The National Employers' Association of South Africa (NEASA) was fundamentally opposed to extending bargaining council collective agreements and making them binding on non-parties. The cost of labour as a percentage of turnover for big business could be 5% or lower. For a small business it could be as high as 50-60% therefore wage increases for a big business could be as low as 1%. Secondly the cost of doing business in the economic hubs of SA was completely different to doing business in the small towns within the country. The Small, Medium and Micro-sized Enterprises (SMMEs) did not enjoy the benefits of economies of scale and could not negotiate better prices and big business were the price givers. Big business passed on increased costs for materials and wages by increasing prices but small business would have to pay twice - paying more for materials and a higher wage due to big business increasing wages. NEASA believed that was wrong.
SAFTU thought the bills were the starting point for government intervention but the fundamental question was what was being attempted. The answer to that question was that government was in the process of transforming South African society - changing the balance of forces which had been stacked against the most marginalised which was the black working class. The process was that of redress and establishing an equilibrium to be able to say there was equity and a movement towards equality in SA.
SAFTU spoke to economic justices such as poverty which had increased from 53.2% in 2011 to 55.5% of the population by 2015. The appalling levels of poverty were a result of unacceptable levels of unemployment in the SA economy. In the last quarter of 2016/17, unemployment sat at 9.2 million out of 55 million South Africans or 36.6% of SA’s population. Having listened to NEASA, the perception was that the trickle-down approach would eventually benefit workers which created a problem because SA workers had been waiting for benefits for the past 24 years and they had not reached the working class yet. The richer becoming richer, the poorer becoming worse, with the unemployed having fewer prospects. Youth unemployment has been labelled a ticking time bomb. SAFTU had been monitoring political events in the recent two weeks and one had to recognise that there was a growing anger from the youth that they had been betrayed by their elders; an anger which was at a boiling point such that yesterday's heroes were currently being labelled sell-outs and betrayers of the dreams of South Africans.
SAFTU was of the view that the proposed minimum wage was an indictment on those that called themselves liberators and that indictment was exhibited by the median wage indicator in 2014 which was at R3400. That meant 50% of the SA work force had been earning below R3400 then already. That had been happening whilst beautiful speeches would be made on Freedom Day on 27 April 2018 about the freedom which had been attained. That freedom was spitting in the face of the 50% of those earning below that median wage. The minimum wage proposal was that workers had to celebrate that there was a chance to increase the minimum wage to R3500 if one was lucky to be working 40 hours a week. If that minimum wage proposal was not addressed then government could not speak about a better life for all. The reference to radical economic transformation (RET) is insulting in a country with such low levels of pay.
SAFTU was opposed to the amendment requiring unions conduct secret balloting of members before going on strike as there was no union in SA with the capacity, logistics and resources to commission secret balloting anywhere.
AgriSA said that 80% of farmers in SA were SMMEs and they had alerted AgriSA that the proposed guaranteed four hour working day could cause challenges for those farmers in instances where it would be impossible to work due to weather conditions but would be required to pay seasonal workers by law anyway.
AgriSA proposed that the terms and conditions of the sectoral determination be retained.
The Chairperson had to intervene during discussion when SAFTU and the EFF had taken exception to the statements by NEASA said that nowhere else on the continent where there bargaining councils, and the amendments to the Labour Relations Act would kill the remaining councils.
Members commented that SMMEs could easily be put out of business by big business and big trade unions agreeing to a much higher wage than sustainable which would then kill SMMEs. It seemed as if small black businesses in the townships would have to avoid legislation altogether and self govern. They asked if NEASA believed that a Minister would be unilaterally arbitrary in exercising the provisions? SAFTU wanted the Committee to reject the labour bills now although the minimum wage had been long in the pipeline - did SAFTU have a problem only now? It seemed that AgriSA was not prepared to increase and wanted to keep the sectoral determination. Could it clarify that? AgriSA was asking for a three-year phase in of the NMW when there were non-compliant farmers to the agricultural sectoral determination already. How much longer was required to get those non-compliant farmers to tow the line?
Members also asked:
- NEASA to comment on the "Minister ‘must’ (rather than ‘may’) extend the collective agreement" which meant that there were those in the bargaining council that could force the Minister to do things.
- What was NEASA's view of employers refusing to participate in a bargaining council?
- What was NEASA proposing as the status quo could not remain?
- Why would SAFTU not want transparency about balloting?
- If SAFTU had a common understanding about the minimum wage separate from a living wage?
- Was SAFTU aware the Bill established a commission to advise the Minister on an annual review of NMW?
- What was SAFTU's advice going forward as the EFF believed that no family could survive on R20 an hour?
- How a minimum wage would increase employment if everyone was saying it would decrease employment?
- Was SAFTU aware there were more people on welfare than there were employed persons in the country? - - Did AgriSA require the Committee to legislate an easier way to punish non-compliance to the law?
- Did AgriSA sign the code of practice ensuring no employer retrenches employees when the NMW starts?
BUSA said the code would bring a fundamental body of guidance to both unions and employers on how to conduct themselves during collective bargaining and industrial action as well picketing action. BUSA understood that the R20/hour NMW was not an economically efficient NMW but the research which fed into the NEDLAC process had indicated that to keep current jobs, the level of a minimum wage had to be set low and that research had even set the level at half that amount. The R20/hour was a level that recognised that it was not efficient to stay at R20/hour but wage inequality had to be addressed together with addressing those earning below what was reasonable and fair in terms of tendering a service.
Members commented that the trade union sector had relented to some of the provisions on picketing and strike action but it had just heard that morning that the sector was unhappy about the provisions as captured in the LRA Amendment Bill. Did that mean the bargaining would then fall through? It had not seen the compulsory default picketing rules which BUSA had spoken to therefore it was uncertain about what these would be.
Members also asked:
- Who would determine when a strike was functional or not and how would that be done?
- Did BUSA think the NMW could dampen collective bargaining where the business sentiment would be there was a NMW and that was where SMMEs would end and go no further?
- Could BUSA comment on the Expanded Public Works Programme why government could not afford to pay EPPW workers the NMW when SMMEs would be required to do that.
- How would BUSA stop Steel and Engineering Industries Federation of Southern Africa (SEIFSA) and others from retrenching workers and rehiring them only to pay them the NMW for the same work those workers had been doing for R80/hour before the NMW was implemented.
- Did BUSA have the capacity to monitor compliance with NEDLAC resolutions by its members?
The Department then presented its responses to the public submissions made during the meeting.
The Chairperson read a letter from Dr Gilad Isaacs from Wits University addressed to the Chairperson. The letter read that AgriSA had referenced the NMW research initiative based at Wits saying the initiative had projected job losses of approximately 205 000 and 897 000 due to implementation of a NMW. Dr Isaacs as coordinator of the initiative clarified that the numbers were incorrect. International evidence and consensus and the work of the initiative had shown very modest impacts on employment with positive impacts on wages, poverty, and inequality and the economy generally. Dire projections of job losses flew in the face of local and international evidence. She said she was noting the letter but not discussing it.
The Chairperson noted that although the Committee had finished oral submissions and closed the period on the 16 March 2018, the Committee had received late submissions including that of the South African Federation of Trade Unions (SAFTU) which was the second biggest labour union. Notably because they had no seat in the National Economic Development and Labour Council (NEDLAC), the Committee had decided to allow SAFTU to present together with the other associations that had submitted late.
Mr L Mashile (ANC) said the ANC supported the decision to re-open oral submissions for inclusivity. However, the ANC preferred compliance with submission deadlines as those were set to the programming of parliamentary work
Ms L Theko (ANC) emphasized that deadlines had to be kept by all as the advertisement had been circulated.
Mr P Moteka (EFF) said the EFF had from the beginning asked that the submission period be extended to allow other federations and worker associations to submit. Therefore the Chairperson should apologise to those whose requests for extension had been rejected although the EFF had supported the extension.
Mr M Bagraim (DA) agreed, saying the DA had also asked that SAFTU be invited to make an oral submission as it was the second biggest federation. It had been the ANC that had not wanted SAFTU to present. Probably it should have been advertised that oral submissions had been extended for others to have come before Parliament to speak on the agenda. He was not sure why the ANC and the Chairperson repeatedly referred to deadlines. He recalled only the 1 May 2018 deadline for passing the Bill which had been missed thankfully; so the Committee had time.
