrangements were not introduced in those sectors, SDs must be extended or something else needed to be done to protect vulnerable workers in those sectors.
The bill also proposed abolishing the ECC, which oversees SDs as one of its main functions. The NMWC was given other functions of the ECC, but not the function of overseeing SDs. The NMW and SDs should be viewed as complementary interventions in the labour market which together dealt with conditions facing vulnerable workers. Some SDs had different categories of workers, with some wages being significantly higher than the lowest wages within those sectors. An increase proportionate to the NMW would simply see wage inequality increase, something the NMWC would not be able to deal with. The IEJ recommended that bargaining councils be introduced within three years, failing which the SDs should be extended within those sectors. The Commission must be given the mandate to adjust the SDs and recommend their extension. All non-wage benefits should be protected and the Commission given the mandate to adjust these as appropriate. The provision requiring the Minister to seek the advice of NEDLAC on any withdrawal of SDs must be reinstated.
Mr Coleman said that internationally, the NMW had created a national minimum wage floor which was a springboard for better wages and conditions negotiated through collective bargaining. If handled correctly, it could play the same role in SA. He cautioned against unscrupulous employers who tried to find loopholes in any labour legislation. He gave the example of the engineering sector where new workers would be earning the new NMW, which was less than half of the current minimum in that sector. This had been done to undermine collective bargaining and higher wages. The IEJ condemned this. There should be adequate provisions to protect collective bargaining. The clause in section 4.6 of the bill was inadequate. On the question of exclusions from the NMW, he said that while there was an improvement for farm and domestic workers on their current SD level, the Expanded Public Works Programme’s (EPWP’s) provisions were unacceptable.
The IEJ believed that the NMW must be part of a coherent strategy to address wage inequality. Section 27 of the Employment Equity Act (EEA) dealt with the reduction of unequal income differentials, but had never been implemented. Failure to abide by section 27 had no sanctions. This section needed to be strengthened and given teeth and sanctions. The IEJ supported labour’s proposal of establishing a ratio between the top and bottom five percent of wage earners in any enterprise. There needed to be a comprehensive package of measures to combat wage inequality. NEDLAC was meant to discuss this, but it had never been done. IEJ recommended amending Section 27 of the EEA, an amendment to 8E of the NMW bill to include provision for a wage ratio, and that Parliament propose that NEDLAC present a policy package on combating wage inequality.
Mr Coleman addressed the issue of enforcement penalties and incentives, stating that the penalties proposed in the bill were entirely inadequate, and proposed criminal penalties or higher fines for repeat offenders. Compliance with the NMW should be a condition for tenders, which had been agreed to in negotiations but not in the bill. If the fast track role for the Council for Conciliation, Mediation and Arbitration (CCMA) was to be supported, it needed to be given the necessary powers and resources. The labour court then should not duplicate the work of the CCMA. To enforce compliance, the DOL Inspectorate should be scaled up and properly resourced. He noted that the bill proposes the right to apply for an exemption, but felt that this should be done by individual employers rather than employer associations as proposed by the bill.
He concluded by noting that the NMWC had been given a host of responsibilities, but needed to be given a proper mandate as well as sufficient authority and weight to deal with the issues. The Committee, in its report to Parliament, needed to establish shortcomings in the Commission’s mandate and ensure that it was given adequate budget and resources.
Mr Bagraim agreed that the NMW was an important intervention but reiterated concerns that it was being rushed and asked Mr Coleman to comment on that. He felt that Mr Coleman’s use of UK opinion polls in his presentation, and comparing the UK and SA, was disingenuous since the two countries had vastly different economies, with different unemployment rates, inputs and productivity. He asked him to clarify what he meant by changing the wage structure, further asking if he wanted to undermine the capitalist system. He agreed that there were major defects and differences between the bill and the agreement. He noted that Members of the Committee may not have had a look at the agreement since it had not been distributed, and asked Mr Coleman if he was suggesting that the Committee have a careful look at that agreement and compare it with the bill.
He addressed the point around social security and highlighted the economic constraints and problems with existing social security which made that difficult, but accepted it was something which needed to be looked at. He agreed that R20 an hour was not enough, but that individual sectors needed to determine what was sustainable. There could be a negative impact on unemployment, with people already losing their jobs and small business being affected, and that people were holding back on creating new jobs due to concerns about the NMW. It would affect those already working due to retrenchments. He referred to estimates of 750 000 jobs being lost, suggesting it might be double that figure. No one would want to create jobs, leading to jobless growth.
Mr Bagraim said that the NMW would not resolve inequality, and that R20 an hour would not eliminate working poverty. Youth unemployment was already over 50%, and he asked how the NMW would impact on this, since employers would not want to hire young people with no skills or experience at the new minimum wage. He cautioned against a resultant increase in unemployment due to the NMW which would place a greater burden on workers to support dependants. It would produce the opposite of the desired effect. He felt that everyone agreed on the need for decent work and a living wage, but he did not see the NMW as a springboard, and there was not enough money for comprehensive social security.
He addressed the disparities between the NEDLAC agreement and the bill, stating that Parliament could not be bound by NEDLAC’s decision – there needed to be some give and take. He accepted that the level was too low, but felt that the Committee needed to weigh up the impact of workers having no job compared to having a minimum wage. The true NMW was R0, since it was the elite who were working.
Mr Bagraim referred to the informal sector, stressing that it would be impossible to enforce a national minimum wage in this sector. The plethora of labour laws was not enforced in the informal sector, so there was no use creating better laws which would not be enforced. He questioned how the government would stop retrenchments due to the NMW if businesses were not able to afford keeping some workers on. The discussions around hourly/weekly/monthly minimums would destroy casualisation, which would destroy around half a million jobs. He felt that the four-hour minimum wage requirement would create hardship, since employers may opt to computerise or industrialise. He gave the example of strikes in De Doorns, where the Minister had doubled the minimum wage in the farming sector, which had resulted in layoffs.
The Chairperson asked Mr Bagraim to wrap up.
Mr Bagraim responded that he needed to test the statements made. He objected, since he had not even asked half of his questions. He still had questions to Mr Coleman about the fishing industry etc.
The Chairperson asked Mr Bagraim to reserve his industry specific questions for later. She handed over to Mr America.
Mr America expressed concern that the presentation was not juxtaposed with the impact of the NMW on rural areas and sectors, stating that many young people were leaving rural areas, and rural industries were shutting down. He gave the example of his constituency of Prince Albert, which relied on farming and tourism, stating that the NMW would have a devastating impact on employment within that community, particularly in the hospitality sector. The country had sectoral differentiation within the economy, regional peculiarities and particular economies which may not withstand the universal application of a national minimum wage. He felt that given the rush to get submissions in, the IEJ may not have had the opportunity to conduct thorough research into this.
There were not enough inspectors to enforce labour law and insufficient manpower to ensure compliance. The institution tasked with adjudicating disputes had claimed it was ready for the NMW, yet it still had major case backlogs.
Mr Coleman thanked the Committee for the detailed questions and said that the IEJ’s sister organisation, the Wits National Minimum Wage Research Initiative, was presenting the following day and were well placed to answer some of the issues. The research into the NMW was well supported in the findings of the expert panel.
Commenting on the rushed nature of the NMW bill, he said that three years was more than enough time to complete bills of this nature, pointing out that this was longer than the Constitutional negotiations took. It was supposed to have been concluded in 2015. The importance of the intervention had led to major interest from business and elements within government which had not exhibited commitment, resulting in delays. The level of the NMW had not even been discussed in the first year of negotiations due to a refusal to discuss it. He suggested the Committee should request transcripts of the NEDLAC meetings to get a real insight into what happened. Labour and community organisations were very uncomfortable that two and a half years of negotiations had taken place behind closed doors. He accepted that closed door discussions were sometimes necessary, but felt that the lack of transparency in this process needed to be addressed.
Mr Coleman accepted that the UK and South Africa were very different countries, but said that across many first and third world countries, the NMW had been very effective in dealing with exploitative wages and working poverty. He gave the example of Germany, which had had 20 percent of its workforce engaged in casual labour and vulnerable. Germany had intervened to deal with this and the introduction of the NMW there had been highly successful in terms of employment levels and in protecting vulnerable workers.
Mr Coleman addressed the question of comprehensive social protection, saying that the IEJ and labour’s position was that an unemployed adult, with no access to social security, was completely unsustainable. There had been numerous creative proposals at NEDLAC to deal with this, such as fiscal transfers, using the Unemployment Insurance Fund (UIF) surplus, employment guarantees and extending the public works programmes. He felt that creative thinking and political will could find a solution to the issue, and that fiscal considerations should no be used as an excuse to do nothing. He cited the DPW, which had claimed that to increase its wage to two-thirds of the NMW would cost R3 billion, which was not very much when considering the number of workers who would benefit. However, fiscal considerations had been used to refuse the increase to DPW workers.
The NMW Research Initiative would deal with the question of unemployment in detail, but international evidence had shown that a NMW alone had a neutral/ negligible impact on employment levels. A rise in wages and a resultant rise in demand and living standards, when combined with other policies, would generate economic activity and stimulate employment. The fact that people were being retrenched now had nothing to do with the introduction of the NMW.
He responded to the comment about job losses in farming, saying that job losses after the introduction of SDs in the mid-2000s were due to trade liberalisation. Wages had increased in farming in 2013 by 52% -- not double, as stated by Mr America -- and within a few years employment in the farming sector had increased very significantly. The IEJ could not claim the increase in employment was due to the increase in wages, but many factors needed to be looked at. The figure of 750 000 job losses had been discredited in the research which would be presented the following day.
