Departmental activities: briefing

Meeting report

LABOUR PORTFOLIO COMMITTEE
14 September 1999
BRIEFING BY DIRECTOR-GENERAL

Document handed out
Fifteen point programme of action (1999-2004) [attached to end of minutes]
Industrial Action in 1998: Annual report executive summary (not discussed)

SUMMARY
The official of the department outlined the problems experienced by the department and the activities that the department intends to pursue in the next five years.

MINUTES
The Director General, Mr Sipho Pityana, pointed out that there were major problems in the labour market such as:
# the high rates of unemployment and under-employment,
# the low rates at which productive employment is being created,
# the existence of poverty among low wage earners, the underemployed and the unemployed,
# the level of inequality on the basis of race and gender
# low level of education
# the legacy of adversarial labour relations in the formal economy
# the inadequate protection for some low-wage earners

The Director General said that the most vexing problem is the high level of unemployment and underemployment and the solutions of the problem do not lie solely with the labour market. Many problems in the labour market can only be solved by combined measures originating from a number of government departments and supported by the private sector. The Director General noted a number of areas that require co-ordination such as:
# proper co-ordination of economic and social policies
# migration policy
# approach to occupational health and safety
# comprehensive human resources development strategy co-ordinated between the Departments of Education and Labour

The Director General outlined the objectives of the labour market as follows:
# to ensure that labour market policies contribute to the realisation of the vision of the government
#to extend coverage of the labour market policies and institutions to all sections of the labour market to redress the apartheid legacy and to ensure equity.
#to ensure that labour-market policies promote economic growth
#to resolve inequalities in the labour-market and promote representivity of the previously disadvantaged
#to upgrade, deepen and broaden the formation and the utilisation of skills throughout.

The Director General set out the approach to labour market policy:
# to regulate the labour market in order to resolve inherited rigidities and flexibity
#to promote labour market and economic efficiency
# to support and enhance employment creation
#to promote worker security, safety and minimum conditions and standard of employment
#to promote participatory and co-operative industrial and labour market relations # to promote equity and skills in the labour market
He pointed out that this approach aims to forge a middle route as opposed to the regulated and unregulated of the labour market.

Finally, the Director General tabulated the Fifteen Point Programme.

Questions from members
Mr B Holomisa (UDM): We have witnessed silence on the part of the Department of Labour concerning the strike of the civil servants. Is the the Department of Labour setting a good example. What message is it sending to the public?
D-G: In the public sector we have assisted with the establishment of the bargaining council. With regard to the dispute between the government and the public servants, the CCMA is facilitating the mediation and the differences between the parties have been narrowed. Therefore, CCMA is playing a role and we as the Department have a legal responsibility to assist the parties to narrow their differences.

Mr Zulu (IFP): In your introductory remarks you said migration has an impact on Department of Labour and the Department of Home Affairs. Is there a possibility for the two department to deal with this issue together?
D-G: We work close with the Department of Home Affairs.

DP Member: When are we going to see the implementation of the Job Summit? Will the committee at any time debate the CCMA report?
D-G: We are implementing the Job Summit agreement. The CCMA report is tabled and it is available to members.

Mr Maphalala (ANC) The problem in the past was that employers did not comply with the Labour Relations Act and there was no mechanism to ensure compliance with it. Does the department have measures in place to monitor compliance with the Act?
D-G: There has been large compliance with the Act.

Member (ANC): My question is relating to Labour Centres. What promotion programme do you have in place? There are scarcity of resources and in the apartheid era there were training centres and the buildings are still there. How best are you going to utilise the resources and how are you going to upgrade the training?
D-G: The department is not the only department which experiences scarcity of resources. The other question which needs to be addressed is whether resources are used optimally, not only this department's resources but government's resources. There is no sharing of resources. The department is looking for partnership with NGOs that are keen to play a role in these issues and there is great deal of progress.

