The Portfolio Committee on Labour, meeting for further public hearings on the Labour Bills, was told that the Consumer Goods Council of South Africa (CGCSA) supported the introduction of a national minimum wage, and that minimum wage setting should be removed from Sectoral Determinations. The repeal of Chapters 8 and 9 of the Basic Conditions of Employment Act (BCEA) would be short-sighted and damaging in the long run. As both organised labour and business supported the continuation of Sectoral Determinations, there did not appear to be any sound reason to repeal these chapters. The extension of the Commission for Conciliation, Mediation and Arbitration’s (CCMA's) jurisdiction to include monitoring and enforcement of the BCEA was not workable. The proposed amendment would not serve the purpose of providing a cheaper and more expeditious method of resolving disputes. Instead it would lead to applications to the Labour Court, and to further delays and legal costs. An appeal process, as contained in the Employment Equity Act, should be introduced to deal with incorrect CCMA awards issued in terms of the amended sections.
Members felt that the CGCSA’s proposals were one-sided, and when they spoke of flexibility it only meant taking work away from workers, maintaining that flexible hours meant that Sundays should just be like any other working day, which should not happen. Others felt the proposal for a uniform minimum wage for all would mean that workers in township supermarkets, for instance, where employers had low incomes, would earn the same as those working in places like Makro, where millions were made.
Tokiso argued that under the current statute, the CCMA may ensure that accredited bodies met their obligations to ensure that the dispute resolution provided the required skills and expertise, so amendments were not required. The amendments proposed to section 127 and 128 would have far-reaching and largely negative effects on the bargaining councils, private agencies and the CCMA, so these amendments were best left out.
Members asked who would employ the commissioners, the CCMA or the government. Others commented that there seemed to be a strong move afoot within most of the commercial community that when disputes had to go to the high court because of unhappiness with some of the judgments, they often opted for private arbitration, which in effect would create a big industry and work for lawyers.
The Southern African Catholic Bishops Conference said the Basic Conditions of Employment Act could leave some workers vulnerable, especially those who currently enjoy benefits such as accommodation under sectoral determinations. They therefore urge the Committee to ensure that no worker was left worse-off as a result of the simultaneous introduction of the minimum wage and the elimination of sectoral determinations. It reiterated its broad support for this legislation, and our hope that it would lead to greater prosperity and income equality in our economy. If this was to be achieved, however, the implementation of the policy and its positive and negative effects would have to be carefully monitored and reported upon.
Members were concerned about how the government was going to protect employees already earning above the minimum wage from being brought down to the minimum wage, because to date big companies were retrenching people, only to rehire them at the proposed minimum wage. The said the exclusion of the Expanded Public Works Programme (EPWP) and Community Work Programme (CWP) workers was totally wrong, as it meant that government expected business to pay the minimum wage whereas it was not willing to pay the same wage itself. This had to be seriously looked at.
The Security Association of South Africa (SASA) said it employed about 176 000 people in the private security sector. It was a voluntary organisation where member companies were required to adhere to a voluntary code of conduct in respect of employment conditions in the security sector. Overall, there were 7 000 private security companies which 500 000 jobs. The sector had added 150 000 new jobs in private security in the last five years. It was a primary source of youth employment in SA and had made large investments in skills and training over a very long time. SASA had a long history of collective bargaining in the sector, although there was no formal bargaining council yet.
The sectoral determination for the private security sector had a number of benefits and allowances besides the basic wage, such as a statutory provident fund, compulsory annual bonuses and premium pay paid to employees on a wide array of line items. The overall pay for a security officer, when correctly paid, would be found to be much higher that what was envisaged by the minimum wage Act. However all the benefits and allowances had not been factored into the proposed R20 minimum, which would pose in the affordability concerns for the private security sector. It argued that companies would want to retain their security costs at the same levels, which meant security providers would have to reduce the levels of service, which would be counter-productive.
The Committee asked SASA, as a representative of registered and organised employers, what it proposed should be done about unorganised and exploited security officers, as they were bringing SASA into disrepute as an association. Was SASA and its members ready to disclose their audited financials as part of the arrangement for their request to have a transitional arrangement for phasing in the proposed minimum wage granted? It also wanted SASA’s comments on the under-equipping of security officers in the rural areas, as they were guarding only with torches and sjamboks to protect and prevent crime.
The Chairperson said that since the oral submissions would be completed today, and the Department of Labour expected to brief the Committee tomorrow, it was her proposal that the Committee meet from next week to continue deliberations on the Bill from 10 to13 April, and then from 17 to 20 April, to finalise work on the Bill.