Mr Coleman elaborated on youth unemployment, saying that currently 4.3 million survived on under R20 per hour, which did not create any employment. On aggregate, the sectors which created employment were in the more skilled and semi-skilled strata of the workforce which was where wages had risen most rapidly. Wages had stagnated at the bottom of the wage structure, where employment had not been created.
He responded to the comment that NEDLAC should not tie Parliament’s hands, referring to the NEDLAC Act and by stating that NEDLAC processes must have credibility and what the social partners had agreed on must be reflected in the draft legislation. He acknowledged that the ultimate sovereignty lay with Parliament.
He agreed that the NMW would be difficult to enforce in the informal sector, but international research had shown that higher wages in the formal sector would have a spill-over effect into the informal sector.
The argument that the NMW would destroy jobs was not borne out by the evidence. Sectoral determinations which had the requirement of minimum wages and minimum hours were already enforced, with the hospitality industry’s sectoral determination being close to R20 an hour. Enforcement for the NMW would be easier, because everyone would know that it was R20 an hour, whereas not everyone knew the minimum wage for different SDs. He stressed that there must be penalties for non-compliance and an increase in the labour inspectorate.
Ms Faith Muthambi (ANC) commented on the removal of SDs and the statement that this was not part of the NEDLAC agreement and had been unilaterally introduced by the DOL. She referred to page 11, where it stated, “the Minister no longer needs to consult with NEDLAC before withdrawing or amending a SD”. The recommendation was that the requirement to consult with NEDLAC must be reinstated. She referred to the NEDLAC constitution, which required that it be consulted before a bill went to Parliament. In her view that requirement had gone through. The intention of the NMW was to do away with wage variations across SDs and as such, consulting with NEDLAC became irrelevant.
Mr Coleman responded that the provisions around the removal of SDs were not contained in the agreements and asked her to check the transcripts for herself. The constitution of NEDLAC provided processes to sign off on agreements before being presented to Parliament. This was a different type of agreement. If one look at the Labour Relations Act (LRA) or other labour legislation, what one had was a line by line negotiation and then agreement or disagreement identified. In this case, the bills were being pushed through and areas of disagreement were not recorded, which was unsatisfactory. In theory there should be a comprehensive report, which had not been done. He reiterated that parties retained the right to table their disagreement in Parliament.
Mr Bagraim asked that some of the minutes of the NEDLAC meetings be made available.
The Chairperson said that the report had been made available to the previous Chairperson. It was just an oversight, but it would be sent to all the Members of the Committee.
Casual Workers Advice Office
Dr Carin Runciman, Member: Management Committee, Casual Workers Advice Office (CWAO), said the CWAO was a non-profit organisation which provided free support and advice to workers, particularly labour broker workers who were largely not unionised. It was because of the experience of working with this type of vulnerable worker that CWAO made this submission.
She provided context to the introduction of the bills and why the CWAO rejected them, calling them a deal brokered between business and trade unions, which represented a shrinking proportion of workers. Unions represented less than a quarter of the workforce, and two-thirds of union members were in skilled or supervisory positions. Unions which brokered the deal were not representative of the workers who were, in theory, meant to benefit from the NMW. CWAO rejected the NMW in its current format. Proponents noted that it would increase the wages of between four to six million workers. The reason why so many workers earned so little in the first place was that the entire SA economy was built on cheap black labour.
The CWAO supported the idea of a NMW subject to certain conditions which were not satisfied by the bill, noting that government itself had acknowledged that it was not a living wage. Government argued that compliance would be higher due to the simplicity of the NMW and that it would provide a floor for collective bargaining. She believed that both were a fallacy, and were not rooted in the reality of the contemporary SA worker.
She noted the current low levels of compliance in SDs -- as high as 50 percent in farming. Non-compliance was due to a dysfunctional labour inspectorate, with five inspectors per 100 000 workers. The previous year it had been reported to the Committee that 5 000 inspections had not been carried out by the DOL. This, in combination with a decline in trade unions, created an environment where employers knowingly and willingly broke the law. The CWAO could provide the Committee with many examples of this.
The bill proposed shifting the burden on to the CCMA as a solution. The CCMA currently dealt with a caseload of 945 cases a day on average. The systems and processes of the CCMA were not designed to take on what would become the enforcement arm of the Basic Conditions of Employment Act (BCEA). Because the CCMA was not designed to deal with this kind of work, the average time it would take to deal with disputes would be 90 days. The longer a case took to be resolved, the more chance there was of victimisation or dismissal of workers, and 30 percent of arbitration awards were not honoured. She expressed concern that the bill could result in a dysfunctional CCMA.
Dr Runciman commented on a defence of the NMW as a floor for collective bargaining, highlighting high levels of casualisation in the economy and low levels of union involvement and hostility towards unions among workers, and called it a cynical move by trade unions to protect their waning influence. She criticised allowing minority unions to make agreements which extended to workers which those unions did not represent. She expressed concern at the way representivity could be determined, which could exclude labour broker workers and casual workers, among others. Farming and domestic work were sectors which stood to benefit from the NMW, but were sectors not conducive to collective bargaining in the absence of SDs. She also noted that some bargaining councils had negotiated wages below the minimum.
She criticised elements of the bill which she felt would reduce workers’ right to strike, and undermine other labour rights. The need to change strike legislation was founded on an ideological argument about the nature of strikes in SA, and had no basis in fact. This was outlined in detail in Appendix 1 of their submission. The arguments made about the nature of strikes in SA were that strikes were increasing, violent and protracted. While the number of work stoppages had increased marginally over the previous 10 years, the number of working days lost – the more conventional measure – showed strikes to be stable or declining, and not high when compared to other middle-income countries.
She questioned why the DOL used media data rather than police data for research on violence, with the latter showing that 88 percent of strikes between 1994 and 2013 were peaceful. The DOL’s annual reports on strike action showed very few strikes lasted over 30 days, with the majority ending within the first five days. The CWAO opposed all the amendments which made changes to the right to strike – the strike ballot, default picketing rules, the extension of conciliation and advisory arbitration. She felt that taken together, the amendments benefited employers by allowing them more time to prepare for strike action and making strike action more difficult, and were legislating continuation of the cheap black labour system.
Dr Runciman outlined the ten CWAO proposals:
- The proposed amendments on strike ballots, default picketing rules, extended conciliation and advisory arbitration must be scrapped;
- The LRA must be amended to prevent employers from using alternative labour during procedural strikes;
- Reinstatement into the LRA of workers’ right to strike over disputes of right;
- There should be no change in the requirements for representivity in bargaining councils;
- A national monthly minimum wage needed to be enacted and the setting of this amount must involve workers through a process of mass consultation, with various options put to a popular vote;
- The Minister of Labour’s right to make sectoral determinations must be retained;
- The making of new determinations for sectors currently covered only by the BCEA;
- The NMWC to have the power to investigate not only wages but also other conditions of employment in specific sectors, and to advise the Minister of Labour on the making of further SDs;
- Enforcement of worker rights to remain the responsibility of a completely overhauled Labour Inspectorate, with a dramatic increase in personnel, training and monitoring of their performance and extended powers for labour inspectors, especially to enforce compliance orders;
- Mandatory obligations on labour inspectors to consult with, and account to, workers when workplace inspections were carried out.
Mr Bagraim asked for clarity on what was meant by “casual worker,” as labour broker casual workers had rights under SDs and if workers belonged to bargaining councils, then workers were part of unions. How would the NMW undermine workers’ rights and further entrench inequality, as his understanding was the opposite? He felt that attacking the NMW was not going to make things any better, and asked how she would address systemic inequality.
The reality was that unions represented their members, and she could not criticise them for that. Casual workers / labour broker workers should join unions. The so-called casual workers had rights --in three days they became workers, and after three months they became permanent workers with the client.
Mr Bagraim disagreed with the feeling that the bills were an attack on the right to strike, stating that the bills were trying to eliminate destructive strikes, where whole industries come to a standstill, and avoid chaos. In his view, the strike ballot was democracy at work. He asked her to comment on why she took issue with default picketing rules, advisory arbitration and extended conciliation, praising the success of the CCMA over the last 20 years. He noted that the LRA made allowance for scab labour and asked why she would want to stop people who wanted jobs from working. Why would people strike for rights they already had under the NMWB? He disagreed with the monthly minimum wage, asking what would happen if someone was needed for only one week a month -- would the job be scrapped?
Mr Bagraim agreed with retaining the Minister’s right to make SDs, as he did not believe the NMW would be a panacea for the working conditions of vulnerable workers. He also agreed with the making of new SDs not covered by the BCEA, especially in the interim phase. He asked if she meant the Minister should make SDs for everyone not covered by one, or whether she meant something else. Giving the NMWC the power to investigate not only wages but other conditions of employment would be wise, but he doubted whether the Commission would have the time or wherewithal to do so.
He agreed with the need for an increase in capacity, saying that if the DOL had its way the inspectorate would increase tenfold, but there was insufficient money in the fiscus for that. The changes would create a greater need for inspectors and for a larger CCMA. He praised the CCMA in comparison with the Department of Justice (DOJ) where cases dragged on for years, stating that in the CCMA, 75 percent of disputes were settled before arbitration. He felt that the proposed bills would triple their workload, and doubted whether there would be sufficient resources to help them cope.