Mr Oliphant (ANC): Can the department provide the committee with a progress report on the Job Summit agreement?
D-G: We proposed to give a more detailed report to the committee. I propose that we set time aside for a briefing on the report.

Member (ANC): Young people are not employed because they do not have experience, what is the department's plan in this regard?
D-G: Employers do not want to take the risk of employing people who do not have experience. The Skills Development Act is concerned in addressing this problem. The learnership programme will also take into account lack of experience amongst youth.

Member (NNP): The government and labour market are limited in creating jobs. What emphasis will the department place on the development of the entrepreneurs?
D-G: The government promotes entrepreneurs and it provide skills training to ensure people open their own businesses.

The committee agreed on the following committee programme
16 September 1999 Exchanging views with the Danish Minister of Labour)
12 October Report on the Job Summit (Whole issue of job creation)
26 October 1999 Skill Development and Social Plan
9 November Employment Equity Act

The meeting was adjourned.

Appendix 1:
FIFTEEN POINT PROGRAMME OF ACTION (1999-2004)

INTRODUCTION
This document Outlines the main activities that the Department of Labour intends to pursue in the five years from 1999 to 2004.

PART 1
Approach to Labour Market policies
Our approach to labour market policy is predicated on the belief that the labour market, while it has some inherited rigidities is sufficiently flexible primarily as a consequence of recent policy initiatives. Furthermore the labour market is not a barrier to employment creation and that the general direction of the reforms being introduced in the labour market is consistent with the imperatives of efficiency, flexibility, equity and improved welfare.

Major problems in the Labour Market
The high rates of unemployment and underemployment;
the low rates at which productive employment is being created in the economy;
the existence of widespread poverty among low wage earners, the underemployed and the unemployed;
· the extreme level of inequality, primarily on the basis of race and gender;
· the low levels of education, skill and investment in training;
· the legacy of adversarial labour relations in the formal economy;
· the inadequate protection for some low-wage earners such as farm and domestic workers.

Functioning of the Labour Market and its implications for Labour Market Policy
The above problems need to be addressed in the broader context of the national vision to democracy, full employment, equity and social justice, economic growth and international competitiveness.
In this respect, the objectives of labour market policy, which are reflected in the objectives of the Department of Labour are to :

· Create an enabling environment for the attainment of economic growth, social development, and increased efficiency, productivity and employment
· Promote stable and sound labour relations;
· Enhance the development of skills;
· Eliminate discrimination and inequalities in the labour market; and
· Improve working conditions and social security benefits.

The most vexing problem confronting government in the labour market is that of the high levels of 8 unemployment and under-employment, the determinants and solutions for which do not lie solely within the labour market.
There has to be compatibility between labour-market policies and a package of broader policies aimed at resolving many of the problems manifested in the labour market, but not necessarily and primarily caused by the labour market, nor restricted to it.

Approach to Labour Market Policy
· The need to regulate the labour market in order to resolve inherited rigidities and inflexibility;
· The need to promote labour market and overall economic efficiency;
· The need to support and enhance employment creation;
· The need to promote worker security, safety, and through maintenance of socially acceptable and mandatory and minimum conditions and standards of employment;
· The need to promote participatory and co-operative industrial and labour market relations in the context of an institutionalised and regulated framework; and
· The need to promote equity and skills in the labour market.

This approach aims to forge a middle route between the extremes advocated by those in favour of unqualified labour market flexibility or deregulation of the labour market, and those advocating a more rigorous regulation of the labour market.

On the one hand, it is felt that advocates of deregulation and labour market flexibility understate the nature of inherited rigidities and inequalities that are built into the labour market and are not sensitive to the poor conditions of work in many sectors in which disadvantaged employees work, such as agriculture, security and domestic work.

Furthermore they underestimate the social and private costs of a highly deregulated labour market in the specific circumstances of South Africa.
On the other hand, it is necessary to be cognisant of the costs to the economy and government of attempting to over-regulate the economy in the manner proposed by some. These costs would entail increases in costs of production; the discouragement of foreign investment; the increase in administrative costs to government; the possible loss of jobs; and the possible triggering of a wage/price inflation spiral.
A middle route between the two extreme views is therefore seen to be the desirable one.