Mr M Bagraim (DA) disagreed with the proposal, suggesting that even before hearing from the Department; a direct input should first be received by the Committee from the Department on all the hearings. All the submissions that were being made today should be taken into account too. Why the rush to meet an artificial deadline, when the Department had not received all the reports and summary from the content adviser? He proposed that all inputs from the Department be first tested by the Committee. What had become vital now was that the Bill needed to be redrafted from its current form because of the exposed errors, taking into account the inputs from various quarters. As for coming back to Parliament during the constituency period, Members did not have permission to be in Parliament at that time. Members had onerous constituency duties as well, therefore he suggested a full debate for tomorrow on the way forward, instead making a five-minute rash decision now.
Mr B Mashile (ANC) seconded the proposal that Committee return to deliberate on the Bill from 10 to13 April and then 17 to 20 April, the only reason being that Members had important legislation to consider without undue delay. It was also unfair for Members make a jdgment on how the Department operated, because they knew how they handled their own side of the bargain. The Department was not new to Bills. It had processed the Bill through Cabinet and had even gone as far as the National Economic Development and Labour Council (NEDLAC), and workers were fervently waiting to see this Bill passed speedily.
Mr P Moteka (EFF) disagreed with this proposal because it interfered with the constituency period, and there was just too much for Members to do at this period. This Bill should not be rushed. Enough time should be given to this important Bill.
Mr D America (DA) reminded Members that they had sat here on Thursday last week listening to presentations from interested parties and stakeholders who had taken the time to prepare for the submissions, and their input should never be treated with levity because of political expedience. The hard question should be asked as to who was responsible for these Bills’ passage -- certainly not the Department of Labour (DoL). Contempt therefore should not be shown to members of the public by ensuring that good legislation was passed here first.
Mr B Martins (ANC) acknowledged the diversity of views expressed thus far and was of the opinion that this matter could not be resolved at the moment. He suggested that the Committee hear submissions from stakeholders present in the chamber, and Members could at the appropriate time decide on the way forward.
The Chairperson agreed with the proposal, and asked for the submissions from stakeholders to go ahead.
Consumer Goods Council of South Africa (CGCSA): Submission
Ms Patricia Pillay, Head: Legal & Regulatory Affairs at CGCSA, in her presentation, focused on the Basic Conditions of Employment (BCE) Amendment Bill. She said that the BCE Amendment Bill proposed a number of far-reaching amendments to the Basic Conditions of Employment Act 75 of 1997 (BCEA). In terms of the Memorandum to the BCE Amendment Bill the primary amendments were:
· The repeal of the provisions dealing with the making of Sectoral Determinations (Chapter 8 of the BCEA) and the powers and functions of the Employment Conditions Commission (Chapter 9 of the BCEA);
· The extension of the provisions for monitoring and enforcement by labour inspectors to include the National Minimum Wage Act, the Unemployment Insurance Act and Unemployment Insurance Contributions Act; and
· The extension of the jurisdiction of the Commission for Conciliation, Mediation and Arbitration (CCMA) to include enforcement procedures in terms of the BCEA, and claims for underpayment.
The CGCSA’s comments related primarily to the repeal of Sectoral Determinations and the Employment Conditions Commission, and the extension of the jurisdiction of the CCMA to include enforcement procedures in terms of the BCEA.
Repeal of Sectoral Determinations
The BCE Amendment Bill, in its transitional provisions, allows that existing Sectoral Determinations remain in force, except to the extent that they prescribe a minimum wage that is less than the national minimum wage, as determined in terms of the National Minimum Wage Act. The BCE Amendment Bill goes much further than simply removing the determination of minimum wage levels from the Sectoral Determinations, however. Section 4 of the Bill repeals Chapters 8 and 9 of the BCEA. It places the provisions of sections 56, 57 and 58 of the BCEA in the transitional provisions. These sections of the BCEA deal with the period of operation of a Sectoral Determination, the legal effect of Sectoral Determinations and the keeping by the employer of a copy of the Sectoral Determination. From the repeal of Chapter 8, the placement of these provisions in the Transitional Provisions, and in the absence of any alternative provisions in respect of Sectoral Determinations, it was apparent that the proposed legislation intends that Sectoral Determinations would eventually be repealed in their entirety.
This view was strengthened by the Department of Labour's Socio-Economic Impact Assessment System ("the Impact Assessment") which clearly records, in response to organised labour's call for the retention of Sectoral Determinations, that its response was that "SD's retained for three-year period" (at page 226 of the Gazette No. 41257 of 17 November 2017).
In the Impact Assessment, under paragraph 1.5 (Report on Consultations), a table was provided which records proposals by the various stakeholders under the heading, "What amendments do they propose?" (at page 226 of the Gazette No. 41257 of 17 November 2017). Organised labour – the Congress of SA Trade Unions (COSATU), the National Council of Trade Unions (NACTU) and the Federation of Unions of South Africa (FEDUSA) had motivated for the retention of Sectoral Determinations. The CGCSA shared the view of organised labour that Sectoral Determinations must be retained. It was respectfully submitted that the repeal of Sectoral Determinations would not serve any good purpose and would disrupt the current stability within the various sectors that is provided by the Sectoral Determinations, and inhibit job creation. The South African economy was made up of a number of distinct sectors, each with their own unique needs. There could be no "one size fits all" for the regulation of employment standards across these different sectors. A "one size fits all" approach would be detrimental to the proper functioning of businesses across these different sectors.