Mr D America (DA) said that the Committee had received the Department of Labour (DoL) responses to the submissions including that of SAFTU and others which would be presented before the Committee. He wanted to know then why the Committee had convened earlier.
Mr W Madisha (COPE) proposed that the meeting had to begin as he was happy that SAFTU and others had been afforded an opportunity to come before Parliament.
The Chairperson replied about the submission deadline and the request made by the EFF to extend it. The EFF had requested the Committee extend the deadline for another two full weeks. She had declined that request because all parties in the Committee had agreed to the process for submissions as well as the deadline which would have been three weeks for submissions through national advertisements in newspapers and elsewhere. There had been agreement on no extensions and the Committee had not engaged individual organisations to invite them to come and submit as the advertisements had been clear. The only reason the Chairperson had opened the window slightly was that SAFTU was a recognised federation with a loud voice and membership numbers but it had simply missed the deadline.
National Employers Association of South Africa (NEASA) submission
Mr Gerhard Papenfus, NEASA Chief Executive, said NEASA had submitted on time but it appreciated the opportunity to present to the Committee.
NEASA was fundamentally opposed to extending bargaining council collective agreements and making them binding on non-parties as proposed in Section 32(3)(b) and (c) of the Labour Relations Amendment Bill. It enables big business to extend their agreements to small businesses.
He said the cost of labour as a percentage of turnover for big business could be 5% or lower. For a small business it could be as high as 50-60%. Secondly the cost of doing business in the economic hubs of SA was completely different to doing business in the small towns within the country. The Small, Medium and Micro-sized Enterprises (SMMEs) did not enjoy the benefits of economies of scale and could not negotiate better prices and big business were the price givers. Big business passed on increased costs for materials and wages by increasing prices but small business would have to pay twice - paying more for materials and a higher wage due to big business increasing wages. NEASA believed that was wrong.
The Bill also allows the Minister to extend a fund agreement to an industry based on a request from a single party to the council; essentially an employer body or a union representing 1% interest in the industry. The proposal had come about because of what was currently happening in the bargaining councils as there were certain employers which no longer wanted to contribute to the fund of the council. NEASA believed the proposed amendment was being introduced to circumvent that and force fund agreements upon council. NEASA said this was unconstitutional.
Mr Bagraim said the amendments essentially meant that the Minister of Labour would run labour relations through regulation rather than legislation - as NEASA had just said. NEASA was warning that SMMEs could easily be put out of business by big business and big trade unions agreeing to a much higher wage than sustainable which would then kill SMMEs. It also seemed that small black businesses in the townships would have to avoid the legislation altogether and self govern.
He asked NEASA to comment on the drafting that the Minister ‘must’ (rather than ‘may’) extend the collective agreement and listen to big business. He said this meant that there were those in the bargaining council that could force the Minister to do things. The constitutionality challenges of the proposals would produce good work for lawyers and would push their minimum wages quite high.
Mr Moteka said that to date workers were being exploited and were being paid below a living wage. He asked what NEASA was proposing to change the status quo because it could not remain?
Mr Mashile said the NEASA submission was exaggerating certain provisions of the Bill. Did NEASA think that a Minister would be so unilaterally arbitrary in exercising the Bill's provisions once it became law, without considering protection of workers’ rights? What was NEASA's view of employers refusing to participate in a bargaining council without any prohibition to do so?
On constitutional rights, Mr Mashile’s understanding was that there were no unfettered rights as all rights could be limited when there was a need for that to occur.
What was NEASA's understanding of the extension of fund agreements as the Minister had to publicize a notice in the government gazette for public comment? What was NEASA's understanding on the provision for recourse to the Labour Court when employers where not satisfied? Were those not safeguards against arbitrary decisions?
Mr America noted that NEASA objected to the deletion of section 32(6)(b) of the Labour Relations Act (LRA) as that would allow parties with low representativity to prevent agreements from being implemented. He believed it was because of that possibility that the Minister would be empowered to extend agreements to allow benefit funds and councils to operate. NEASA believed that the Bill was unconstitutional as parties which were not party to a particular bargaining council would be negatively impacted. However, there was a proviso in the LRA that non-parties were allowed to apply for exemptions. Moreover, there was legal recourse if employers felt that the extension of an agreement would impact negatively upon them.
Mr Papenfus replied that by leaving out certain fundamental provisions of the LRA in the LRA Amendment Bill, the Minister could indeed "make laws" without parties negotiating those laws as Mr Bagraim had intimated. A reference made to some bargaining councils was that they were price fixing cartels, which was true and which was why they had been excluded from the Competition Act, because if bargaining councils were included in the Competition Act, that would have spelt trouble. In one bargaining council, 12% of big business made laws that affected the remaining 88% which were SMMEs. For example, if one had a business employing 1000 people across SA and that business made an arrangement with its employees, the business could approach DoL to say it wanted to extend the agreement to 1000 other SMME businesses employing 1 employee, and the Minister would have to do that. That one business could effectively destroy his competition in that way. That was why in the last decade the Metal and Engineering Industries Bargaining Council (MEIBC) had lost 100 000 jobs. The industry no longer employed people as the manufacturers currently imported products. It was unfeasible to manufacture competitively in the current environment.
Mr Papenfus said Mr Bagraim was indeed correct that small businesses would go underground and operate under the radar without registration because alternatively when a bargaining council official walked into an SMME that potentially spelt the end of the SMME if the SMME was forced to pay uncompetitive wages.
There had been a court judgement that said all decisions by the Minister of Labour were subject to administrative justice but these proposals would remove administrative justice. NEASA would no longer be able to challenge the Minister when she made a decision.
Mr Papenfus said although NEASA's position sounded insensitive, it was not meant to be like that. However, if a wage was forced upon an employer which firstly the employer did not want to pay and secondly he could not afford to pay, there would be no payment. That was fact, if someone knocked on someone else’s door and demanded a wage; and the owner of the business said he would not be paying the demanded wage, the knocker would not be employed and no employer could be forced to employ someone they could not afford to pay. Therefore if Parliament made wages for whatever reason, on a level that employers could not afford that would lead to unemployment, which NEASA had already observed was happening. Therefore Parliament had to be careful that the labour laws would not worsen the situation of employees. There already was high unemployment in SA and the first objective had to be to get people back to work as there were a generation of parents and their children all not employed and not learning any skills as employers were unable to pay a wage, manufacture a product and then sell it at a competitive price. The moment prices went out of the competitive range, employers generally released all the employees. He had evidence were manufacturing factories employed in the hundreds previously; but currently were having no more than 20 staff members and were importing and had become retailers.
Whether NEASA believed that a Minister could be unilaterally arbitrary, what the amendment to the LRA was proposing was for the Minister to no longer seek input from employers, as that had been written out by the proposed amendment. The amendment would prevent employers and NEASA from going to court to stop the Minister from extending collective agreements. It also could happen that an employer body, employing as a big business, enters into an agreement with a trade union representing 1% of employees and that then would get extended to everyone; and an unemployed person would by default be excluded forever from ever entering the job market.
All businesses were required to register with a bargaining council as participation was through employer bodies and workers through their unions. However; participation could not be coerced but registration in compliance with that bargaining council's provisions could be compelled upon a business.
The amendment completely took away the constitutional rights of employers because if the Minister said one party had agreed with someone else, who was a majority party there needed to be no further negotiations. Indeed constitutional rights could be limited but that would be an extreme situation where the Constitutional Court would have to be convinced of that.
The purpose of the publication of the notice in the Government Gazette is to invite comment. NEASA and other employer bodies would study the documentation in the Government Gazette and would approach the Minister and advise that the Minister cannot extend on particular grounds. If the Minister then extended notwithstanding what she was being told NEASA, then NEASA would litigate which it had done so successfully in the past. If the LRA Amendment Bill was enacted, employer bodies would no longer be able to litigate.