Ms Muthambi addressed the staffing issues within the CCMA, and said that while there were challenges, the Committee should address the capacity issue rather than rejecting the bill. The CCMA would face an ever-increasing case load, which would put a strain on its resources. The increase in the CCMA’s mandate and capacity issues should be dealt with separately. She felt that the fifth proposal around mass consultation was covered by the public hearings. She also asked presenters to come to the Committee with clear, concrete suggestions.
The Chairperson asked the DOL to address capacity issues in its response.
Dr Runciman said that if the bill was to be successful, capacity issues would have to be dealt with and not overlooked. She referred to the ten proposals made, and said that the Committee should reject the bill.
Mr Igshaan Schroeder, Coordinator: CWAO, felt that Mr Bagraim’s opinion about workers joining unions was irrelevant, since it was not his place to dictate to workers. The existence of bargaining councils meant that workers did not have to join unions. He noted that in the LRA, workers could go on strike over rights or go to the CCMA.
He agreed that in law, there was no such thing as a casual worker – either fixed term or permanent -- but noted that many workers worked without benefits and at wages below minimums in SDs. Many workers saw themselves as casual labour. Labour brokers would have workers sign an open contract with the end date left blank so that the workers could be dismissed at any point.
He felt that the part of the bills dealing with strikes was a propagandistic intervention, stating that the statistics drawn from the DOL’s own reports were clear. If Parliament wanted to deal with violent strikes, it would have to deal with the source of violence in strikes, which was scab labour. Picketing rules and strike balloting would not deal with this. The measures proposed would not deal with the issue of violence during a strike, but were a cover used to limit workers’ right to strike. As the bill stood, any party could ask for advisory arbitration even before the strike had started. This did not explain how it dealt with violent strikes, or if it could be implemented before a strike had started.
Throughout SA’s history, improvements in wages were due to strike action. Limiting the right to strike would condemn the workforce to R20 an hour. The reality facing workers was that the unions had collapsed, with membership dropping from 40% to 24%. Workers no longer had that tool to defend themselves. If workers went to the DOL or CCMA, it would take much longer than what corresponded to the needs of the workers, giving the upper hand to employers. He said that employers were on the rampage, and cited examples of workers earning R24 after a 12-hour shift at Heineken. He felt that the Committee was faced with the decision to go with the bills, knowing the bills benefited big business, or to reject them and stand with the majority in the country.
Ms Lisa Vetten started by introducing the Shukhumisa Coalition and its partners, on whose behalf she was making the presentation. 1 500 non-profit and social welfare organisations were represented in this submission. She lamented the fact that non-profit organisations (NGOs) were consistently left out of the debates around the bill. It was a different and unique sector, whose concerns had not been adequately considered. The NMW panel had identified three categories of vulnerable workers – domestic workers, farm workers and social welfare/care workers -- as categories which would benefit from the introduction of the NMW. She welcomed this, but noted that the circumstances of the sector had not been considered.
She explained that NGOs were financed through private donors and subsidies from the Department of Social Development (DSD). She stressed that the Department provided subsidies, not the full cost of service, as it expected organisations to raise funds from elsewhere. She compared statistics which showed large discrepancies between funding within and between provinces, as there was no national standardisation of subsidies paid. Currently the subsidies were inadequate. She outlined the three types of subsidy the department gave – the programme subsidy, post subsidy and service delivery subsidy. Post subsidies covered part of the cost of a particular category of worker. Examples were given which showed a variation of between R5 145 a month in the North West, compared to R14 536 in the Western Cape for qualified social workers. Rates were even lower for care workers without formal qualifications -- in some cases lower than the SDs for farm workers. Counsellors in the Thuthuzela Care Centres, which dealt with post-rape counselling, received R1 250 per month, and house mothers in domestic violence shelters were receiving R2 500 a month, both for 12-hour shifts. This was evidence of the need for a minimum wage in this sector.
Programme subsidies were given by the Department which the organisation could use, as it wanted to cover posts, etc. An example was given of a domestic violence shelter in the Free State which received a subsidy of around R257 000. Out of that, the shelter had to pay all staff salaries, which the Department said should be set at a stipend of R600 a month. It also had to pay the rent for the shelter, all administration and communication costs, as well as all shelter residents’ food and their needs, including those of their children.
The beneficiary/service delivery subsidy was based on the number of beneficiaries the NPO delivered the service to, with the cost being given to the person who used the service. In 2010 it was accepted that R4 000 a month was what a child would need to be cared for in a child and youth care centre. The DSD in the Free State ran its own child care centre, at a cost of between R5 000 and R6 000. NPOs were expected to provide the same service at a cost of R2 091 per month.
In 2010, because of the subsidies being inadequate, a group of NGOs referred to as NAWONGO (National Association of Welfare Organisations and Non-Governmental Organisations) had taken the government to court. The court ruling resulted in the existing policy, that organisations must be given the same amount of money as government. Organisations had found it increasingly difficult to get outside funding and the court had ruled that the government must cover its costs in full where it could not access additional funding. This court ruling in 2014 had not yet been implemented. 88 percent of the DSD’s budget went towards social grants, compared to 10 percent for social services. The amount was not enough to cover the NMW.
She read a set of case studies on the consequences of the NMW. Some non-profit organisations (NPOs) which serviced children would not be able to retrench staff due to the NMW, or risk being in violation of the Children’s Act. The organisations in question may have to shut down their service, and she did not believe the DSD would be able to take over the service if they had to shut down. Government had a duty to ensure these services kept running. Many NPOs would face severe funding shortfalls if forced to pay everyone at the new minimum wage, due to a lack of funding from government.
The DSD characterised many NPO employees as volunteers, rather than full time employees, resulting in lower wages being paid. An example was given of a youth skills development centre, called a “protective workshop” by the DSD. Those who attended the centre were called beneficiaries by the DSD and given a stipend of R200 per month. The DOL would characterise them as employees and expect the NPOs to pay the minimum wage.
Ms Vetten felt that the NPO sector was between a rock and a hard place, with the DOL requiring payment of wages at the new NMW, and the courts, Treasury and DSD acknowledging that funding was inadequate. She recommended that an expert panel be established urgently to consider the challenges in the sector. Low pay was linked to what the government paid, so the problem must be fixed by government.
There needed to be an attempt to assess the number of people below the minimum wage, what the DSD needed to do to ensure that it paid a subsidy that met minimum wages, and what it would cost to phase this in over time. She suggested that a temporary exemption be applied to this sector to prevent job losses and disruption of services. The expert group would need to resolve the different understandings of employee, beneficiary and volunteer. She expressed concern that NPOs were not given space within NEDLAC or the Wage Commission. There needed to be explicit recognition in the legislation that this was a big sector and category of workers, as well as a largely feminised workforce. If government was serious about gender equality or radical economic transformation, this was a sector that needed to be looked at.
Mr America said he sympathised with care workers. He noted the shortcomings in the NEDLAC representation and supported the recommendations and plea for exemptions, as well as state compliance with the court judgment. He thanked the Shukhumisa Coalition for its good work.
Mr Bagraim felt that the NMW would exacerbate problems in the welfare sector and that there should be a voice for them. Without private welfare, there might be a repeat of the Esidimeni tragedy. The government would fail people if private welfare organisations were forced to shut down due to the NMW. He supported an overall exemption for the sector, and urged government to come to the party.
He commented that donor funding was shrinking, and said that government was trying to “duck” its own laws, as with the Expanded Public Wroks Programme (EPWP). There was confusion between the DOL and the Department of Health (DOH) over definitions, where the Labour Relations Act (LRA) was clear. The DSD should give the allocation or an exemption from the NMW, or every organisation in the examples given would shut down. He supported the recommendations, but felt that exemptions were not the real solution, and that government should meet the wage bill of these organisations.
Mr B Martins (ANC) urged the Committee to look at the unintended consequences of the law, after laws had been passed. It must listen to and engage with stakeholders to enhance its work. He thanked Ms Vetten for the clear submission.
The Chairperson agreed, calling the presentation eye-opening.
Mr Bagraim noted that in its presentation, the Confederation of Associations in the Private Employment Sector (CAPES) recommended that welfare be exempted from the NMW.
Ms Vetten emphasised that she was asking for a temporary exemption, noting the gendered nature of care work. To create a situation where a type of work which employed predominantly women, paid less and excluded it from basic labour legislation, was wrong. She wanted to see a move towards making the working conditions in this sector fair and reasonable. Welfare workers had been excluded from the BCEA until 1997, and the fixing of SDs for the sector had never happened. It was hard to provide a quality service if care workers were not treated properly. The NMW would need to be phased in. The expert group would need to be convened and look at accessing funding so that workers in this sector could be paid an acceptable wage.
Confederation of Associations in the Private Employment Sector (CAPES)
Mr Anton Moolman, of the Confederation of Associations in the Private Employment Sector (CAPES), said the organisation represented small and medium enterprises (SMEs). It objected to the insertion of Section 9A in the BCEA, which state: “An employee who works for less than four hours on any day must be paid for four hours worked on that day”. CAPES felt that this should apply only to the minimum wage, and that employees earning the minimum wage or above should not be covered by this clause.
In terms of Section 127 of the LRA, the proposed section now stated that any council or private entity may apply to the governing body for accreditation, and for accreditation of its dispute resolution panels. It appeared to CAPES that the governing body now had the power to vet the dispute resolution panel of the agency. This power should remain with the agency, and the CCMA could not be burdened with this power as well. Should it be found that these agencies were not following the proper vetting procedure, accreditation could simply be withdrawn or suspended.