Sectoral Determinations had replaced the old Wage Determinations as the vehicle for setting sector specific conditions of employment. They carried out a vital function as they regulated and set minimum standards that were appropriate and sensitive to the needs of a specific sector. Amongst other things, Sectoral Determinations cater for differences in standards brought about by sector specific needs, such as the regulation of differences in ordinary hours of work and night work to provide workplace flexibility, and the setting of wages and alternative means of payment, such as for employees who earn commission. To simply illustrate this point, she used the provisions of Sectoral Determination 9: Wholesale and Retail (SD9), relating to hours of work.
The wholesale and retail sector was an evolving sector. Trading hours had changed dramatically over the past 20 years. Increasingly there was a demand for retail trading hours to be extended to 24 hours a day, seven days a week and 365 days a year. The retail sector also experienced strong seasonal patterns with increased activity around the Easter and Christmas periods. Over these periods, retailers may require additional staff to deal with increased customer volumes and may also be required to operate for longer hours in the day. As an example, for the month of December 2017, the increase in working hours and extra positions required for that month was the equivalent of 24 000 full-time jobs.
Mr Bagraim appreciated the presentation, noting that none of the previous submissions, including this one, had called for the dissolution of the Sectoral Determinations (SDs). The case had been made for why CGCSA would actually benefit from their retention. What had not been spoken about though was the issue of informal traders, which comprised of thousands of spaza shops which did not benefit from the CGCSA’s experience, or the SDs. It was easier to get the bigger retailers to comply than the small shops in the townships, who knew nothing of SDs. Concerns had also been raised in the presentation on extending the CCMAs jurisdiction, and this concern had been shared by the CCMA itself when it presented. Regarding the protection vulnerable employees, what other benefits except wages did people in the industry served by the CGCSA get? Bargaining councils were not the answer, as it was well known they were in the process of dying, and without the SDs there was going to be a bigger problem. He asked for the CGCSA’s views on these issues.
Mr Moteka said the CGCSA proposals were one-sided, and when they spoke of flexibility it only meant taking work away from workers. These flexible hours meant that Sundays should be just like any other working day, and that should not happen. Their proposal for one regulation for all would also mean that workers in the township supermarkets, for instance, where there was less income for the employer, would earn the same as those working in places like Makro, where millions were made. To be against the bargaining councils was wrong.
Mr Mashile was sure the presentation would help in the deliberations. The Committee should craft legislation that would be easy to read and understood by everyone. All the differentials spoken about in the employment sector may need to be dealt with in the regulations, to ease implementation. One such area was policing, where an army of inspectors would be needed to ensure implementation. Had the CGCSA made any submissions directly to the Department before? How had the Department treated such a submission, if made? Was the CGCSA represented at NEDLAC? How did it feel about the outcome of the NEDLAC process? Looking at the Bill in its current form, did the CGCSA feel their submissions had been ignored? Was any proposal made for effecting the minimum wage without scrapping SDs?
Mr Jose Jorge, Attorney at Cliffe Dekker Hofmeyr, said that submissions had been made to the Department of Labour. No response had been received from them, and neither had any change to the Bills been made reflecting the submissions, so they had fallen on deaf ears. The best bet then was to channel those submissions via the CGCSA on behalf of the sector, and through them to Parliament. The retention of SDs had also been proposed in the initial submission, and the CGCSA maintained this position.
As for flexibility, the alternate position was a 45-hour week, which meant people would be sitting idle when nothing was happening in the shops and additional staff engaged when business was busy. No staffing could be planned with such a rigid condition, and it would end up pushing the wage bill upwards, ultimately leading to shop closures and loss of employment. In this scenario, the best bet was flexibility. In the formal and informal markets, the simplicity of SD9 would apply better there. Informal markets would not be expected to participate in bargaining councils, but SD9 would have to apply to everyone. As for compliance, the big shops would normally comply but not so for the informal markets which, if issued with a compliance order, would close shop and pop up somewhere down the same road. Informal market enforcement was a problem, so the objective was to partner with informal trading associations. The difficulty was the nature of its informality, so education and skills upgrade was the key.
Tokiso Dispute Settlement: Submission
Ms Tanya Ventel, Chief Executive Officer (CEO): Tokiso said that Tokiso was an accredited private agency in terms of section 127 of the Labour Relations Act (LRA) 66 of 1995 (as amended), and its submissions were limited to the proposed amendments to sections 127 and 128.