Mr Papenfus said it was not parties with low representativity that were blocking agreements being extended but parties with almost zero representativity which would now, with other parties on the other side, extend agreements. If the parties were a majority in terms of union and employer body, agreements could be extended and no one could do anything about that. NEASA's problem was where minorities extended their will to the majority in order to push the majority out of business.
Mr Moteka was dissatisfied with the response. The status quo was employers lived luxuriously but daily complained about the insulting wages they were giving their employees, some of whom could not even afford school fees and build a house. He wanted to know if NEASA wanted to keep the status quo because the reason behind the LRA amendment and the national minimum wage was to change the status quo unless NEASA saw no problem to date with it.
Mr Mashile said that as much as he agreed on the need for employment, he disagreed with employment that would essentially enslave those employed, to work for slave wages. That balance had to be understood because ordinarily employers would want to pay as little as possible for services rendered by employees. He recommended that NEASA had to look at the LRA amendment as not a standalone piece of law such that it would react the way it was doing and make far reaching decision excluding regulations that would be produced to give effect and explain some of the provisions of the amendment.
Mr Papenfus said the discussion unfortunately was not about wages but an amendment whose constitutionality was questionable. 90% of the work force in the country was employed by SMMEs and big business employed only 4% of the work force and if one were to drive through the small towns of SA one would find SMME owners with bonded houses and he had stories of SMME owners driving around on motorbikes as they had given up their cars. He was not talking about the 4% employed by big business but the SMME owners who were struggling to pay wages and not able to pay themselves. The perception that those small business owners live luxuriously was wrong because those earning millions were not small business owners and the notion that small business owners did not want to pay fair wages was also untrue. He strongly objected to the perception that NEASA wanted to pay slave wages, as that was a sentiment of people that had never employed anyone in their lives. He dared government to root out small business and it would see what would happen
Currently the state was carrying the burden of unemployment which as it was increasing also was eroding the tax base of the country. If it were to happen that someday SMMEs would close shop then all the bargaining councils in SA would have to close because currently on the continent there were no bargaining councils.
Mr Moteka interjected raising a point of order that it was offensive for Mr Papenfus to say that Mr Moteka’s opinion was because he had never employed anyone in his life. He asked that Mr Papenfus withdraw that statement
The Chairperson said that although all at the meeting were allowed to ventilate their opinions and feelings that had to be done without attacking each other. She asked Mr Papenfus to withdraw the statement he made towards Mr Moteka.
Mr Papenfus withdrew the statement.
Mr Zwelinzima Vavi, SAFTU General Secretary, intervened that the statement from Mr Papenfus had been offensive and racist.
The Chairperson intervened that Mr Vavi would have his opportunity to present to the Committee and asked that he refrain from engaging on the matter.
Mr Vavi added that Mr Papenfus had also intimated offensively so that in Africa there were no bargaining councils which was a very loaded and racist statement as well. That was factually incorrect and typically prejudicial with the intention to insult himself as an African and he took exception to that.
The Chairperson noted Mr Vavi’s inputs and the inaccuracy of the statement from Mr Papenfus. She asked him to withdraw that statement and to refrain from making derogatory statements.
Mr Papenfus said nothing he had said had been meant to be racist as South Africa was part of Africa as he was an African as well and there were no bargaining councils in Africa.
The Chairperson interjected that it was inaccurate to say such a thing and cautioned Mr Papenfus to refrain from saying that.
Mr Papenfus withdrew the statement unconditionally. He pointed out that the statement that employers wanted to employ slaves and pay slave wages was unfair.
The Chairperson requested that the proceedings proceed as Mr Moteka had been given an opportunity to raise his concerns and she would not allow him to speak any further as she did not want a back and forth discussion between Mr Moteka and Mr Papenfus. She asked Mr Papenfus to finish his replies.
Mr Moteka asked to be allowed to respond to what he termed an insult.
The Chairperson refused noting she had requested Mr Papenfus to withdraw his statement which he had duly done.
Mr Moteka interjected that it was attitudes such as Mr Papenfus was exhibiting that made employment conditions worse in the factories of SA. If Mr Papenfus could not respect the leadership of the workers how would other employers deal with leadership?
The Chairperson reprimanded Mr Moteka saying the point had been taken and she requested Mr Papenfus to finish his response.
Mr Papenfus said about the regulations that if the ‘override’ provision of the LRA was removed by the Amendment Bill, there could be no regulations as there would be no provision to regulate.
The Chairperson said that there had been several other processes dealing with the three bills including NEDLAC and the DoL’s process but the parliamentary process was different in that even if a representative body had submitted to both those processes that body would have had to submit and present to Parliament as well hence the oral submissions which were underway.
Mr Zwelinzima Vavi, SAFTU General Secretary, said SAFTU was grateful to be allowed to present to the Committee as it was a new player in the trade union sector, as well as to the Members that had insisted that it be allowed.
SAFTU thought the bills were the starting point of the government intervention and the fundamental question was what was being attempted; what the context of the intervention was; what the politics were and ideological pinnings of what was being attempted. He said answering that question was that government was in the process of transforming SA society; changing the balance of forces which had been stacked against the most marginalised which was the black working class. The process was that of redress and establishing equilibrium to be able to say in SA there was equity and a movement towards equality.
Mr Vavi said that the SAFTU submission spoke to economic injustices such as poverty which in 2015 afflicted 55.5% of the SA population of SA which had increased from 53.2% in 2011. The appalling levels of that poverty were a result of the unacceptable levels of unemployment in the SA economy. In the last quarter of 2016/17, unemployment sat at 9.2 million people of the 55 million South Africans or 36.6%.
With such endowments in minerals, human resource capacity and capability and arable land, some wanted to believe that such unemployment numbers were because employers were not allowed to pay below the current status quo minimum. That was where opposing ideologies needed to be unpacked as there were two prevailing ones. Others within society believed that the crises of poverty, unemployment and inequality could be resolved only through intervention of the state to enable an environment where prosperity of businesses was guaranteed and growth of the economy would create employment opportunities – this was an ideology economists referred to as the ‘trickle down approach’. The opposing ideology accepted that whilst SA was a capitalist society where 70-80% of the employed were in the private sector; where the same margin spoke to ownership of property; but the belief then was that the state had to play a more meaningful role than just regulating businesses and the trade environment as the state had to actively participate in the economy, intervene to ensure the spirit of the Constitution which promised equity was realised – which would not happen organically out of the whims of the private sector: that growth had to happen through redistribution of wealth and opportunities and that the state ensure that wealth creation would not be on the back of deepening the exploitation of the people.
Having listened to NEASA, the perception was that the trickle-down approach would eventually benefit workers which created a problem because workers and SA had been waiting for benefits for the past 24 years and they had not reached the working class yet. The richer becoming richer, the poorer becoming worse, and the unemployed were having fewer prospects.
Youth unemployment had been labelled as a ticking time bomb and SAFTU, which had been monitoring political events in the recent two weeks, had to recognise that there was a growing anger from the youth that they had been betrayed by their elders; an anger which was at a boiling point such that yesterdays heroes were currently being labelled sell-outs and betrayers of the dreams of South Africans. Mr Vavi said that 15 years ago he noted that South Africa’s capitals were surrounded by rings of fire as SA was the capital of demonstrations and police records could attest to that as they stated that annually there were 13-14 000 demonstrations about the lack of service delivery. At the back of that were the statistics which were routinely referenced without attaching faces and the warm bodies that made up the statistics.
The crux of his submission was that SA was two countries where one part lived in opulence, dying of disease of excess whereas the other part, which was the majority, were dying from diseases associated with poverty. He pleaded that the Committee not decide on anything that would entrench the status quo of two countries in one.
SAFTU was of the view that the proposed minimum wages were an indictment on those that called themselves liberators and that indictment was exhibited by the median wage indicator in 2014 which had said that wage was R3 400 which meant 50% of the SA work force had been earning below R3400 then already. That had been happening whilst beautiful speeches would be made on Freedom Day on 27 April 2018 about freedom which had been attained by a section of SA society, which was spitting in the face of the 50% of those earning below that median wage. The proposal to date was that workers had to celebrate the fact that there was a chance to increase the median wage to R3500 if one was lucky to be working 40 hours a week. If that was not addressed then government could not speak about a better life for all nor could workers be insulted by reference to radical economic transformation (RET) in a country with such low levels of pay.