Broader policy requirements for Labour Market Policies
The Department recognises that many of the problems in the labour market such as the high rate of unemployment cannot be addressed by labour market policies alone. However, the Department of Labour is responsible for the effective functioning of the labour market.

Thus many of the significant problems in the labour market can only be solved by a package of measures originating from a number of government Departments, in addition to being driven by the actions of the private sector.

Some of the areas that require co-ordination or that need to be complemented by other policies are listed below:
· There should be proper co-ordination of economic and social policies, especially the need to harmonise macroeconomic policies, supply-side trade and industry initiatives, social and economic infrastructure policies, and labour-market policies in a manner that maximises their impact on the problems at hand;
· There should be bold developmental initiatives at the industrial, sectoral, regional and national levels in the context of the Employment Strategy agreed upon at the Jobs Summit of October 1998 as the basis for inclusive and equitable economic growth;
· There should be a comprehensive social security policy so that a social safety net exists to underpin flexibility and adaptability in the labour market. This should include social a plan measures to ameliorate the impact of massive retrenchments occasioned by the restructuring of the economy and at rehabilitating communities economically depressed by such massive lay-offs;
· Migration policy should be humane, and made progressively liberal and compatible with international conventions and recommendations, and should be managed in a manner that is compatible with demand and supply of skills for the country and its regional obligations.
· There should be a common approach to occupational health and safety by establishing closer co-operation with the Departments of Health, Minerals and Energy and Environmental Affairs and Tourism.
· There should be a comprehensive human resource development strategy co-ordinated between the Departments of Education and Labour.

Objectives of Labour Market Policy
In the context of the above, labour market policy has been guided by the following objectives:
· The need to ensure that labour-market policies contribute to the realisation of the vision of government and that they are aligned with the broader policies of government;
· The need to extend coverage of labour-market policies and institutions to all sections of the labour market to redress the apartheid legacy and to ensure equity in the context of an increasing number of atypical work relationships;

Objectives of Labour Market Policy
· The need to ensure that labour-market policies promote economic growth and dynamic and allocative efficiency in a manner that contributes to greater employment generation in the economy and greater protection and security for the workforce;
· The need to resolve inequalities in the Iabour market and promote representivity of previously disadvantaged groups, especially with respect to skills training, and improved work conditions; and
· The need to upgrade, deepen and broaden the formation and utilisation of skills throughout including small, medium and large-scale enterprises.

Strategic Approach
· The promotion of labour-market efficiency within a regulated framework that allows for variability with respect to wage a determination, work processes, and the utilization of labour in a manner that is compatible with security;
· The promotion of 'voice regulation' through participatory labour market institutions, co-operative labour reIations and collective bargaining;
· The implementation of a preventative strategy that will reduce the burden on administrative monitoring, inspection and enforcement and that will empower social partners to pro-actively participate in the execution of the strategy;
· The rationalisation and integration of related activities and services such as inspection services and those offered by labour centres; and
· The need to provide efficient and easily accessible services to clients of the Department through reform of the bargaining council system, establishment of one-stop service centres;
· The delivery of high quality employment services and the promotion of skills development;

FIFTEEN POINT PROGRAMME OF THE MINISTRY OF LABOUR

Introduction
The first five years of democratic rule in South Africa have been characterised by an extensive programme of transformation of the labour market. In the period from 1999 to 2004 we intend to consolidate the advances made and ensure that our vision for the labour market is successfully implemented.

In identifying our challenges, we need to bear in mind the context in which we shall be operating. On the one hand, the legacy of apartheid discrimination and exploitation has not yet been overcome and the process of globalization may result in further restructuring, retrenchments and attendant increases in inequality and poverty.