Section 1 of the LRA provided for employees and their trade unions, employers and employers’ organisations to collectively bargain to determine matters of mutual interest in a manner that they deemed appropriate, including at sectoral level. The parties to a bargaining council regulated their dispute resolution function, including their rules and a panel of dispute resolvers, through collective agreements. This amendment to sections 127 and 128 intruded on bargaining councils’ and private agencies’ rights and duties by prescribing how they must conduct their internal affairs, effectively undermining section 30, which provided that a council must provide in its constitution the procedure to be followed if a dispute arose between the parties to the bargaining council. Therefore, bargaining councils, and private agencies, provided in their constitutions for the requirements of their panel of conciliators and arbitrators in compliance with section 30, read with the provision of the LRA. The application of section 23 of the LRA would also be impacted by this amendment. Parties’ self-regulation by way of a collective agreement of all employment issues in terms of the LRA was consistent with the primary purposes of the LRA. This was particularly pertinent to bargaining councils.
Compromise initiatives to promote skills development in the industry
The CCMA had decided to outsource its training to tertiary institutions, creating a greater pool of skills and expertise in the labour market. This meant that aspirant dispute resolution practitioners may complete the respective courses without being appointed as a commissioner. By requiring the CCMA to accredit an individual commissioner, this would undermine the opportunity of bargaining councils and private agencies to develop the labour market through various self-determined means, such as mentoring and further training and selection of persons -- for example, persons appropriate for a particular industry.
South Africa had a history of credible and high-quality dispute resolution before the CCMA was established. Bargaining councils and private agencies were equipped, within the framework outlined in section 127(1) of the LRA, to assess whether an individual person had the requisite skills and qualifications for their needs. The dispute resolution industry had already established the Dispute Settlement Accreditation Council (DISAC). There had been an in-principle agreement to register DISAC as a professional body to regulate dispute resolution practitioners.
The CCMA, it was submitted, already had an extended and onerous role. To place a further burden on them to appoint and monitor bargaining council panels was particularly onerous, particularly for party disputes, which should sit with the bargaining council. Section 52(1), read with section 51(3) of the LRA, requires that bargaining councils require only CCMA accreditation to resolve non-party disputes. In the converse, CCMA accreditation was not required for purposes of resolving party disputes. It was assumed that the amendments would apply only to non-party disputes, but this was unclear. This could lead to confusion and create uncertainty in the monitoring and accreditation role of the CCMA.
Mr America said that the memorandum did not speak of quality, but of qualifications and experience. While there were many capable mediators in the field who had the requisite qualifications and experience, they may not be CCMA commissioners judging from the judgments coming from the labour courts, and taking into consideration the quality of certain commissioners currently accredited to the CCMA. He therefore agreed with the plea that there was no rationality for this amendment to be made to the legislation and it would not improve the public resolution processes. The Committee had the final say though.
Mr Bagraim said he thought silence for the other amendments to the other legislation could be interpreted as consent. Who would employ those commissioners -- the CCMA or government? Or would the Department be happy to employ all these commissioners? There seemed to be a strong move afoot within most of the commercial community that when disputes had to go to the high court, because of their unhappiness with some of the judges, they often opted for a private arbitration which, in effect, would create a big industry and work for lawyers. Did Tokiso appoint people fit for purpose for these particular disputes, or did they appoint those accredited by those in dispute, and with their consent? How then would Tokiso get parties to agree to go to a dispute resolution when they had no idea who the commissioner / arbitrator would be? The golden thread in all the submissions received so far was why all this not was discussed in NEDLAC. Why had it been , and why the silence from the Department? It also looked like the parties themselves and the industry would have no input at all. The CCMA also might have a lot of estra pressure on them if these amendments were passed into law.
Mr Moteka asked for a simple explanation with regard to the amendments to Sec 127,128 -- who was going to be more compromised between labour and business?
Mr Mashile wanted to indicate that currently there were many workers who were casuals, contracted with labour brokers, and were on a daily basis with their rights and protection eroded. These workers look up to the government for protection, and an organisation like Tokiso would look for a way to be given a space to operate. But in the face of workers trading their labour for wages, what would be Tokiso’s comment if government tried to intervene?
Ms Venter said the protection of vulnerable workers was at the crux of SA labour laws. As a private agency working in this sphere for over 20 years, the worst abuses had been seen, and concerted efforts were made to circumvent labour laws by employers of labour. Some sectors were often more guilty than others, especially the private security industry, where employees were put into contracts often below the minimum wage, and they also had to come to private arbitration where they were compelled to pay 50% of the fees for arbitration. When aware of this situation, Tokiso contacts the employers to remind them that it was unlawful, an should they fail to comply in full the director of the CCMA would be contacted to assume jurisdiction of the case. Although the law of contract was binding, it vested no authority in an employer to underline the rights of an employee to a fair and free process. Tokiso had very good working relationship with the CCMA and the bargaining councils to ensure that wherever there was an attempt to evade the law, that it was not entertained. Tokiso also did not regulate -- it was the parties that did so themselves.