On the LRA amendments and limitation of rights, he said the reality was that the trade union movement had been weakened over time such that it only represented 24% of the working population. SAFTU was opposed to the proposed amendments seeing they would undermine the right to strike.
SAFTU was opposed to the balloting amendment as there was no union in SA with the capacity, logistics and resources to commission secret balloting anywhere.
Mr Vavi said all the amendments were a government response to the Marikana massacre of 2011, the fact that the workers at LonMin had gone on a five month strike demanding a minimum wage of R12 500. If Parliament endorsed these bills, it was making it impossible for those workers to ever have the possibility to take up the battle against low pay. He reiterated that the Committee could not subject the marginalised to low wages because they lacked a voice; instead it had to ensure that the ‘better life’ promise would benefit all and not some in the country.
Mr Mashile wanted clarity on why Mr Vavi wanted the Committee to reject the labour bills it was processing when it was known that the minimum wage had been long in the pipeline. Did SAFTU have a problem with them only now?
Did SAFTU prefer for the bills to be delayed or for them to be implemented immediately? That would mean the 50% of workers currently underpaid as per the SAFTU submission would prefer to wait some more? Was there a common understanding about the minimum wage separate from a living wage?
Why would SAFTU not want transparency regarding balloting? Was the federation aware that the Bill proposed that there be a commission to advise the Minister on a review of the minimum wage annually?
Mr Moteka noted SAFTU’s comment that each Committee member had to decide whether they wanted to perpetuate the status quo or not. The EFF had long maintained that the bills in their current form had to be returned to NEDLAC to be redrafted as they proposed no fundamental changes to the status quo. What was SAFTU’s advice going forward on the bills as the EFF believed that no family could survive on R20 an hour?
Mr Bagraim asked what Mr Vavi meant in saying the first 24 years of democracy had worsened employment relations in SA. In what way did he think a minimum wage would not increase casualisation of employment and the use of labour brokers currently taking place as per SAFTU’s submission? How would the minimum wage increase employment when all were saying it would decrease employment? Was SAFTU aware there were more people on state welfare than there were employed persons in the country? Could SAFTU comment that? He agreed with SAFTU on some sort of basic income grant because when someone was attempting to look for a job they could not get to an interview decently dressed to make a good impression.
Was SAFTU not undermining its own sentiment when it said the biggest cause of poverty was unemployment, by demanding that the minimum wage had to be set at R12 500?
Mr Bagraim was shocked to learn that the expanded unemployment rate for youth unemployment had become a staggering 63.8%, meaning almost two out of every three young persons was unemployed. SAFTU had a voice which he would have liked to engage but would not be able to spoke to Mr America’s earlier point about whether the meeting was simply a compliance exercise and why there had been a need to meet when all the submissions and DoL responses had been circulated via email to the Committee.
The Chairperson said there were other members in the Committee and it was only fair to allow everyone to engage SAFTU and carte blanche could not be given selectively or the meeting would not conclude.
Mr X Ngwezi (IFP) said he agreed with SAFTU’s position but he wanted clarity on whether indeed the federation preferred the bills to be scrapped entirely, because the damage in the workplaces would continue and not await Parliament.
Mr Madisha agreed that workers no longer joined unions in SA because employers no longer backed unions. He wanted SAFTU’s input on that seeing that indeed workers also could not say anything about increases as they had no representation. He asked SAFTU to comment on the fact that the ratio of 40% unemployment rate versus 60% employed spoke to workers from outside the country in the mining sector, which settled for low wages out of fear. Additionally the unemployed who casualized themselves were people that lived on tip wages such as waiters at restaurants – had SAFTU attended to that sector of workers?
He agreed with SAFTU’s proposals and wanted to know why SAFTU was not allowed to participate in NEDLAC?
Ms Theko said the intention of the National Minimum Wage Bill (NMW) was to bridge the gap between those that were receiving low wages and those adequately salaried. It had been a necessity to have a base from which to start. What was SAFTU’s response about the need to have base from which to start?
She took it from the fact that SAFTU only disagreed with four provisions in the NMW Bill, that in principle the federation agreed but seemingly disagreed with the Bill because it was being proposed by the ANC. At least 6 million people would benefit from the introduction of a NMW and she wanted to know from SAFTU whether its position was that those people had to be refused those benefits, if SAFTU wanted the bills scrapped altogether. Did SAFTU prefer that a base not be established at all; because inequality had to be addressed and the bills were intervening to do just that?
Mr America was disappointed in how SAFTU had talked to only the wage gap regarding inequality and how that had been framed. He did not get how there existed a dialectical link between inequality, unemployment and SAFTU’s demand of a living wage of R12 500 and how that would deal with that because that living wage would cause serious unemployment.
SAFTU had not proposed an alternative time period for the conciliation process to be concluded by the Commission for Conciliation, Arbitration and Mediation (CCMA) but was rejecting the amendment to extend the time for that process to occur.
The DA had proposed that young people who were out of employment for two years and had left school had to be granted an exemption certificate to enter the labour market for a limited period of time and navigate the space as an intervention into youth unemployment. What was SAFTUs view that?
Mr Vavi replied that SAFTU supported the principle of a NMW and that principle was agreed to within the Congress of South African Trade Unions (COSATU) only after the Marikana massacre and in response to the workers of De Doorns who without trade unions had taken up the battle to demand R115 per day instead of the R67 sectoral determination. SAFTU was objecting to the levels proposed as they entrenched poverty, inequality and the apartheid wage structure. SAFTU was saying the NMW Bill had to be returned to NEDLAC and had to be engaged on by all including those that were currently excluded, which was SAFTU. SAFTU was a federation of marginalised trade unions representing farm workers, commercial, catering and hotel workers where the level of penetration of unions remained very low, all of which were start-up and small unions. The DoL had already in 2016 February recorded that there were 182 registered labour unions in SA which exhibited the fragmentation of trade unions in SA.
SAFTU was being excluded from NEDLAC and the Committee would recall during apartheid that government had developed a special law for Mr Robert Sobukwe called the Sobukwe clause to ensure that Mr Sobukwe could be incarcerated indefinitely. NEDLAC had in January 2017 passed hurriedly a special clause which read that any federation that wanted to apply for membership in NEDLAC had to have been in existence for more than two years and produce audited statements for that period. As SAFTU would be finishing a year in April 2018 that then excluded SAFTU from NEDLAC until April 2019. The Committee had to recall that the reason why Marikana occurred was that miners at Lonmin having been betrayed by their traditional union had felt unrepresented in the bargaining structures and had found solutions outside the rules of the tent. For factional reasons almost 800 000 workers were being excluded from NEDLAC, where those excluding SAFTU were waiting for a bomb to go off. The first bomb would go off when SAFTU would be taking to the streets on the 25 April on a general strike and SAFTU was pleading with the Committee to engage NEDLAC; that there was nothing to fear from a federation proclaiming to represent the genuine interests of workers and wanting to practise the principle of independence not apolitically by a democratic worker controlled and campaigning union movement. The bills had to be returned to NEDLAC on condition that no one would be locked outside.
In its introduction SAFTU had asked the Committee to reject the status quo; it could not say it was fundamentally restructuring power relations in society in favour of those that had been at the receiving end of apartheid colonial capitalism mismatch by playing on the periphery; interventions which would overall keep the status quo of low wages and poverty. SAFTU was asking Parliament to dismantle the apartheid wage structure and to replace it with the concept which Mr Vavi had thought had been adopted y the ANC in 2007: which was decent work for all people of SA. There was no decency in R20 and R11 per hour and SAFTU had proposed the R12 500 base because that standard had become an emotional issue for South African workers as that had been what had led to the government to organise mortuaries and 2000 live rounds of ammunitions so that 34 mineworkers could be mercilessly and brutally killed with their hands up pleading for their lives at Marikana.
In 2014 the University of Cape Town (UCT) had said for a worker that supported five dependents to survive that worker would need R5400 salary a month. The figures proposed now were way below that number and were entrenching poverty and glorifying it with the concept of a half loaf of bread was better than nothing, and that 6 million workers would be liberated. They would be liberated from what to go to what? The R3500 was not even in the NMW Bill because what was there was R20 per hour; moreover R3500 would only be reached if a worker worked everyday 40 hours a week, barring that, a worker would earn less. Fortunately the employers through Business Unity SA (BUSA) had already stated publicly that with the passing of the NMW they would simply decrease hours of work, so that the R3500 would not even be a talking issue.