On the other hand, there are at present differences between the major labour market players on the policy approach to the labour market. Amongst the business community, a widely held view exists that labour market reforms are not aligned to the imperative of economic efficiency. Whether this can be borne out by reality is not necessarily relevant since it is acknowledged that such negative perceptions develop their own reality.

Amongst labour and community constituencies there is an appreciation of the interventions made by the Department of Labour. This is coupled with a growing concern that some of the interventions may not go far enough to address pressing problems they face including continued high income differentials, poverty among working people and the constant fear of retrenchment and job insecurity as well as high levels of unemployment.

Fifteen point programme
First, there is the need to strike an appropriate balance between security and flexibility in the labour market. While we believe that our legislative framework in general reflects such as balance …

Second, employment creation is the biggest challenge facing government. The Department's particular contribution to this challenge rests with the formulation of effective and active labour market policies as well as to provide a supporting and enabling environment for jobs to be created.

Third, we shall ensure the effective and efficient implementation of the resolutions of the Presidential Job Summit in order to accelerate job creation and tackle the scourge of high unemployment.

Fourth, the skills deficit is one of the major handicaps to the development of our economy and is a discouraging factor to potential foreign investors. With the policy framework now in place, our focus will shift to ensure that the skills development structures that are set up, adequately and speedily respond to market demands and imperatives.

Fifth, in light of the persistent way that racial and gender inequalities exist in the workplace and contribute to the inefficient utilisation of our human resources, the Department passed the Employment Equity Act in 1998. The coming period will focus on the effective implementation of the Employment Equity Act as an important part of Government's project to create an equitable society.

Sixth, the state carries the responsibility of protecting vulnerable workers to ensure that they have the same basic rights and are afforded their dignity. The Basic conditions of Employment Act is the principal instrument through which such protections are extended. In the coming period we shall focus on its effective and appropriate implementation, bearing in mind the above mentioned requirement to seek a balance between security and flexibility.

Seventh, there will be a need to introduce legislative reforms that are intended to improve the safety net to cushion those affected by the country's structural unemployment. This will be done within a broad framework of the government's social security system. Particular attention will be given to the restructuring of the Unemployment Insurance Fund in order to extend coverage, contain costs and enhance compliance.

Eighth, to adequately deal with the negative consequences of occupational accidents and ill health on individuals, enterprises and the state, we will accelerate measures aimed at reducing accidents and improving the health and safety of workers. This will occur, inter alia, through achieving greater co-ordination of the occupational health and safety instruments of government.

Ninth, evidence suggests that the interventions introduced through the Labour Relations Act of 1995 have contributed positively to promoting stable labour relations. The Department will ensure that these gains are built upon and consolidated in order to continue with the downward trend in industrial conflict. Negative and unintended consequences of the legislation will also be addressed through legislative amendment or institution and capacity building, as appropriate.

Tenth, the Department shall build on the initiatives already undertaken to promote productivity. This will include promoting an agreement between the social partners on productivity as discussed at the Job Summit in October 1998 and drawing on the experiences of the Workplace challenge and the National Productivity Institute.

Eleventh, the transformation of various statutory bodies and the establishment of NEDLAC have brought clear gains in policy development and policy making. The challenge is to build on this culture of dialogue and nurture the opportunities for deepened social partnership.

Twelfth, the Department will continue its efforts to ensure that our country is fully integrated in the international system. We intend to develop adequate capacity and resources to influence and shape international policies as developed by
the ILO and other relevant international institutions.

Thirteen, the Department will improve its capacity to monitor the impact of government policy in regard to economic growth, employment and development. This will assist in establishing a more scientific basis for discussion on the impact of government's labour market policies.

Fourteen, the major institutional restructuring we have undertaken will have to be extended and consolidated in order to ensure that the Department of Labour is aligned to address the above mentioned challenges and carry out the new and expanded mandate that emanates from the changed policy environment.

Fifteenth, while the thrust of our policies will remain the same, certain areas will receive attention for possible legislative amendments to improve the effective functioning of the labour market and reduce what may be perceived to be obstacles to employment creation.