On how many cases Tokiso handled, its scope was way beyond the Labour Relations Act. It facilitated and did a lot relation building between parties. There was a practice in the commercial field for parties to go for private arbitration to circumvent and avoid the courts, and there was a history of that. The reason parties went to private arbitration was because they wanted to choose their own arbitrator.
On the issue of qualifications, the CCMA sometimes gets a raw deal because it was the bad awards that get wide publicity instead of the good ones; and there were exceptional, competent and committed CCMA commissioners, and they were in the majority. They were doing a great job because they handled close to 200 000 cases a year.
Southern African Catholic Bishops Conference (SACBC) submission
Adv Mike Pothier, Programme Manager, Southern African Catholic Bishops Conference Parliamentary Liaison Office (CPLO) , said that the office was tasked with liaising between the Church and Parliament/Government, commenting on issues of public policy, and making submissions on legislation. The CPLO welcomed the opportunity to comment on the National Minimum Wage Bill, as throughout its history the Catholic Church had upheld the ideal of a ‘just wage’ -- an amount sufficient for the worker’s own support and for that of his/her family, with proper provision made for old age and for emergencies. The National Minimum Wage Bill was clearly an attempt on the part of the South African state to do just that -- to ensure as far as possible that workers received a just, or fair, wage. In this respect, the Bill deserved to be supported in its overall aims.
Support for Specific Provisions
Clause 4(4): It was important that the Bill stipulates that the minimum wage cannot be waived, since pressure would no doubt be exerted by some employers to force workers to accept a lower wage.
Clause 5(1) & (2): The Office agrees that the calculation of the wage should exclude payments for such things as transport, tools, accommodation and the like, as well as payments in kind.
Clauses 6 & 7: It was appropriate that the minimum wage should be reviewed annually, and that this review should consider both the positive effects (alleviation of poverty/reduction of inequality) and the possible negative consequences (impact on job creation/capacity of small businesses to pay the wage).
Clause 9: The composition of the proposed National Minimum Wage Commission was balanced and appeared to be sufficiently independent.
Clause 15: Even though the minimum wage had been set at a very low level, there may be times when employers cannot afford to pay it. Businesses sometimes face crises or encounter cash-flow problems. It was fitting, therefore, that employers should be able to apply for exemptions. It was also fitting that an exemption should not be valid for more than one year.
It was often argued that the imposition of a minimum wage would result in job losses, and that such losses would particularly affect poor people and those who earn at the lowest point of the wage spectrum. This concern must be taken seriously. However, it must also be said that when the minimum wage was set as low as R20/hour, it seemed unlikely that it would have this effect on a large scale. Businesses which cannot survive in the long-term if they have to pay R20/hour may have more deep-seated problems than simply labour costs. A more complex problem was that the existence of a minimum wage may have a generally depressing effect on wages. It was easy to imagine employers who might have been prepared to pay R25/hour or R30/hour now deciding that there was no need to go above R20/hour. As had been observed, a minimum wage could easily become a maximum wage. Although clause 4(6) aimed to prevent employers from adjusting the wages of existing employees downwards in response to the legislation, there was nothing to stop employers from setting R20/hour as the wage for new employees. It was imperative that the National Minimum Wage Commission should monitor these aspects and report on them in its annual review.
Mr Moteka said that the EFF was in agreement with the SACBC, and did not see the need for rushing through the labour bills. If labour and business were not happy with the amendments made in the bills, in whose service would passing them be? For example, setting up the minimum wage meant that government was in the process of ensuring that no one would be earning below the poverty level. Government could also not declare that its own employees on the Expanded Public Works Programmes (EPWP) could survive on R11, and therefore the CPLO presentation was definitely on point.
The EFF would not want to change anything concerning the bargaining councils ,but how was government going to protect employees already earning above the minimum wage from being brought down to the minimum wage, because to date big companies were retrenching people, only to rehire them at the proposed minimum wage. R20 also was too low, and the aim was not to destroy businesses but to provide a minimum wage. Restricting the right to strike of workers was trampling on their labour rights because that meant they had no weapon to fight for fair labour practices. Who was being protected with the rush to pass all the labour bills before the Committee, if stakeholders were bemoaning the way the bills had been drafted?
Mr America said though the SACBC presentation was clear, the submission seemed to be silent on the inadequacy of the rate which had been determined. Nowhere in the submission had there been acknowledgement of sectors that would not be able to afford the rate, including small businesses in the townships. He agreed that there had to be a degree of transparency in the review of the minimum wage, and that Parliament through the Committee had to be involved in consenting to the said review. He agreed that the exclusion of the EPWP and Community Work Programme (CWP) workers was totally wrong, as it meant that government expected business to pay minimum wage whereas itself was not willing to pay the same wage. This had to be seriously looked at.