There was a ballot in the current labour laws but the LRA Amendment Bill was entrenching a problematic ballot system in the first instance, which now would have to be secret and be kept for three years and balloting to be the responsibility of unions thenceforth. Even NUMSA with its 300 000 plus membership did not have the capacity to organise secret balloting. The Committee could imagine secret balloting being attempted at every filling station around the City of Cape Town alone by a union with only 100 or 1000 members. To require unions to do that was ensuring that no worker could embark on a protected strike going forward. As Mr Madisha had pointed out, union membership was declining for many reasons. The Committee would have to anticipate what would happen when the three bills became laws. Unions would become irrelevant or become insurance companies; the Committee could not go down in history as the people that emasculated the working class.
SAFTU was opposed to the big rush to pass the bills and welcomed the fact that the implementation date had been postponed. 1 May 2018 was international workers rights day which would have been the day that SA would have dealt workers the biggest blow. SAFTU hoped the next step would be Parliament listening to its pleas and reverse the dangerous elements in the bills.
He thanked the DA for insisting that submissions be re-opened as Mr Vavi preferred to deal with honest disagreement than pretention. SAFTU disagreed with the DA on the notion that the NMW Bill would worsen unemployment, because the structural problem in unemployment had remained due to the democratic dispensation inheriting a growth path from the apartheid regime which simply reproduced unemployment, poverty and inequality. Government was too scared to confront the bull and dismantle the dependency of the economy on the mining, finance and heavy chemicals complex. SA never industrialized as it wanted to be the darlings of the world and had gone to Singapore in 1993 and committed to removing all tariffs, faster than what had been required by the World Trade organisation (WTO) before the WTO even existed. Deindustrialization started then on the then Minister of Trade and Industry’s advice, Mr Trevor Manuel; worsening unemployment had started at the moment when SA refused to use its mineral advantage to industrialize, build secondary industries, beneficiate SA and to bring the resources of the country to bear fruit and benefit all citizens of SA. Unemployment in SA had been created by the apartheid regime’s creation of homelands, which were labour reserves with deliberately undereducated and unskilled labour.
As long as there were 50% of workers in SA trapped at R3400 per month that meant that 50% of the SA labour force was trapped outside of participating in the economy of SA, as they would not be able to buy irons, refrigerators and cars manufactured by other workers; which was what was driving unemployment in SA. There were far too many people that could not buy locally made products. He understood the time constraints that the Chairperson had noted although he would have wanted to respond to more questions.
The Chairperson said Mr Vavi would be welcomed to reply in writing to all questions that remained unanswered.
Mr Vavi said that the NMW was not a bridge as Ms Theko had alluded to but an entrenchment of the status quo; a bridge would be talking to a minimum living level as he had just outlined above; and the promise that the NMW was a base which would be reviewed and changed soon after the NMW Bill was adopted was to make workers accept the proposal as a permanent feature of the SA labour market. COSATU had always been divided over the NMW all the way from 1985 but had only united after the Marikana massacre because that occurrence was such a wakeup call that everyone and everything had to be reviewed and that was why COSATU for the first time in two decades had become united. As that resolution was passed a tsunami occurred within COSATU which had thrown some senior leaders out including himself and 100 000 workers together with those employees.
AgriSA National Minimum Wage: Submission to Labour Portfolio Committee
Ms Jahni de Villiers, Head: Labour & Development, AgriSA, said the AgriSA submission would be on what currently was happening wage wise in the agricultural sector in SA. What are the possible challenges with the NMW in the agricultural sector? She said that 80% of farmers in SA were SMMEs and they had alerted AgriSA that the proposed guaranteed four hour working day, could cause challenges for those farmers in instances where it would be impossible to work due to weather conditions but they would be required to pay seasonal workers by law anyway. AgriSA was proposing that the terms and conditions of the sectoral determination be retained (see submission).
Mr Bagraim said AgriSA would have noted that sectoral determination was destined to disappear completely overtime which would destroy some of the benefits across the board; he wanted AgriSA’s view on that. Unions were telling Parliament with the exception of SAFTU that it had to be careful that the value of the R20 could not be denuded; that is, the increases that would follow the baseline of the R20 had to keep up with the same buying power the R20 would afford whereas AgriSA was saying it wanted more time in which to implement the NMW. He wanted AgriSA comments on that. AgriSA said that the NMW Bill could have the opposite effect to social justice and economic development; he wanted Ms de Villiers to expand on that. He had recently visited a farming operation where everything was run by computer and mechanisation and only employing a dozen people compared to the 100 it used to employ. At what point did a farmer decide to mechanize because jobs had to be protected; he wanted AgriSA’s view on that.
He said the DA had been arguing for a long time that each sector had to be viewed individually so that whatever NMW was decided on would be done sectorally and not uniformly across sectors so that the 1/3 workforce without a minimum wage could be brought into the NMW.
Mr Bagraim said experience had shown that exemptions were a difficult thing to get from bargaining councils. He disagreed with unionists such that he believed that exemptions had to be legislated and a process laid out because the country could not risk leaving that to the Minister with some regulations to guide that process. Could AgriSA expand how employers qualified for an exemption?
He disagreed with AgriSA that the way the clauses had been worded when it came to claims for failure to pay the NMW, could result in forum shopping and could be very time consuming and costly. He believed the CCMA was the best forum to sort out that issue as courts could take years to sort out that issue.
He asked if Parliament could be allowed to have input on the regulations and how they could be drafted in terms of clause 16 which read that there would be no obligation for the Minister to publish draft regulations; he asked for AgriSA’s view on that.
Every submission had missed out on speaking for the unemployed regarding the NMW.
AgriSA had called for allowable deductions of 10% which Mr Bagraim would agree to but he wanted some elaboration on that. He also asked AgriSA to address the Committee on the sawmilling industry.
Mr Moteka asked how long would the extension to phase in the NMW last because the employers represented by AgriSA had long had the time to pay a living wage. The requirements for exemption had to be very strict requiring audited financial statements to justify their qualification for exemption.
At the previous sectoral determination for agriculture, workers had demanded R115 per day and employers had bemoaned that demand until it went down to R105 per day with threats of job losses. Each time there had to be a sectoral determination for a living wage for the employee, farmers threatened to send their workers home, therefore the labourer could not demand a living wage for the sale of his labour which produced a saleable product or service for his employer. He was not saying R12 500 for farm workers as well as some loved to exaggerate and obfuscate issues deliberately to mislead. Exemptions had to be strictly awarded to those that could justify the need as the Committee would not allow further slave wages.
Mr Mashile asked AgriSA whether the agricultural sector was committed to making a meaningful contribution to transformation to the conditions of employment of the workers in that sector. The minimum wage was different from a living wage and that then would allow unions to still bargain for a living wage if they believed the minimum was not adequate. Would AgriSA accept that bargaining collective in pursuit of a living wage having set down a minimum wage already?
If AgriSA had a seat in the Committee to decide on the three bills and heard SAFTU punt the R12 500 minimum wage, someone else from UCT proposing R5 400 and NEDLAC proposing the minimum wage to be set at R3500 what would be the AgriSA proposal to ensure that it dealt with poverty and unemployment.
Did AgriSA require the Committee to legislate an easier way to punish non-compliance to the law?
Mr Madisha commented that AgriSA was not prepared to increase and that was based on its submission that albeit that the NMW Bill had and would be explained to their member employers and NEDLAC having promised not to repeal sectoral determinations. Could it clarify that for him?
Ms Theko asked whether AgriSA had not signed the code of practice ensuring that upon implementation of the NMW no employer would retrench employees. AgriSA was asking for three years to phase in the NMW when there were non-compliant farmers to the sectoral determination for agriculture already. How much longer then would be required to get those non-compliant farmers to tow the line?