CAPES believed that the LRA should have a clear right to approach the labour court to declare a strike unprotected in circumstances where violence and intimidation was occurring. In light of the NMW, to save jobs the act should ensure ease of exemptions, and a cap on exemptions should not be put in place. CAPES also felt that welfare organisations should be excluded from the ambit of the bill.
Mr Bagraim agreed with the suggestions around the BCEA and LRA. On the ease of exemptions, he said that there were regulatory authorities in each bargaining council where people applied for exemptions. The problem was that the very people who wanted the enforcement were deciding on the exemptions. The second problem was that many small businesses would not have formal books or accounts, or the formal paperwork needed to apply for an exemption. If these businesses wanted to apply for an exemption without the formal paperwork, it might be in their interest to ignore the legislation altogether. He asked Mr Moolman what he would suggest.
Ms L Theko (ANC) asked Mr Moolman whether he was supporting the bill. She also asked him to explain the exemption for welfare organisations
Mr Moolman said that the purpose of the submission and the primary drive for exemptions was to save jobs. Luckily, most CAPES members had the necessary documentation, but there must be allowances for those without paperwork to apply. CAPES was not objecting to the NMW, but wanted exemptions to be easy to obtain. There were no welfare organisations within CAPES, but it supported exemptions for welfare organisations in its submission.
The Chairperson handed over to the joint submission by the union federations COSATU (Congress of South African Trade Unions), FEDUSA (Federation of Unions South Africa) and NACTU (National Congress of Trade Unions).
COSATU, FEDUSA and NACTU: Joint Submission
Matthew Parks, Parliamentary Deputy Coordinator: Congress of South African Trade Unions (COSATU), introduced the delegation representing organised labour. The delegation would make comments on all three bills. He sent apologies from the National Congress of Trade Unions (NACTU) delegation.
Ms Riefdah Ajam, General Secretary: Federation of Unions of South Africa (FEDUSA), said there had been broad agreement for the bill through their collective engagements in the NEDLAC chambers. This was a historical milestone for organised labour and for SA in general. She noted discussions around expanding the process by ensuring the process was not rushed, and that detailed discussion would be given to the specific aspirations outlined in the bill.
While there was broad support for the bill, she felt that there were shortcomings which needed to be addressed. The submission was on behalf of three million workers in SA. The NMW was not a utopian dream but just a starting point in the right direction. Unions were attempting to respond to inequality gaps in society, and while unions were not happy with some of the issues being articulated in the meeting, it was an attempt to reduce the high levels of inequality in one of the most unequal societies in the world.
The agreement had been endorsed by the NEDLAC constituencies, including the community constituency. When the delegation engaged on the issues of informal and vulnerable communities, it considered the extensive discussions which had taken place around transitioning from the informal to the formal economy. While the country may move beyond the 1 May implementation deadline, it was a progressive course of action. It should be a just transition for those earning under R20 an hour and it should be a progressive attempt to continuously re-evaluate where the country moved, but one that should be moved forward.
Ms Ajam cautioned against opening the door for blanket or continuous exemption. She commented that after the De Doorns strike of 2012, the sectors had recovered from the strike through collective dialogue. Through collective discussions, there must be additional resources allocated to enforcement and implementation. The strength and might of the CCMA must be strengthened to provide people with decent work and a decent life for vulnerable groupings in society.
Mr Parks spoke about the NEDLAC engagements and the Labour Relations Bill, referring to innuendos about the NEDLAC process being a type of gate-keeping exercise. People had chosen not to include themselves in the NEDLAC process by not applying to be part of the process. There had been extensive consultation on this process, with Parliament going to all nine provinces. The LRA provisions around collective bargaining were a huge victory for workers, contrary to what was being said in the media. He highlighted the challenges in reaching the 50% threshold in a sector, especially with high levels of outsourcing and labour workers. The bill would empower the Minister to extend collective agreements if there was sufficient representation in a sector. This would help bring outsourced workers into collective bargaining agreements. He stressed that collective bargaining was not just about wages, but also non-wage benefits and working conditions, and claimed that the amendments were a huge victory for workers.
The CCMA was drafting a code of good practice which would become the default picketing rules. This would help workers who were newly represented. The unions were happy with the essential services clause. The requirement for strike ballots being viewed as the government taking away the workers’ right to strike, was an unashamed lie. The 1995 LRA made provision for strike ballots, and the only change was the insertion of the word ‘secret’ before ballot in the act.
The DOL had been engaging with unions over the last five years to remind them that their constitutions must be in line with the act. Ballots were the quickest way to see whether workers supported a strike action. There was an established practice of secret ballots in the country and the issue of strike ballots was being abused in the media. There had been a proposal that wage offers from employers to unions be balloted, but this had been rejected. The delegation did not have a problem with advisory arbitration, and saw the CCMA as a friend to workers, as it was accessible and affordable. Advisory arbitration did not stop strikes. Unions were about negotiations, and this was standard practice.
Mr Johan van Niekerk, of Fedusa, said the NMW was a way to deal with extreme inequality, extensive poverty and the legacy of very low apartheid wages. There were often questions around jobs, but the NMW could assist the economy. For jobs to be created there needed to be a focus on many other policies such as skills development, the building industry and having a trade policy which did not sell out workers in industries. It had been introduced in many different economies with significant success. The NMW would stimulate demand through the injection of additional wages into the economy. It was well known that poor people, when able to access more money, tended to spend a greater proportion of that money on locally manufactured goods, whereas rich people spent on imported goods. He added that higher wages would result in higher productivity.
He recognised that R20 was not a living wage, but a wage floor. This was not labour’s desired level, but was an outcome of the negotiations. Legislation must ensure that there were no gaps resulting in people earning less than this level and that its value was not eroded even further. The level was arrived at after extensive research from a panel set up by the then Deputy President, as well as other research organisations. It had been agreed to by NEDLAC constituencies and millions of workers stood to benefit.
Mr Van Niekerk moved on to the union’s suggested amendments to the NMW bill. It felt that the definition of worker was too narrow and excluded independent contractors. This went against the agreement reached at NEDLAC, where not only workers but employees and independent contractors were covered by the bill. The DOL had indicated in January that it was it was a mistake for the definition to be so narrow.
He elaborated on the proposed amendments to section 5, which dealt with the calculation of the wage. There should be an amendment in the law to explicitly state that payment in kind could be used in the domestic and farming sectors. SDs indicated that payment in kind could form a small part of the wages of farm and domestic workers. Unions wanted to make sure that when the new NMW came into effect, this would not be excluded. He feared that employers and farmers would try to claw back some of the NMW by overcharging for things like accommodation or food. If it was included in the bill, it could be controlled the way it was in SDs.
Another proposed amendment, also to section 5 of the bill, dealt with employer contributions. There was an agreement that the NMW should excluded employer contributions, such as provident funds, medical aid and the Unemployment Insurance Fund (UIF). The R20 could not be reduced further by deducting employer contributions from it. It was crucial that this was made explicit in the legislation. This could be captured in a sample calculation in the bill, or a good practice note
Mr Van Niekerk presented an amendment to section 7 of the bill, which dealt with the conduct of an annual review, where the NMWC would look at the impact of the NMW and review future increases. Unions thought it was important that Parliament make it clear to the Commission through a change in the legislation that the increases needed to be real -- more than just inflation. The NEDLAC agreement recognised that the value of the NMW could not be eroded. He gave the example of the USA, where there had been a huge increase in inequality, even though the USA had a NMW. The reason this had had happened was because the NMW in the US had stayed the same for many years while wages at the top were increasing. He asked Parliament to include this amendment to say that when the NMWC considered an increase, it must make sure that the real wage (wage plus inflation) was not less than it had been the previous year.
The next suggested amendment was to Section 11, and the functions of the Commission. He elaborated on the negotiation of the R20 level as being offset by a compromise around a progressive medium-term target for the NMW. The medium-term target would be reached in a few years, and would be higher than inflation-based increases to ensure that the NMW moved beyond the current levels. This had been agreed to in NEDLAC. He asked the Committee and Parliament to reduce the period for stipulating the target from three years to one year, and for that target to be reached within three to five years. A lengthy period for the introduction of the medium-term would reduce some of the good work done around the NMW.
Mr Van Niekerk addressed amendments to Section 15 of the bill, saying that labour did not support the opening of exemptions to employer organisations, as this would lead to an erosion of the NMW and be a disguised exclusion from the NMW. Labour supported provisions for individual employers to apply for exemptions, but asked Parliament to delete the sub-section so that the bill was not watered down and there were no loopholes.
Provision for a review of the exemption system should be included in section 15, as currently there was only a provision to review the NMW. This could be done in regulations, but it was an important oversight. If there were no checks on how the exemption system was working, it may create loopholes in the NMW.
Mr Van Niekerk suggested a provision for bargaining councils, where wages were currently lower than the NMW, to be allowed to phase in to the NMW for a limited period. This could be done if it was controlled and regulated, and would be only for those wages that were below the NMW and for companies registered with the bargaining councils. It would need to happen before the introduction of the NMW.
He addressed the daily wage payment, which had been agreed to being for four hours at NEDLAC. This feature was found in several SDs. The idea was that people did not work for an hour or two and earn less than the cost of coming to work. He felt there should be a commitment to investigate increasing it to five hours in the legislation.
Mr Van Niekerk addressed the transitional provisions. There should be an investigation into the possible reduction in working hours due to the NMW. A way to counter this would be the introduction of a premium payment to strengthen the NMW, and that this should be investigated.