A few submissions had agreed partly with sectoral determination, and while the SACBC had reluctantly proposed that it could agree to the R20 minimum wage, if it was discovered to be inadequate, it would want that to be immediately reviewed. The bill had a provision for a review after 12 months if the rate was found to be inadequate, but how soon would the SACBC want a review if indeed a discovery had been made after implementation?
Adv Pothier said, as already stated in the SACBC presentation, section 15 of the proposed bill allowed for application for exemptions where businesses could not afford the minimum wage. However, he thought there had to be some onus from individual employers or sectors in the economy to come forward to state their case on why they believed they would be unable to afford the minimum wage. He cautioned against the assumption that R20 was too high a figure, but there had to be research done as to why employers would not be able to afford that so that the reasons could then be addressed accordingly.
The subtext within the labour legislation was an attempt to deal with the gross income inequalities in SA, as the Committee would know the difference between what a factory floor worker earned compared to the chief executive officer (CEO) of that same company. That difference was amongst the highest in the world, compared to Japan, Germany and other countries.
The review of the minimum wage was experimental and needed to be followed with really good research which the Committee would need to apply their mind to on an annual basis, to improve the legislation over time.
Possibly the Department of Labour (DoL) was better suited to respond to why government was allowed or exempted to pay just about half the rates in the first year of the EPWP, as it was illogical at face value and was reminiscent of private sector initiatives where there were some, like learnerships and on the job training. This then begged the question whether they were not also supposed to be allowed to pay R11 an hour, if government was allowed to do so?
As the SACBC had already said regarding an upward revision of the minimum wage, and how soon that would have to be after implementation, the SACBC would like to see the R20 per hour as a starting point. Certainly it would be irresponsible to say it had to go to R30 or more after 12 months, because there needed to be an empirical basis for such a type of adjustment. After 12 months, a review would certainly allow the Committee a better judgment, based on the effect of the rate, to decide to change it or keep it.
Security Association of South Africa (SASA)
Mr Costa Diavastos, Executive Committee Member, Security Association of South Africa (SASA), said he was representing two employer organisations from SASA -- SASA and the South African National Security Employers Association (SANSEA) which were registered with the DoL. Together, SASA members employed about 176 000 people in the private security sector. SASA was a voluntary organisation where member companies were required to adhere to a voluntary code of conduct in respect of employment conditions in the security sector. The Committee would probably be aware of the notoriety of the security sector’s rampant disregard for employment laws, and SASA expressly was distancing itself and its Members from those sector practises through the voluntary code of conduct which all its members signed.
There were 7 000 private security companies in SA, and the security industry provided half a million jobs in the economy. The security sector had added 150 000 new jobs in private security in the last five years. The sector was a primary source of youth employment in SA, and had made large investments in skills and training over a very long time. SASA had a long history of collective bargaining in the security sector, although there was no formal bargaining council yet. SASA had made significant self-determined increases in the last 10 years in the security sector.
An application for the registration of a bargaining council in the security sector was pending and being processed by the registrar of labour relations.
Though representivity by employers and trade unions in the security sector had been fairly low traditionally, SASA had engaged in collective bargaining through the formation of a collective bargaining forum which operated much like a council without the statutory recognition of a bargaining council. In the forum, representativity was determined, collective agreements were entered into which were then made into a consolidated set of proposals which was then submitted to the Employment Conditions Commission (ECC) as a joint submission of organised business and labour. The proposals had been accepted by the ECC since 1993 as a consensus view of what employment conditions and remuneration were to become in the private security industry, and generally the proposals had found their way into the Sectoral Determination 6: Private Security Sector.
The SASA submission included how it negotiated collective agreements to date. The particular regulated process had been in place since 2006 after the labour strike in the security sector of that year. He was particularly proud that the sector had been able to settle their disputes on behalf of employers and labour in the last decade since 2006 under that new bargaining structure. Moreover, advantages had been created on both sides to the extent that SASA currently believed that it had enough representativity to establish a bargaining council,thus their application.
The Chairperson interjected that though the background of SASA was important, it was best for Mr Diavastos to get to the content of his presentation.
Mr Diavastos said that over the last decade, SASA had managed to triple the basic remuneration of employees in the security sector, where currently there were two demarcations in employee pay structures -- urban and rural demarcations. SASA’s submission was around the application of the R20 minimum wage to the rural demarcation, where there were two subcategories of employment which earned below the R20 minimum wage. The minimum wage as per SASA was not the only determining factor in what a security officer earned, as the total cost to a company of security officers far exceeded what was envisaged as a monthly rate of earnings by the legislation before the Committee. However, that would not be immediately obvious if one looked only at the hourly rate and SASA’s submission was that that hourly rate did not represent all pay and remuneration for security officers in the private sector.