Ms de Villiers replied that AgriSA was concerned about the disappearance of the sectoral determination in the long term because sectoral determinations went much further than what the Basic Conditions of Employment Act (BCEA) provided for. AgriSA believed the sectoral determination worked in agriculture and implemented correctly there was no reason for the sectoral determination to disappear as it considered the uniqueness of the agricultural sector. AgriSA definitely supported setting a NMW which would consider the peculiarities of each sector differently and agriculture already had a minimum wage which had been in place since 2006, and it was not opposed to that but it was simply notifying Parliament that the levels or quantums proposed would place a burden on the sector hence AgriSA was asking for a phased in approach over three years.
AgriSA emphasized that transport was given to employees free of charge on many farms and there were more benefits than what was provided for in the sectoral determination. Housing was incredibly contentious and affected not only agriculture but other sectors.
AgriSA represented 28 000 commercial farmers in SA and it actively participated in the AgriPhakisa process and Ms de Villiers believed that if AgriPhakisa were to succeed, that needed everyone to be involved as the initiative was quite important.
Eroding the value of the R20 had been raised even at NEDLAC but her point was that increases within agriculture had always been above inflation and if that trend continued then agriculture would have naturally caught up to the R20 quantum minimum wage. AgriSA certainly understood the NMW was a baseline and was not naive to think that everyone had to be paid only up to the NMW and not beyond the rates proposed.
AgriSA through its membership of BUSA was signatory to the code of practice at NEDLAC backdated to 2017 that no termination of work would be effect once the NMW was implemented. What AgriSA was saying was that should a situation develop where a farming operation which was already on the brink due to the drought and other reasons, and that farming operation closed down, then the agricultural sector would be contributing to inequality and restricting social justice.
Computerizing and mechanisation and the fourth industrial revolution had serious consequences for SA especially considering education levels. The reality was unfortunately that if an operation’s labour cost would eclipse business operations, there were people in the agricultural sector that would have to make difficult choices and no member of AgriSA wanted to make such a choice.
Historically, the exemption process had situations where farmers applied and never received any communication thereafter. What AgriSA had been pointing out was that its members wanted a smoother administration process where there was communication. She could not say that its member employers wanted a legislated process for exemptions as AgriSA had been engaging the DoL on those administrative challenges when processing exemptions aside from the fact that she did not believe it was healthy for a single person to have the power to decided alone whether exemption was granted or not.
AgriSA had signed a Memorundum of Agreement (MoU) with the CCMA on the claims for failure to pay the NMW as things had been changing and certainly when labour disputes emerged, AgriSA would prefer them sorted out at the lowest possible level which was the CCMA.
Job losses numbers after De Doorns would be sent to the Committee in writing but that had to consider seasonal work losses.
AgriSA was committed to transformation and would be holding a conference on that soon as it had conducted a survey on transformation amongst its members.
AgriSA was a policy influence organisation and not an employer’s organisation and therefore could not venture to speak on collective bargaining processes as it was not involved there.
In addition to compliance with the NMW, the agricultural sector had to look at entrepreneurial development as well as Ms de Villiers did not believe anyone could ever become rich remaining a farm worker.
If the agricultural sector could increase the number of people feeding and clothing the general public, the better the sector would be for SA.
The agricultural sector had already implemented its sectoral determination increases and therefore it was not refusing to increase rates but AgriSA was requesting that the sector be allowed the three instead of the two years to implement the NMW.
Mr Madisha was concerned that Ms de Villiers had just said that AgriSA would wait for three years to implement the NMW and he required clarification on that.
The Chairperson said she would allow members to ask questions but some of the responses could be forwarded in writing.
Mr Moteka said the 28 000 employers represented by AgriSA were part of the crisis that had resulted in the NMW being discussed and government was still being lenient in the quantums put forward in the Bill but still the employers were saying they could not afford R20; what was AgriSA proposing in reality?
Ms de Villiers replied AgriSA was not refusing implementation but was discussing the contents of the NMW Bill and the current agricultural sectoral determination minimum was R16.25c which had been implemented. If by some miracle the 28 000 had managed to implement the R18.00 proposed rate by 1 May 2018; that would create a situation where there would be job losses and SMME farmers closing down in some areas.
Feeding and clothing the nation was what the agricultural sector did as it grew the material that did that. She was not saying the farmers under AgriSA were paying wages to only allow workers to afford clothes and food. Her solution to the crisis lay beyond a minimum wage and AgriSA believed SA was at a point where plans to develop farm workers and their employers beyond farming so as to bring them into the mainstream economy of SA.
Business Unity South Africa (BUSA) submission
Ms Tanya Cohen, BUSA CEO, spoke about the Labour Relations Amendment Bill:
- Compulsory default picketing rules: To date there were no picketing rules for industrial action and the compulsory rules would provide for picketing rules in every strike.
- The Code of Good Practice would bring a fundamental body of guidance to both unions and employers on how to conduct themselves during collective bargaining and industrial action as well picketing action.
She said Mr Vavi had been correct that it was post Marikana that NEDLAC had resolved not to stand by and watch the conduct that took place there to be repeated as it had been too damaging for society and the economy. The rating agency had also indicated that SA labour relations stability was damaging investments prospects. BUSA believed that the NEDLAC negotiations it had been party to had already started to change the tone of labour relations in SA but certainly could be reinforced with the amendments proposed.
On the National Minimum Wage, BUSA understood that the R20/hour NMW was not an economically efficient NMW but the research which fed into the NEDLAC process had indicated that to keep current jobs, the level of a minimum wage had to be set low and that research had even set the level at even half that amount. The R20/hour was a level that recognised that it was not efficient to stay at R20/hour but wage inequality had to be addressed together with addressing those earning below what was reasonable and fair in terms of tendering a service.
The Chairperson noted that BUSA had not indicated the organisations it represented in its submission.
Ms Cohen replied that BUSA represented multisectoral organisations from agriculture through to manufacturing including the Steel and Engineering Industries Federation of Southern Africa (SEIFSA), the Manufacturing Circle, Aluminium Federation of South Africa (AFSA), Banking Association of SA (BASA), Chamber of Mines SA (CoMSA), Retail Motor Industry Organisation (RIM), Tourism Business Council of South Africa (TBCSA) and organisations as small as SAVRALA (Southern African Vehicle Rental and Leasing Association) and the Consumer Goods Council of South Africa (CGCSA). She said though their numbers could be difficult to estimate, 60-70% of GDP was generated through its membership base. BUSA also represented corporate organisations.
The Chairperson said she took it that BUSA would have been constantly engaging all those members throughout the NEDLAC process before entering into agreements.
Mr Bagraim said some of the organisations that had come before the Committee which had part of the NEDLAC process had said that the NMW Bill and the Amendment Bills did not reflect what had been discussed. Could BUSA comment on that. Could it also comment on the exclusion of SAFTU from NEDLAC? He asked BUSA to share the research input which had indicated that the R20/hour could lead to job losses.
Obviously the trade union sector had relented to some of the provisions on picketing and strike action but now the Committee was hearing that the sector was unhappy about the provisions as captured in the amendments to the LRA; did that mean the bargaining would then fall through?
The Committee had not seen the compulsory default picketing rules which BUSA had spoken to therefore he was not certain what that was going to be. He requested the Code of Good Practice (CoGP) on Collective Bargaining, Industrial Action, and Picketing. Would Parliament have a say on that?
Mr Bagraim also asked:
- Who would determine when a strike was functional or not and how would that be done? His presumption was that that would involve some regulatory authority to give the Minister some guidance on that.
- Would a functional exemption system also be a regulatory authority that would by-pass Parliament. He pointed out that exemptions via the bargaining council had been quite difficult to navigate to date.
- On the back of the rumour of imminent implementation of the NMW, SMMEs were holding off on employment and were reluctant to invest in their own businesses. He asked BUSA to comment on that.
- Did BUSA think the NMW could dampen collective bargaining for business, where the sentiment would be there was a NMW and that was where SMMEs would end and go no further? Could BUSA comment on the Expanded Public Works Programme (EPWP) and why government could not afford to pay the NMW to EPWP workers when SMMEs would be required to do implement to NMW.
- Had the drafting oversight been part of the agreement BUSA had entered into and who would be doing the impact assessments?