Regarding schedule 1 of the bill, it had been agreed at NEDLAC that farming and domestic workers would be phased into the NMW after twoyears unless there was compelling evidence that this should not happen. He asked that this be included in the legislation
He raised a few issues around the BCEA Amendment Bill. He felt that it would be a mistake to repeal chapters 8 and 9, which would mean there would be nobody able to change SDs. These sections should not be repealed, but the functions of the Employment Conditions Commission (ECC) should be taken over by the NMWC to allow them to make changes to SDs. It may be necessary to introduce new SDs in the future, which would not be possible with the repeal of these sections.
With regard to fines and penalties, measures should be included in the bill to get companies to comply. Penalty provisions should be strengthened to get companies to comply, such as escalating fines or criminalising non-compliance. It had been agreed at NEDLAC that in future, compliance with the NMW should be a requirement for government tenders. He suggested amendments to Section 76a, saying fines should also cover companies who had received an exemption notice by providing false information. According to draft legislation, companies that received exemption notices through false information could have those exemptions withdrawn. Such companies should be fined for cheating the workers out of the NMW. They should pay workers the wages owed to them as well as a penalty.
Mr America was pleased that there were few disagreements with the amendments to the LRA. He reminded Members of the 9.3 million unemployed compared to the three million union members represented by the submission, and that the unemployed had been excluded from the NEDLAC negotiations. This number would grow with the introduction of the NMW, according to some analysts. He asked for the justification behind the inclusion of “independent contractor” as a worker in the NMW bill, since the LRA excluded independent contractors from the definition of employee. He asked the delegation to clarify their position on SDs, and how to include those who did not fall under an SD.
Mr Bagraim praised the agreement that had been signed with the African Union (AU) the previous day on the free flow of people and goods. He felt that the new minimum wage may see an influx of workers from other countries seeking higher wages, placing a strain on the system. The free flow of goods may also threaten local industries competing with goods that could be produced more cheaply elsewhere, and asked the union delegation to comment.
He did not feel that independent contractors should be included in the bill, citing the difficulty in forcing someone to pay themselves money that they may not have. Who would he claim the NMW from as his employer? He also questioned whether the unions viewed the NEDLAC agreement as sacrosanct. Was Parliament bound by those agreements? He asked about business bearing the cost of benefits such as medical aid and pension and payment in kind, and suggested employers may just stop offering things like accommodation and non-wage benefits if they were not able to deduct it from the wage. Many businesses did not offer medical aid and retirement funds due to the expense. This would be a great disservice to union members by not allowing any deductions of any sort.
He understood the cost of transport being an issue in the daily minimum wage. He asked what would happen if workers were informed beforehand not to come in to work, and whether there would be any payment at all.
Mr Bagraim felt that the suggestions around medium-term targets were tying the hands of the Commission. Why have the Commission, if the unions were going to set the figures? He disagreed with not having employer associations apply for exemptions as a group, asking why individual employers should be burdened with the applications for exemptions. Did the unions have issues with exemptions altogether? He gave examples in KwaZulu-Natal (KZN) of textile employees supporting lower than minimum wages to keep their jobs.
He disagreed with the minimum daily payment, as employers may decide to mechanise for staff who were needed for only a few hours, rather than pay workers. The notion of a premium payment was moving away from the idea of the NMW towards differential payments, and he suggested that there be differential payments per sector, or minimum wages per sector, rather than a national figure.
The timeframe for phasing in the NMW was another attempt to tie the hands of the Commission, and asked that the experts in the Commission be allowed think these issues through.
He did not agree with criminalising penalties, as it would move issues away from the labour courts and the CCMA, to criminal courts. He asked the delegation to comment on the government not paying the NMW in the EPWP sector. Why was government exempt when the private sector was not? He concluded by agreeing with making compliance a condition for tender regulations.
Mr Parks said that he was happy that the LRA amendments extended collective bargaining and defended the right to strike. On unemployment, he welcomed the jobs summit, stating that the goal was to get everyone working in a permanent decent job, but that poverty wages were not the answer. He supported the free flow of people and goods if it was done in a phased and calculated way, giving the example of the South African Customs Union (SACU), where the barriers had been lifted too quickly, resulting in 100 000 jobs being lost. One could not have a situation where SA was an island of industrialisation supporting the whole continent.
Ms Ajam clarified that NEDLAC made provision for the community constituency. There was an informal pact between labour and the community constituency which meant labour was the voice of the voiceless in that platform. Some key decisions labour had engaged on included the Youth Unemployment Services (YUS) programme and the Employee Tax Incentive, where provision was made to make it lucrative for businesses to employ people from the youth sector to address youth unemployment. With regard to the AU agreement, she encouraged people to buy local goods to encourage cyclical economic activity.
Mr Etienne Vlok, of Cosatu, responded to question about the definition of worker. Currently the bill stated that a worker was an employee, as defined in the BCEA. He felt that it should be defined as ‘any person who works for another and receives or was entitled to receive payment for that work, whether in money or in kind’. The formal definition had a few conditions which must be applied, whereas this definition ensured more people fell under the scope of the act.
He addressed the question of SDs, clarifying that if there was a SD in place there was no bargaining council. He expressed concern that the NMWC would deal only with monetary issues. The example of payment in kind in the agricultural sector was given, where if employers provided accommodation or transport, they were entitled to deduct an amount of up to 25%, something the unions wished to keep. He cautioned against removing SDs in sectors where there were no bargaining councils, stating that SDs worked well. He proposed keeping SDs until bargaining councils were established.
He acknowledged that NEDLAC was not ideal, but said that there was a need to make it work and he encouraged outside unions to apply to participate in NEDLAC. Discussions in NEDLAC were robust and it was important for business and labour to put their concerns on the table and come to some sort of agreement.
Mr Vlok clarified that the minimum daily payment was for workers already at work, and gave the example of a worker being told to go home due to a power failure at work – then he should be paid the minimum daily payment. Some SDs already provided for five hours. He understood that if a worker had been warned not to come to work, there would be no payment.
He proposed putting the ECC together with the NMWC as a cost cutting measure. If the NMWC was capable of handling the SDs as well as their current and new obligations, then this should happen. The NMWC would have the current ECC infrastructure to do so. Rather than duplicating work, that saving could be used to hire more inspectors.
He clarified the exemptions process and the specific issues the employer needed to respond to. If the trade union agreed that it would be better to receive lower wages and retain jobs, it would play an important role in the exemption Committee’s decision.
Mr Van Niekerk said that if SDs were repealed, there would be no chance in the future to start new or fix existing SDs. For that reason, unions were proposing that the functions of the ECC be transferred to the NMWC.
He felt that payment in kind should be explicitly stated in the bill, that payment in kind was allowed in the farm and domestic work sectors, as it currently existed in the SDs. The fewer deductions allowed, the closer workers would get to the R20 figure. If one allowed employers to deduct from the R20 an hour, one was no longer talking about the NMW, but the total package. Employee contributions could be deducted, but not employer contributions That should be explicitly stated in the law.
The NEDLAC agreement informed the decision-making process that unions were advocating, based on the positions arrived at through NEDLAC. In this case, unions were asking Parliament to tie the hands of the Commission to deal with inequality and poverty in setting the medium-term target.
Mr Van Niekerk responded to the suggestion of sectoral differentiation. He referred to International Labour Organisation (ILO) presentation, which had highlighted sectoral differentiation in SA as a problem. Despite the different minimum wages, there was still high inequality, and the way to deal with this and ensure compliance with minimum wages was to have a single NMW. While the unions had allowed for temporary exclusions and phasing in of the NMW, it did not support sectoral exclusions. Premium payments were not a sectoral matter, but a matter for the whole NMW.
Regarding criminal penalties, in serious instances where the NMW was being breached four times by a company, for example, there would need to be a different approach, because clearly then the penalties were insufficient. Then the matter should be moved to the criminal courts.
Mr Van Niekerk clarified that unions were not happy about the EPWP wages being set at R11 an hour, but the agreement had been signed. The NEDLAC agreement stated that there would be an investigation into the government paying a higher wage in this sector after the introduction of the NMW.
Mr Jeremy Marillier, Executive Director: FishSA, said FishSA was an industrial body for the commercial fishing industry which represented a cross section of the industry, from listed companies to SMEs to individual fishermen. His delegation included representatives from the biggest employer associations. There was support from the fishing industry for the NMW in principle as a pro-poor measure that reduced poverty and inequality. Its introduction was projected to significantly reduce poverty among the bottom quintile, and to reduce income inequality.
Mr Marillier provided an overview of the fishing industry. The industry was divided into 11 sectors in terms of the Marine Living Resources Act. These sectors varied greatly in size and the number of people employed. The fishing industry had traditionally been governed by the Merchant Shipping Act in terms of employees at sea. There needed to be tweaks to the BCEA and the NMWB if it was to incorporate seafarers. The sector had accepted the challenge of self-regulation in terms of the LRA through the establishment of bargaining councils in the different sectors.
FishSA noted that the NMW was being introduced in the context of low economic growth and in an economy which was not labour absorptive. It was happy that the DOL would look at an affordability analysis when determining exemptions. It did not feel that there should be blanket exemptions, but rather that exemptions should happen at the level of individual companies. He handed over to Ms Roux from SAFIEO.
Ms Roux, of the South African Fishing Industry Employers' Organisation (SAFIEO), said that SAFIEO represented the trawling sector, which had an annual billing of over of R1 billion and employed over 7 000 employees. 30 percent were seafarers, with the remainder being land-based and falling under the BCEA. 97 percent of those who worked at sea were permanent, with temporary workers standing in when a permanent worker was sick or on leave.