SASA’s submission was based on the affordability, the negative impact on the provision of security services, and increased levels of crime. It was concerned about increases in non-compliance in the private security sector, which was on the rise, job losses and business closures. SASA therefore was requesting the Committee to grant, for its rural demarcation, a transitional arrangement similar to that which had been enshrined in the bills for farm workers and domestic workers. Ultimately, SASA was asking for a more gradual implementation of the R20 minimum wage in rural demarcation areas although it was supportive of the R20 minimum wage as it had demonstrated through its conduct over many years. Through self determination SASA had been able to make great strides in raising employment standards in the private security sector but to date, and given all the movements in that sector, SASA anticipated that a massive negative impact would result in its rural demarcation through the implementation of effectively a 25% increase as a minimum wage all at once.
The sectoral determination for the private security sector had a number of benefits and allowances besides the basic wage, such as a statutory provident fund, compulsory annual bonuses and premium pay paid to employees on a wide array of line items. The overall pay for a security officer when correctly paid would be found to be much higher that what had been envisaged by the minimum wage Act. However, all the benefits and allowances -- some of which had been mentioned above -- had not been factored into the R20, which then resulted in the affordability concerns for the private security sector.
The collective bargaining agreements in the private security sector had been a product of robust bargaining which had resulted in trade-offs and concessions over the years that had brought the SASA sector to where it was to date, where security officer’s remuneration was no longer the lowest in the industry.
He said that the SASA membership’s ability to afford to pay wages was a function of what their customers were willing to pay for security services, so there was a direct correlation between what customers paid security employers and what the employers were able to pay security officers. In the discussions SASA members had initiated with customers around the need in rural areas to increase wages by 25%, this had been met by many of them telling them they then needed to downscale their service provision. Downscaling services ultimately meant reducing manpower deployment, which translated to job losses. In many instances, contemplation processes in terms of section 109 had already commenced in the private security sector.
Of the 7 000-plus private security companies in SA, fewer than 200 were compliant with all the employment conditions legislation in the private security sector, which meant only about 8% of companies in that sector were fully compliant with the prescripts of the current sectoral determination. Of the various forms of non-compliance taking places, there was outright breach of the sectoral determination, with atypical employment such as self-employed security officers, sub-contractors, labour brokers and learnerships. These atypical forms of employment were being used to essentially buck the system in the private security sector. SASA estimated that there were at least 100 000 people employed in the sector in those atypical forms of employment. That meant one thing only -- that those employees were being paid much less than what was legislated and what had been agreed through the collective bargaining forum.
The Committee would have heard before the meeting about non-compliance with the statutory private security sector provident fund (PSSPF), which was something SASA were grappling with as it was pervasive throughout the sector. If SASA and other associations were to degrade the levels of non-compliance even further in the private security sector, there was potential for an unhappy by-product to develop, which was the chance for the incidence of crime increasing because SASA customers would start to look for cheaper alternatives and use unscrupulous companies, which deployed the abovementioned atypical work in the private security sector. The levels of professionalism in actually providing crime prevention services would then be brought down. An unintended consequence was that the rural area security officers who currently earned a monthly premium would essentially start earning more than their urban demarcation counterparts if the 25% was effected. The private security industry had been lifting the minimum wage and reducing income inequality between the categories for many years.
SASA was also concerned about the treatment of sectoral determination in the proposed bills, as many of the benefits like the PSSPF, compulsory annual bonuses, premium pay and others were enshrined in the sectoral determination. Should there be a scenario where the sectoral determination ultimately lapsed after a period of time, all those employment benefits which had been implemented over the last decade would essentially fall away. All of that was relevant if SASA did not succeed in registering a bargaining council and even then, SASA would need to determine the pace at which the private security industry adapted to the progression of employment conditions.
Although SASA was aware that exemption regulations had not been published through the DoL roadshows, some issues had arisen which SASA felt were necessary to be brought to the Committee’s attention regarding the principles of the proposed exemptions. Criteria based on affordability and the manner in which the criteria were intended to be applied were not appropriate for the private security sector, because the sector was driven by customer behaviour in terms of purchasing decisions for security services.
Mr America said that he recalled in his previous employment that a lot of cases brought to the CCMA a few years ago had been on employment practices in the private security industry. Looking at the main agreement and current salary progression for security officers, he was asking himself what SASA had come to the Committee for, as the progression was above the minimum wage. He wanted to know what exactly the transitional arrangements SASA was requesting entailed. If there were 7 000 operators in the sector and only about 8% were legislatively compliant and under SASA affiliation, that meant the work of the CCMA would be increased in future, and if only that sector was so rampantly non-compliant, he shuddered to think about the resistance that inspectors would receive regarding enforcement in the other sectors, considering the submissions the Committee had already received.