- In terms of the minimum four-hour shift, in the fourth industrial revolution, shift work would be disappearing as piecemeal home-based work would take over; from where would the four hours be taken?
- Who would define what a worker was because Mr Bagraim believed that would lead to years of litigation?
Mr America said BUSA had proposed a medium term target to be set within three years of NMW implementation which had not been accepted at NEDLAC in favour of the NMW annual adjustment. What had been the motivation for a three-year period instead of an annual adjustment? The NMW Bill had also proposed a NMW commission consisting of a chairperson, three representatives from business, labour and the community; and three independent representatives. Had there been agreement at NEDLAC on who those representatives would be - would they come from the currently represented parties at NEDLAC? Had it considered the usefulness of an independent panel divorced from outside or constituency influence? What needed consideration in mitigating the possible negative impact of NMW implementation on SMMEs?
Mr Moteka commented that BUSA had been the most accommodated in all three bills because in the factories where he used to work, workers remained at work to clean the factory floors if there had been load shedding or machinery breakdowns and got paid for a full day’s work and he was not referring to vulnerable construction workers. Strangely the bills were now saying that employers were wasting money in paying workers for a full day’s work when in fact they were doing housekeeping for four hours. Additionally, employers were winners in that the bills were now restricting the length of time of industrial action irrespective of whether workers demands had been met or not. How would BUSA stop SEIFSA and others from retrenching workers and rehiring them only to pay them the NMW for the same work those workers had been doing for R80/hour before the NMW was implemented.
Mr Mashile asked how authoritative the Ekurhuleni Declaration was for business. SAFTU had alleged that business could abuse the secret balloting provision in the LRA Amendment Bill. What was BUSA’s response to that? What was BUSA’s relationship with AgriSA? He reiterated his question on what advice BUSA would give to him on a NMW when confronted with the three proposals of R12 500, R5 400 and R3 500 per month. Was the understanding of business the same as that of government - that the NMW would be the bottom ceiling and anything under it would be illegal to pay by an employer to an employee? SAFTU had accused business of undercutting the R3 500 being proposed at R20/hour by manipulating the hours of work - what was BUSA’s comment on that?
Mr Ngwezi said little if anything protected worker interests in the BUSA submission. Had there been any clear evidence that the R20/hour NMW would lead to job losses. Although the sentiment was that the R3 500 was the bottom ceiling how could it be that government would not be able to afford that for the EPWP but business had to pay the hourly rate? He also wanted BUSA’s comment on SAFTU’s exclusion from NEDLAC negotiations.
Mr Madisha said he had found that there was a challenge in the agricultural sector where farm and agricultural business owners upon request for increments by their employees would relieve them of their duties replacing them with machines which would cost upwards of R1.5 million. Could BUSA comment on that? Did BUSA have the capacity to monitor compliance with NEDLAC resolutions by its members?
The Chairperson recognised the Chairperson of the Select Committee on Economic and Business Development, Mr L Rayi (ANC: Eastern Cape). The Chairperson advised BUSA to respond to matters within its realm and leave those beyond its purview.
Ms Cohen replied that other than the areas she had mentioned; only those areas had found their way into the LRA Amendment Bill; there possibly had been an oversight about the exclusions BUSA had referred to, hence they had raised those with the Committee.
Although the Chairperson had noted that BUSA reply to only what was within its purview, it was important as a participant in NEDLAC and as the business representative there that it spoke to the SAFTU exclusion. NEDLAC was a creature of statute and participation therein depended on the provisions of the NEDLAC Act and the Constitution and BUSA abided by those. She was aware that there were challenges being raised to date about participation and there was a discussion underway within NEDLAC to consider the governance structures there and whether the NEDLAC Act like any legislation needed to be modernised.
There were two main research resources which had been relied on at NEDLAC. One had been a feasibility study research done for the Employment Conditions Commission by Professor Haroon Bhorat, Development Policy Research Unit at UCT. Secondly, research had been produced through the panel findings under then Deputy President and current President, Mr Cyril Ramaphosa. The panel had arrived at the R20/hour NMW balancing both recognition of not wanting ultra low wages and the need for a sustainable living as well as pressures businesses were under and mitigating against job losses. The research was all linked to the number of people currently employed in SA as there were exceptionally high dependency ratios in the country because of the levels of unemployment and the meeting had heard figures of how workers were supporting three to five other people in the home. That had fed into the analysis of what a wage was during the NEDLAC process and the thinking was that if unemployment could be decreased through creation of employment, the NMW would take on a different meaning.
Under the amendments to section 69 of the LRA were compulsory default picketing rules amendments. Additionally there were provisions in the CoGP on how picketing rules could be implemented as well. The details of the CoGP had been deliberated at NEDLAC and as far as BUSA understood the LRA, a CoGP had to go through NEDLAC to be accepted. However, it needed the enabling provisions of the LRA Amendment Bill before finally being passed.
On who would determine when a strike was no longer functional, Ms Cohen replied that the details under the advisory arbitration provision could be found quite a complex set of triggering provisions that would give rise to advisory arbitration. Amongst those was a court of law where the other was where the parties agreed and another was when arbitration was triggered by the director of the CCMA, in terms of the current provision existing under section 150 of the LRA. Therefore there were a number of grounds where a legitimate party or the parties of their own accord could decide to refer advisory arbitration for consideration to the CCMA.
The engagements BUSA had had on exemptions with labour and community in NEDLAC in the recent past had been on the detailed wording of the regulations and they had almost reached concluding those deliberations whilst the DoL was testing the electronic system. BUSA had provided DoL details on employers that were willing to see how accessible, user friendly and functional the system was. BUSA had been impressed by the electronic system design to date; which ideally on application and submission of the required details and when there were no triggers would grant exemption automatically. When and if there were triggers there had been a commitment that it would go to a DoL committee which would deal with that application for exemption which ideally would produce an outcome within a 30 day period. What had been observed to date was the system was superior to what BUSA had been exposed to in the past and BUSA believed it would function effectively, barring which BUSA would be the first to raise a flag if there were problems.
On whether the NMW would dampen collective bargaining, Ms Cohen replied that that had been raised often during negotiations and research had shown that a NMW could not be set at a level that would crowd out collective bargaining. The design and landscape of the minimum wage was that it was intended to be a minimum.
BUSA understood that the wage was a minimum unless one fell in the agricultural sector or the domestic sector which had lower tiers or there was an exemption certificate, the R20/hour was the minimum.
The impact assessments would be done through the National Minimum Wage Commission.
Indeed the agreements were a package although it was important to recognise that there had been two separate streams of negotiations at NEDLAC. One had been on labour relations stability and the other on the minimum wage; there been no trade-off between the two streams.
On the definition of a worker and whether they had a minimum of a four-hour work day, one had to read carefully NMW legislation and proposals there which defined a worker as opposed to the BCEA which defined an employee. It was by careful construct that the minimum of four hours applied to an employee in the BCEA instead of a worker.
BUSA had agreed to the annual adjustment and probably Mr America had been referring to a transitional provision where BUSA had referred to a three year period. That related to one sector in a specific circumstance where it had wages above the NMW where there would be retention for the next three years of an increment for those salaries above the minimum. The point made there was that after the three years had lapsed that provision would fall away.
On who would nominate parties to the NMW Commission and whether an independent panel would not be better, Ms Cohen replied that BUSA would have preferred a greater weight on independence and experts on the panel but that was not the agreement reached at NEDLAC. As it stood there would be three representatives each from the community, labour and business nominated from any statutory bodies within NEDLAC. The structure would be unique because in all the research presented to NEDLAC including that of the International Labour Organisation (ILO) and around the world, had been that where there was constituency participation it was usually business and labour and purely independent and expert based bodies. But there were a number of provisions that spoke to the NMW Commission and checks and balances which ensured that if, for example, one of the parties to the commission had a disagreement, their input would be captured in the final report. As Parliament it would be important to follow that as Parliament would be asked to approve the NMW each year.
On what could be done to mitigate job losses, BUSA believed that firstly the NMW had to be set at the correct level which would ensure that job loss would not be triggered and the NMW would not be a deterrent to employment; and did not encourage mechanisation and technological substitution. Another point which was important was the employment tax incentive provision which operated for first time work seekers to give some level of subsidization of salary from the state. There had been discussion during the NEDLAC negotiations around the opportunity for other categories including small businesses that could not afford this. Unfortunately there was no fiscal space for that to happen to date.