The industry had established a bargaining council as early as 2000 with its social partners in the representative trade unions – the National Certified Fishing and Allied Workers’ Union (NCFAWU), the Food and Allied Workers’ Union (FAWU) and the Trawler and Line Fishermen’s Union (TALFU). Through negotiations, this sector now provided extensive benefits which included: pension/provident fund, group life assurance, medical aid, regular shore leave, improved family responsibility leave, and all forms of other leave offered in terms of the BCEA. The bargaining council’s main collective agreement contained minimum guaranteed remuneration structures which were extended to non-parties by the Minister of Labour on an annual basis.
Ms Roux addressed the question of remuneration. This interpretation was supported by the structure of the main agreement which did not provide for ordinary hours of work and provided for the payment of a daily rate even in circumstances where services were not performed. If seafarers went out to sea and there were no fish, they still got paid. She said that commission was paid, based on fish landed, on top of the daily rate. She contrasted this with the NMW, which provides for a time-based payment calculated in terms of hours of work. She defined “working day” in terms of the main agreement, and said that there was no reference to wage in the agreement. Remuneration was not based on hours worked, and the only reference to hours in the main agreement was that an employer may not require or permit an employee to work more than the maximum of 14 hours per day. Employers were not obliged to record actual hours worked, but rather the total number of working days. Therefore, for the purposes of calculating wages in the fishing industry, the calculation must be based on both the daily rate and commission-earned components.
Ms Roux said that other fishing sectors -- Small Pelagic, South Coast Rock Lobster and West Coast Rock Lobster -- had been successful, with NEDLAC accepting their application to extend the scope of the bargaining council,
Ms Frederi Steyn-Visser, General Secretary: AFEO, continued speaking about the expansion of the bargaining council. Small Pelagic Fishery was the largest SA fishery by volume, and second most important in terms of value. It was the highest paying sector of the fishing industry, despite there being no daily rate, as all payment was 100% commission-based.
The South Coast Rock Lobster Fishery had eight operating vessels and employed 220 fishers. All of the employers had agreed to be included in the bargaining council. West Coast Rock Lobster had two sub-sectors – nearshore and offshore. This sector operated under restrictions from the Department of Agriculture, Forestry and Fisheries (DAFF) quotas which only allowed fishing at specific times of the year and in specific areas. Weather also became an issue with the small boats. This sector was also 100% commission-based.
Ms Steyn-Visser addressed the NMWB, stating that in terms of the BCEA, seafarers were excluded from the jurisdiction of the BCEA and therefore the application of the NMWB could not assume jurisdiction from the BCEA, which had excluded seafarers. Employees on vessels at sea were not subject to the “ordinary hours of work” as defined in the BCEA and referenced in the NMWB. Hours of rest were recorded on vessels, not hours worked. The basis of this industry was a concentration on incentive-based productivity. A time-based minimum wage was unworkable in the fishing sector. Data on working hours was not recorded. She reiterated that seafarers were excluded from the BCEA with the exception of section 41 – SDs. The industry had elected to go for self-regulation.
Ms Roux went through the definitions in Section 1 of the NMWB. She felt that these were not applicable to the fishing industry. The bill stated that a worker meant an employee, as defined in the BCEA. “Ordinary hours worked” were also defined in terms of the BCEA, from which seafarers were excluded. Regarding the calculation of wages, she argued that the fishing industry should be excluded, as it operated on a remuneration structure basis, not a wage basis and that commission was excluded from the NMWB definition of wages. The NMWB referred to ordinary hours of work, where there was no measurement of hours worked in the fishing industry. Attendance lists were the basis for recording employees at work and remuneration was calculated on days at work rather than actual hours worked. She said that exemptions were allowed in accordance with section 85 of the BCEA, reiterating that the BCEA was not applicable to employees employed in terms of the Merchant Shipping Act.
Mr Marillier concluded by stating that the employer associations had pointed out some of the intricacies which would make the current bill difficult to apply to workers defined as seafarers. A strict interpretation of the NMWB would not apply to employees employed at vessels at sea, He reiterated that commissions were a large component of remuneration, and should be part of wages.
Mr Bagraim thanked the delegation, calling the presentation eye-opening. He felt that this would create problems in how the legislation would handle it. There were many professions which earned commission only. The argument would probably be if every month one was earning above a certain amount, one would be earning the NMW, but one could not say that with certainty – it depened on how many fish were caught, for example. He proposed an exemption for the sector. He asked if by being excluded from the BCEA, it should be exempted from the NMW.
Ms Roux highlighted the fragmented nature of the industry, in that some sectors were already in BCs where there were clear guidelines on daily rates etc. There were some sectors which were by exemption only. Until such time that all sectors were based on the same payment formula, exemption would probably be requested.
Ms Steyn-Visser said that section 3(3) of the BCEA dealt with people employed at sea in terms of the Merchant Shipping Act (MSA). This was not exclusive to fishermen. These structures might well be alright to work on a time basis, since their operation was different to fishing. FishSA believed that fishermen should be differentiated from other seafarers, since the work was unpredictable and there were not conventional shifts. The work in some sectors was seasonal in nature. The sector wanted the jurisdictional issues to be sorted out. Most of the industry was committed to self-regulation and dealing with minimum payments for fishermen.
Mr Merillier said that the MSA was being reviewed, and the NMW did not take preference over that. Legislative tweaks would have to be looked at. The South African Maritime Safety Authority (SAMSA) and the DOL should sort out these issues. The practical implications and the way operations were structured made the implementation of the NMW difficult in some fishing sectors.
Submission by Mr Desmond Peterson
Mr Desmond Peterson, an independent member of the public, clarified that he was making the presentation on behalf of old trade unionists, activists and union educators. He wished to comment on the process, asking for assurances that submissions would be taken seriously with the date of implementation looming. He expressed concern that a date had been announced while the public participation process was still happening.
He began by noting that the preamble to the bill referred to SA being one of the most unequal societies in the world, and the need to eradicate poverty. He referred to a research document around the earnings of workers and the working poverty line – R4 370 a month based on 2016 rates. The proposed NMW not only fell short of the working poverty line of two years ago, but undermined the stated purpose of the bill -- improving the wages of the lowest paid workers and protecting them from unreasonably low wages. The low rate was driven by suggestions that if it were higher, it would increase unemployment and that employers would not be able to afford such rates. This should not influence the setting of a higher NMW.
If a minimum wage was set below the working poor line, it would knock workers into poverty. The increase in the growth of the informal economy reflected the failure of the formal economy to provide meaningful employment. Wages and salaries at the upper level continued to increase, resulting in widening inequality, but this was hardly complained about. A report said that the NMW result would be a rise in household income for low-income workers, resulting in increased consumer spending, as well as in output and productivity. He disagreed, stating that if the NMW was below the working poor line, this would not take effect. It was not a living wage and fell short of providing workers with the means to live in human dignity.
Mr Peterson spoke about the concept of a NMW was that would cover all workers, providing uniformity. A worker entering the labour market in any sector could expect to be paid at least the minimum wage. This provided the worker with a sense of recognition, clarity, security and the ability to budget. The ILO supported the NMW as it was easy to enforce, enjoyed high compliance, benefited all workers equally and could be set to broader policy objectives such as poverty reduction. It could be set to consider the needs of workers and for macroeconomic growth.
He expressed concern that the current NMW bill excluded farm workers, domestic workers and EPWP workers, as well as those on learnerships. These exclusions flew in the face of the concept of a NMW. It undermined the notion of a wage floor. It continued to exploit farm workers, among the most vulnerable in society. The bills perpetuated gender inequality by excluding domestic workers, the majority of whom were women. This was indirectly discriminating against women, and the Committee should look at this clearly. The exclusion of workers in the EPWP reflected poorly on government. When compared to the wages earned by some public-sector worker,s the EPWP rates were an embarrassment. He expressed concern at some workers being paid SD wages and being phased into the NMW, stating that this defeated the purpose of the NMW.
Mr Peterson spoke of the need for a national maximum wage, stating that inequality just became perpetuated without a national maximum wage. One could not narrow the gap in inequality by dealing with only one side and ignoring the other. A national maximum wage would permit all South Africans to address the issue of poverty and inequality. It would free up money at the top which could be used for lower wage earners to increase their wages, effectively closing the gap.
He referred to the challenges of monitoring and implementation, especially around labour legislation. Despite laws which created obligations, these laws seemed to be broken at the whim of employers. The NMW may be destined to be ineffective without proper monitoring and implementation. He proposed that the old system of policing the labour environment be looked at. This Committee had visited factories to do investigations, and that needed to happen more often.
Mr Peterson concluded by stating that the Committee must be emboldened by the decision to expropriate land without compensation, defying years of conservative-speak that such action would destroy the economy. Similarly, most of the arguments against the NMW centred on unaffordability and how it would lead to greater unemployment. The portfolio should take bold steps to change the reality of the lowest paid workers by paying a much higher NMW.
Mr Bagraim asked how to police a national maximum wage, and what the figure should be.
Mr Peterson reiterated that one could not look only at one side of the workforce to deal with inequality, and asked the Committee to investigate a national maximum wage. He did not have a figure for a maximum wage.
Mr America called Mr Peterson’s passion for the vulnerable, particularly farm and domestic workers, commendable. He reminded him of the drought in the Western Cape which had negatively impacted on agricultural output. He asked if the higher minimum wage would lead to greater job losses and make agricultural production uncompetitive. There needed to be a balance, and not aggravate the economic hardships people faced. Inequality was a direct result of 9.3 million people being out of work. He concluded that a national maximum wage would result in a brain drain and contribute to higher unemployment.