Mr Moteka said a gap table would be important, and he hoped that the presentation which would be left with the Committee had included that because although his brief perusal of the presentation had shown some officers earning just above R5 000, there were security officers in SA who were earning R1 800-R2 200 per month, which was way below the proposed minimum wage. As a representative of registered and organised employers, what was SASA proposing should be done about the unorganised and exploited security officers, as that brought SASA into disrepute as an association?
How was SASA ensuring legislative compliance from its affiliate members? If R16-plus was the current sectoral determined minimum wage, he did not see the difference in the movement from R16 to R20. He understood it would be difficult for those that were still paying people R8 to R10 per hour.
About 4 000 workers were employed by a labour broker in the Johannesburg City Council, where the council paid the broker good money to only find out that he paid the workers only 15% of what he received from the council. Were SASA and its members ready to disclose their audited financials as part of the arrangement for their request to have a transitional arrangement in phasing in the proposed minimum wage granted?
Mr L Khoarai (ANC) wanted SASA’s comment on the under-equipping of security officers in the rural areas, as they were guarding only with torches and sjamboks to protect and prevent crime. As an employer representative, what was SASA’s view on the interests of the employees the member’s employed to protect their assets?
What was SASA’s view on the exploitation of domestic workers in some farm communities?
Mr Diavastos replied that possibly the massive evolution of the private security sector in the last decade, as had been noted by Mr America, had made the sector victims of its own progression in some sense, since it had taken minimum wages and tripled them, and had introduced a whole host of additional benefits and allowances and protection for workers in the private security sector. What had then developed as an unwanted by-product of all this had been the emergence of a shadow security industry that was non-compliant with the laws and conditions put in place through the consultative, self determining process which had been undertaken by the formal and regulated parts of the sector.
It was true, therefore, that there were security officers in the sector earning a fraction of the presented remuneration, but that did not change the fact that the presented remuneration was what those underpaid officers were supposed to be earning.
The issue of compliance and enforcement was not one the industry could deal with alone but required help and support from regulatory bodies, lawmakers and the authorities. SASA and its partners were constantly canvassing the regulators on compliance in the private security industry. Moreover SASA actively advocated customers to buy security services only from the registered and compliant companies.
SASA was also of the view that seeing that it had arrived at a point where a bargaining council was possible in the sector, regulation would improve once the council was established, as it would then be able to set up its own enforcement. Therefore it was critical to the regulation of the industry to have that bargaining council up and running and for regulators to support that structure to ensure that there was no security officer earning R1 500 a month, as that was unpalatable. However, the fact that that existed was also driven by consumer behaviour. People who bought security bought it regardless of the fact that they were aware or unaware that the company they were buying from was non-compliant.
As the organised part of the industry, it was not in SASA’s interest to allow abuses to prevail over what had been agreed to be the scenario in the sector. That also spoke to Mr Khoarai’s sentiment, that often employees were deployed without the proper tools, insufficient protection and insufficient amenities, and those were the symptoms of using non-compliant security companies instead of those that were compliant and had a level of professionalism, which of course came at a cost. Unfortunately, organised industry was being slowly defeated in terms of what customers wanted to pay for. However; higher levels of compliance would result in higher levels of professionalism and therefore better conditions of employment in terms of protection and amenities for security officers.
Regarding the issue of the City Council of Johannesburg security provider, Mr Diavastos replied that the practise was inherently non-compliant and it should not be accepted by any buyer of security services.
SASA imposed a code of conduct on its affiliate members, and also conducted an annual audit of its members in terms of their compliance with statutes. The downside, however, was that SASA’s affiliation was voluntary and companies could simply exit if they did not want to be scrutinised.
The increase from R16, 41 in the rural demarcation to R20 was approximately a 25% increase, and what SASA was trying to avoid was a situation where that increase would have to be offset by a reduction in the number of services security companies provided. For example, a customer who paid R100 000 for security in March 2018 would want to pay the same amount for security even after the promulgation of the bills before the Committee, and the only way to contain costs for SASA affiliates would be downsizing the number of services they provided. This meant employing fewer people and cutting jobs, and that trend had already started with some of SASA’s affiliates in the rural demarcation. The Committee had to note that that demarcation spoke directly to the mining industry, large farming operations and heavy industry in many situations in what would be categorised as the rural demarcation.
The Chairperson wanted to know what steps SASA had taken, and how regularly it checked that its affiliates were compliant with legislation, because if only less than 10% were compliant, what would then happen when the minimum wage law was implemented? She asked that Mr Diavastos submit that response in writing.
Mr Moteka also asked for the database of SASA membership, so that it could be verified.
The meeting was adjourned
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