BUSA could not be said to be the winner as the challenge of unemployment was national and the social partners at NEDLAC had tried to preserve the interests of business but certainly not over the interests of the country. The body recognised that more work was needed on transformation of the economy and that employment levels were lifted including higher levels of participation in the economy.
The four-hour pay provision was accompanied by a provision that stipulated that an employer could not unilaterally decrease provisions currently in application. Additionally the four-hour minimum was not only for instances where for some reason work could not proceed. It operated as a minimum shift time as well as there currently being no such provision.
There was currently no restriction to strike and each of the provisions was not something business could do anything about. Therefore if there was no secret ballot the Registrar of Labour Relations had to take steps to investigate and as a last resort deregister a union. Similarly on advisory arbitration, the employer and the union had no obligation to accept arbitration. There had been no rights provided through the LRA Amendment Bill that would create a limitation on a union’s ability to strike. Throughout the NEDLAC process the negotiators had always sought constitutional advice and had ensured that it created provisions that were constitutionally sound.
On how BUSA would stop employers from undercutting current above minimum wage employees being retrenched and substituted by others and manage agricultural mechanisation, BUSA was unfortunately a voluntary member organisation and had no enforcement protocol or rights against its members. It could only encourage its members to be law abiding and comply with the NMW as it felt it was a far better situation when businesses supported a NMW versus previous labour law iterations in SA.
BUSA had been bound by the Ekurhuleni Declaration which had been why it had gone into the NEDLAC process. It set the principles for the NEDLAC engagements and dealt with issues which had troubled all represented constituencies in NEDLAC. Similarly the Labour Relations Accord that BUSA had entered into was an important agreement that constituencies recognised though it would not be made into law.
Some of the solutions at NEDLAC on the capacity to conduct a secret ballot by unions had been about getting assistance from the CCMA, the IEC possibly as well as the ILO technology which ILO was willing to share with constituencies and therefore BUSA thought there were resources that could be accessed.
AgriSA was a member of BUSA. On whether BUSA had sought mandates from its members as the process evolved, the Ekurhuleni declaration paved the way for the NEDLAC process where BUSA continually engaged its members and of course did not always reach 100% consensus but it ensured the agreements were agreeable to all its members.
BUSA had tried at NEDLAC to produce something that all social partners could live with and support in terms of labour relations stability and in terms of minimum wages.
Mr Moteka said between 2010-2013 the state had gone to India to buy ductile iron water pipes from ElectroSteel, leaving the only SA producer of the pipes to shed jobs. Loss of jobs was therefore not always about better wages but whether a company had work, since when there was work, there would be money to pay workers. A labour revolution was coming and business had to force government to buy from within the country and not from outside because the NMW was being imposed on business by a government buying from outside the country. The textile industry was suffering as textiles were being imported together with chicken meat but government expected farms in SA to keep people at work.
Mr Moteka said EPWP was a state programme but government had said only the private sector had to pay R20/hour as government could only afford R11/hour. Both had to work together to better the lives of South Africans.
Ms Cohen replied that when the negotiations were in their infancy the EPWP had been a category excluded entirely and labour had pressured NEDLAC on its inclusion. During the course of the process the number of EPWP participants together with the intention of the EPWP was reviewed. To a large extent the consensus had been that the EPWP was a form of social transfer and grant as it had been intended to give people skills and income in exchange for limited types of work and not commercially productive employment. The discussion had also spoken to possible private sector schemes similar to the EPWP which would be targeted at supporting people to getting into world of work but it had not succeeded in convincing its partners to do such programmes. If the EPWP level had to be lifted beyond what it was that would have meant a third of the people currently participating in the EPWP would not have been able to participate which was approximately 330 000.
She agreed that it was the responsibility of government and all South Africans to promote local industry and to put their weight behind youth employment since localization was definitely one of the ways of doing that.
The Chairperson said that she would allow the DoL to submit its responses to the submissions from all the stakeholders that had presented.
Mr Bagraim said that the agenda had simply included an item called ‘way forward’ but nothing about DoL being allowed to respond and he did not understand why the DoL had to read out its comments replying to written submissions. The Committee could read for itself. He was not sure what the Committee was supposed to do with an oral submission from DoL as all the stakeholders’ submissions surely would be part of what would go into redrafting the bills eventually.
Mr Mashile said he struggled to understand how Mr Bagraim expected the DoL to bring a redrafted Bill when in fact the DoL had introduced a Bill to parliament. What the DoL could redraft would be coming from the Committee as a consensus and not from the DoL.
Mr Moteka asked if it was possible for DoL to redraft the bills as discussed by the Committee or was it only NEDLAC that could make changes to the bills?
The Chairperson replied that the process for oral submissions had been previously agreed on and the DoL had submitted responses on contentious issues from the first round of submissions. However, DoL had not responded to today's submissions. The Committee would deliberate on the DoL response to all submissions the following day therefore DoL would be presenting its response to the submissions of today now. The Committee would compare all that information with what it already had and propose redrafting for the bills. Thereafter it would process clause by clause to check whether everything was as the Committee had proposed before presenting the bills to the House.
Mr Moteka reiterated that he was not clear about whether the power to redraft was with DoL or NEDLAC?
The Chairperson said the bills were in the Committee’s hands and it could do as it saw fit, to amend by deletion, insertion or redrafting provisions.
Mr America agreed with the Chairperson saying that the DoL had responded in writing to the oral submissions but he did not see the need to listen to the DoL reading its written response as the Committee would not engage on the appropriateness of that DoL response.
The Chairperson reiterated that because the process of DoL presenting its reply had been done with the first round of stakeholder inputs, it was only fair that the DoL be allowed to do likewise with the second round of submissions. If members had other commitments no one was required to stay. She would allow the DoL to respond.
Mr Moteka interjected that the Chairperson had to calm herself and he appreciated being clarified on his question.
Department of Labour response to public comment on National Minimum Wage Bill
Mr Thobile Lamati, DoL Director-General, said that the DoL was doing a second round of replies in a matrix format to comments from the all interested parties on all three bills before the Committee. DoL had observed that the comments had been merely policy related rather than legal in nature. At the time of preparing the response the DoL had 50 submissions commenting on the three bills submitted to Parliament in November 2017. The DoL had also received inputs from 39 individuals and 16 organisations which were submitted to the Committee.
The DoL responses had been arranged by Bill. The DoL would not deal with editorial or grammatical corrections required in the bills as those had been identified and the redrafted versions would deal with all errors. The DoL comments would also not go beyond the objectives of the bills to issues the DoL had not considered or that had not emanated from the NEDLAC process.
Mr Lamati said the NMW Bill sought to introduce a NMW of R20 for all workers as the purpose of the NMW was to improve the wages of the lowest paid workers. Comments from the business community argued that the R20 would impose pressure on firms and that the current economic environment was not conducive to the introduction of a minimum wage. Many from organised labour had argued that the R20 had been set too low. He then read through the Department of Labour response to the public submissions (see document).
Mr Mashile said the NMW Bill would establish the NMW Commission which would be expected to set mid-term targets, and would provide a three year period linked to those targets. He asked DoL if it had set a timeframe for the establishment of the NMW Commission so that its anticipated work could coincide with its establishment.
Mr Moteka said that the EFF rejected the AgriSA request to be given three years to implement the NMW.
The Chairperson said that Mr Moteka’s view had to be repeated during the following day’s discussion and the clause by clause consideration of the Bill.
She thanked all stakeholders that had attended and informed the Committee of the following day’s deliberations and programme.
The meeting was adjourned.
- National Employers Association of South Africa submission
- Agri- SA submission
- South African Federation of Trade Unions (SAFTU) submission
- Business Unity South Africa (BUSA) submission
- Department Of Labour on Public Comment on Basic Conditions of Employment Amendment Act
- Department Of Labour Report on Public Comment on the National Minimum Wage Bill
- Department Of Labour Report on Public Comment on the Labour Relations Amendment Bill, 2017
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