Ms Theko asked how much Mr Peterson was proposing as a NMW. She asked him to explain the maximum wage.
Mr Peterson responded to the question about affordability, stating that South Africa had grown more unequal over the years. He felt that employers could afford more than the minimum wage. He did not have a figure for the maximum wage, but said it was something that should be discussed.
The Chairperson asked if he had a figure in mind for the NMW.
Mr Peterson said that he did not have a figure at hand as he had come to Parliament to negotiate, but he wanted to make the point that people could not live in a dignified way at the proposed NMW level.
Commission for Conciliation, Mediation and Arbitration
Mr Cameron Morajane, Director: Commission for Conciliation, Mediation and Arbitration (CCMA), said that his presentation would be a practical one with suggestions on how some clauses should be written, since the CCMA would be doing the legwork for the new laws. This would be a new jurisdiction for the CCMA.
The CCMA had been created by an act of Parliament, namely sections 112 to 126 of the LRA. It had a mandate in terms of the LRA, the Employment Equity Act Act (EEA), and the BCEA as amended. The BCEA would be the execution tool for the NMW, and the NMWB must be read together with the BCEA. He said that over 20 years, the CCMA had registered around 2.7 million referrals, and 1.7 million cases had been heard. The previous year had seen approximately 180 000 referrals. On average, the CCMA case load increased by 5% year on year, and he was expecting this to increase with the introduction of the NMW.
There would need to be legislative changes to accommodate the expanded jurisdiction of the CCMA. The intended effect of the proposed amendments was to minimise the incidence of strike-related violence, to reposition the labour market’s approach to dealing with collective bargaining, to introduce a new NMW and expand the CCMA’s jurisdiction. The short to long term benefit of the proposed amendments would be to promote economic development and promote labour market peace and stability, with the CCMA seen as the vehicle to implement and execute these changes. He expressed concern about the availability of adequate resources, and said that the expanded jurisdiction would significantly impact on the work of the CCMA. He appealed to the Committee for resources and for changes in legislation to help the CCMA make the rulings it needed to.
Mr Morajane elaborated on comments specific to the BCEA in the CCMA’s submission. It supported Item 8 – moving the securing of written undertakings from employers to comply with the provisions of the BCEA, from labour inspectors to the CCMA.
Mr Morajane elaborated on Item 9 – Amendments to Section 69 of the BCEA. This section dealt with compliance orders. The proposed amendment would give employers a right to lodge an objection to a compliance order with the CCMA, instead of to the Director General (DG) as was currently the case. The CCMA welcomed this approach, but felt that the Bill needed to provide sufficient clarity concerning the process for referral and time periods for the referral, and whether an employer should be able to apply for condonation for a late referral. The CCMA generally allowed for condonation for late referrals on good cause. He expressed concern that this may be abused for the purposes of delaying dispute resolutions. The CCMA would support the inclusion of an appropriately worded condonation for a late referral, provided than an employer seeking condonation for a late referral was required to furnish security to the satisfaction of the CCMA in respect of the amount that must be paid in terms of the compliance order.
Amendments to section 73 of the BCEA would see the power to confirm a compliance order being transfered from the Labour Court to the CCMA. The CCMA supported this amendment, subject to a few changes. He felt that the CCMA should be able to issue an arbitration award if it was satisfied that the compliance order was served on the employer and the employer had not referred a dispute objecting to the compliance order. He stressed that the less complicated the process was, the better, given the people these laws affected.
Mr Morajane elaborated on item 12 -- the insertion of section 73A into the BCEA. The proposed amendment sees claims for the underpayment of minimum wages, failure to pay annual leave or sick , as well as claims for overtime pay and refunding of unlawful deductions, fall under the jurisdiction of the CCMA rather than labour courts. The CCMA supported this, as there were often small amounts of money involved, but it felt that most of the claims could be resolved through conciliation, with no need for arbitration. Section 73A would need a technical redrafting to clarify its terms.
He concluded his presentation by elaborating on the CCMA’s submissions relating to the LRA Amendment Bill. The CCMA supported the proposed amendment to Section 127(1), which would empower the CCMA to accredit bargaining councils and private agency panelist members for the purposes of performing accredited dispute resolution functions. He welcomed the amendment, as it would enable the CCMA to monitor the competency and compliance levels of the panellist members performing accredited functions on behalf of the councils and/or agencies. He expressed concern that while the power to accredit was given to the CCMA, the power to remove accreditation was not explicitly stated, and this could subject the CCMA to unnecessary litigation.
Mr America referred to page four of the CCMA submission where it said: “Workers who fall outside of the definition of an employee in terms of the LRA and BCEA would be entitled to refer claims to the CCMA to enforce NMW”. He referred to the FishSA presentation, where they had said that some of their members fell outside of the BCEA and LRA.
He was happy that the CCMA had highlighted the absence of provisions in the legislation which would allow people to apply for condonation. This had been a shortcoming and it needed to be clarified. He asked for clarity around compliance orders referred to in Section 73, and asked whether that would take place through a conciliation or arbitration process.
Mr Bagraim noted that Mr Morajane expected a 15% increase in caseload, which he felt was conservative. He expected the caseload to double. He said there would be challenges at the beginning with training and capacitating people to deal with the increased workload and new responsibilities.
He felt that the issue of compliance orders for workers who fell outside the definition was absurd, especially for independent contractors. He referred to the claims in 73A and asked whether this would be about all underpayments, and wanted to know what would happen to the DOL and the small claims court.
He agreed that the rules would make the amendments workable, and supported empowering the CCMA to put together the necessary rules. He referred to rule 68, asking if an employer could challenge a compliance order and go through an arbitration process. This would place further constraints on the CCMA in terms of time limits.
Mr Bagraim referred to previous submissions, which proposed criminalising non-compliance, which would take it outside the jurisdiction of the CCMA, and asked for comment. He noted the suggestion that employers should put up security in the case of an appeal, and asked if the CCMA had the authority to open trust accounts, since only certain people could do so.
In cases dealing with monetary issues, why was the CCMA opting for reviews? Since it was purely monetary, an appeal would be more appropriate. He asked Mr Morajane to comment.
Mr Bagraim asked about the LRA Amendment in Section 127(1), saying it was not clear whether it was referring to the accrediting individuals or councils, and whether there would be room to challenge that ruling.
Mr Morajane responded to the question about workers who fell outside the definition of employee in the LRA and BCEA. The two definitions were not the same – one excluded private contractors. The all-embracing definition of worker was meant to ensure that no one fell through the cracks regarding outstanding payments.
Regarding the objections process, the traditional approach of the CCMA was conciliation/arbitration. It was a simplified process where money was involved, as there was a paper trail. The CCMA would design a quicker, more simplified approach to deal with objections to existing orders. There had been long debates about whether an appeal or review was more appropriate. A review focused mainly on process, whereas an appeal focused on the merits. As such, he admitted that an appeal might be more appropriate.
Mr Morajane conceded that the 15% figure was conservative. The CCMA now had the jurisdiction to deal with new types of pay disputes, including disputes about deductions which it did not have to deal with before. The CCMA needed the power to make rules as it saw fit.
Free Market Foundation (FMF)
Mr Themba Nolutshungu, Director: Free Market Foundation, said that the FMF’s main issue was its concern for unemployed people. It would like to prevail on the Members to apply their minds to the big picture – the marginalised and forgotten unemployed people. When one talked about unemployed people in statistical terms, it always seemed abstract, but people out there were desperate for employment. When one spoke of over nine million people that were unemployed, one was referring to real people, and Members needed to take cognisance of that. The FMF really thought about those unemployed people. They should be given an opportunity to voice their preferences, and it seemed they had been excluded from this process.
It was concerned about the negative consequences of the National Minimum Wage, the Bill itself, for the unemployed. There was hardly a mention of unemployed people in the Bill, yet people were aware that there were people out there who were unemployed, suffering and broken. That often led to domestic abuse, and had all sorts of psychological and social connotations. The Committee should take into consideration the plight of the unemployed, as they might not even be aware of the hearings so that they could express their struggles. This could be reversed by considering deeply the policy proposals contemplated by the Bill. The FMF had looked at the reality and the cases where a minimum wage had been implemented, and the outcome of that research had indicated that this was not the way to deal with it -- in fact, it would have dire consequences.
If one was talking about the 9.2 million people unemployed, that was equivalent to the population of Gauteng and Cape Town combined. The Committee should think about the unemployed people in considering the Bill. The minimum wage did not take cognisance of the gross domestic product (GDP) discrepancy between the rural and urban businesses. Businesses in rural areas functioned marginally. People were not going to be employed after the implementation of the Bill. The minimum wage should be increased by 100%, but that could not be done because there were constraints on businesses. Those constraints had something to do with being competitive and the overall economy – one needed to be competitive as a country. This law was going to restrict potential investors in this country, and this would be counter-productive.
The Foundation had been going on about this subject for over 15 years, and had even prepared a petition. Why is there such a massive unemployment rate in South Africa? What was the Constitution doing for the unemployed? There was no doubt that long-term unemployment encroached on the rights of people. The state went to great lengths to try and protect the employed, but it had done very little to protect the unemployed. The Bill discriminated directly and indirectly against the unemployed -- in fact, it had considered increasing the benefits of the employed.
The unemployed had never been called in to consult on what they thought about the Bill. The labour laws were fully responsible for the unemployment rate in South Africa. The Bill had a detrimental effect on the unemployed, and by so doing, it was unconstitutional. He suggested that the unemployed should be exempt from the labour laws that were causing them to be unemployed. Special exemption certificates should be given to every unemployed person coming forward to ask for it, and it should run for at least two years while they were acquiring skills for future employment. Implementing this bill would not reduce the protection that the employed had right now.
Mr Bagraim said the FMF had referred to 9.2 million, but the Director General of the Department of Labour had referred to 9.8 million, and Treasury had come up with a figure of about 750 000 people who would lose their jobs when this Bill came into effect. Perhaps the FMF could comment on that, as there was inconsistency. He asked the Foundation to comment on the fourth industrial revolution, and whether one of the cures could be the education from Grade One level. Perhaps the small, medium and micro enterprises (SMMEs) in the townships should be given an exemption.
Mr Nolutshungu said onr should talk about what was happening now in practice, in anticipation of the Bill. Who had been buying farms in recent times? It was not people with no farming experience, but rather accountants interested in investment in capital instead of labour. There were machines which were operated from a computer, and they could be programmed to work the whole day. When companies were confronted with onerous compliance costs, they would not write to Parliament to say why they were retrenching people and closing down. There was a need to focus on policies that would enhance the demand for labour and ensure people were employed.
The 9.2 million figure came from StatsSA, but it could be higher. Education should definitely improve, as there were people out there with muscle power but who were not educated. They could not compete with the educated people, but they could learn on the job. There was a need for employment that would empower that group of people. Companies had already started reducing their staff before the Bill goes through. It was not likely that there would be a massive lay-off when the Bill came into effect, because companies had already started reliving people of their jobs.
As for exemptions, if one was talking about exemptions for the SMME sector, it should be applicable universally because the challenge was so big, and one could not afford to classify these benefits or blanket applications.
Labour Enterprise Policy Research Group – University of Cape Town
Dr Shane Godfrey, Senior Researcher: Labour Enterprise Policy (LEP) Research Group, University of Cape Town, outlined issues of process and said that an important change had been made to the draft NMW bill that had left the National Economic Development and Labour Council (Nedlac). This was the narrowing of the application of the NMW to ‘employees’ rather than ‘workers’. An announcement had been made to the effect that the change had been a mistake. However, the fact that a mistake of this magnitude could be made called into question the status of the process within Nedlac, as well as the status of the draft bills that had left Nedlac.
The question regarding the status of the process on Nedlac was underscored by section 4 of the Memorandum of Objects to the NMW bill, which was headed: Departments/bodies/persons consulted, and which stated that: “Organised business, organised labour and the organised community sector were consulted during the engagement in the National Economic Development and Labour Council”. Section 3 of the Memorandum of Objects to the BCEA Bill was even more dismissive of Nedlac. It stated that “all affected stakeholders were consulted individually”. The inference was that Nedlac as a body did not deal at all with amendments to the BCEA.
The wording of the section was preremptory and indicated that Nedlac had to consider all proposed labour legislation before it was introduced to Parliament. It did not say that the Department of Labour must merely consult the parties in Nedlac before it introduced proposed labour legislation to Parliament. The approach adopted by the Department towards Nedlac was surprising and sharply at odds with its stated commitment to social dialogue. It represented a major and unacceptable shift from the process adopted with regard to previous amendments or new labour legislation. It also represented a major and unacceptable shift with regard to the Department’s view of the status of Nedlac.
Mr America said the issues highlighted in the submission were relevant and contextualised the concerns that had been identified. He was pleased with the emphasis it placed on Nedlac, and on maintaining the current regime. The Bill should bring in elements that could improve offerings to the economy and the labour market. Very little emphasis had been put on the unemployed, hence the preparation for the submission had led to the conclusion made. He wanted to know whether the Labour Enterprise Policy Research Group had considered the impact that the legislation would have on employment and to what extent it would reduce or improve employment in the country.
Mr Bagraim said sectoral agreements were a good idea, but should be tempered per sector instead of a national minimum wage. The research had concentrated a lot on Nedlac. In 2014, there had been a suggestion from Nedlac that people would become permanent employees after six months of employment, and when it came to Parliament, it had been completely ignored. Nedlac was a serious body but it seemed that it was not taken seriously.
Dr Godfrey said the research had not dealt with the impact on employment but had focused on how the minimum wage fitted into legislation. Whether one should be setting minimums in different sectors was one option, but the issue was how one juggled the instruments that one had. The minimum wage was going to set a floor level for wages. Sectoral differentials should not be removed.
Nedlac had lost power over the years, but there were certain aspects of the Act that ignored what could be done post Nedlac. He argued for the resurrection of Nedlac, plus including the community constituency and taking into account the unemployed and the small sectors of industry.
Forestry South Africa
Mr Roger Godsmark, Operations Director: Forestry South Africa (FSA) said sectoral determinations were designed for specific sectors. One of the problems was that the industry consisted not only of timber farmers, but also agricultural farmers growing timber, and they employed a considerable number of people. The small scale timber farmers had a huge problem with the minimum wage. The industry was very labour intensive and there were high labour turnover rates. Farmers provided accommodation, food and transport. The industry was very easy to mechanise, and that was something that was moving at a rapid rate in other countries.
From year to year, the forestry industry’s ability to pay operational costs varied considerably. It was a major catalyst for rural development, and provided other socio-economic necessities. It tried to keep the costs down, but had no control over the prices it received – it was a price-taker as an industry. It had to try and control its costs, and there had to be a relationship between input costs and productivity, which was something that had been considerably overlooked by previous speakers. Circumstances faced by employers in 2013, when sectoral agreements came up -- although more drastic than those envisaged when the NMW is implemented -- could have similar consequences unless phased in sensibly. The industry’s minimum wage had gone up by 56% in one year. When 40% of their costs went up by 56%, businesses who could not handle the increases closed down. An impact assessment by government had indicated that there could be a significant job losses, but now no one knows how badly the impact is going to be. Livelihoods were going to be at stake, and the number of unemployed people was going to increase.
He made the following recommendations:
- Postpone the implementation of the Act until economic conditions have improved to the extent where the unintended consequences will be minimised;
- The phasing in period of the NMW applicable to farm workers should be extended to a minimum of three years.
If the NMW was phased in over a period of three years, the impact would have no effect on productivity. One needed to look at other operational costs as well, such as water, electricity and property charges. The NMW was one of those factors in the operational costs that forestry could not afford. When all operational costs went up, labour was the first place to minimise.
He asked Members to consider the following recommendations for the forestry industry:
- If the NMW was not postponed until the potential unintended consequences were minimised, consideration should be given to the request that for farmer workers, the NMW must be phased in over a period of at least three years;
- Deduction of the sectoral determinations to be allowed in terms of making deductions on loan advances given to employees;
- The definition of a farm worker must be broadened;
- The exemption process should be extended to organisations such as their own, with 25 000 small scale timber farmers;
- The voice of the unemployed should be heard
Mr America said what stood out for him were the recommendations attached to the various sections and elements of the Act. On page 13, for the first time out of all the presentations heard today, there was an addition to clause 7(a) – an insertion of economic growth.
Secondly, he appreciated how the voice of the unemployed had been silent on this process, and wondered who was going to represent the unemployed. A way was needed to determine to what extent a broader voice could be achieved. Under 5.6 (functions of the Commission), he supported the recommendation to reword clause 11(b).
Mr Bagraim said the forestry industry internationally was well geared to be organised. It did not need people for it to function, but employment was needed in the country. There had to be a level where the wage was not going to affect employment. International companies in the forestry industry had mechanised operational costs.
Ms Theko asked whether Forestry South Africa was in support of the Bill as it was, with the added consideration of phasing it in over a period of three years to prepare the small scale timber farmers for the financial implications.
Mr Godsmark said FSA was concerned about the number of people who would go without jobs. It was growing slowly and it was not the right time to look at the NMW, but if it was going to happen, at least the input from the unemployed should be considered.
The forestry industry could be fully mechanised, and other countries had done so. FSA had taken a different route. It had a social responsibility, hence it did not mechanise, because one machine could replace about 200 people, and one had to consider productivity as well. At this stage, FSA had not mechanised as far as it could, in consideration of employment. However, mechanisation was going to take place because the NMWB might encourage people to do so.
After the Nasrec conference last year, the rand had appreciated, meaning that export income had declined and now with the appreciation of labour costs, that would significantly affect the industry. Hopefully, the Members would take on board the recommendations to minimise the effects the Bill would have on the industry. Forestry’s sectoral determination had been increased to be in line with agriculture, but it had been done over a three-year period, and had not been a shock to the system and the industry. It had been far easier to prepare and was not a sudden jump. FSA was supporting the phasing in of the Bill, because it would soften the blow and give the industry more time to stabilise without job losses.
The Chairperson said that the recommendations were worth noting and would be taken into consideration. There were suggestions about the unemployed not being given the opportunity to be heard, but the Committee had started with workshops in August 2014 in Parliament. In November 2014, there had been extensive public hearings in provinces where members of the public and those unemployed were allowed to come and make presentations to the Committee, and those deliberations would be considered in the final deliberations.
The meeting was adjourned.
- Casual Workers Advice Office submission
- Shukumisa Coalition / Wits City Institute submission
- Institute for Economic Justice submission
- Confederation of Associations in the Private Employment Sector submission
- FishSA Presentation National Minimum Wage
- FishSA submission
- Free Market Foundation (FMF) submission
- Commission for Conciliation, Mediation and Arbitration (CCMA) submission
- Nedlac submission
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