NEDLAC 2005 Programme: briefing

Meeting report

LABOUR PORTFOLIO COMMITTEE
12 April 2005
NEDLAC 2005 PROGRAMME: BRIEFING

Chairperson: Ms O Kasienyane (ANC)

Documents handed out:
NEDLAC briefing
NEDLAC Growth and Development Summit Implementation Report

SUMMARY
The National Economic Development and Labour Council (NEDLAC) presented its 2005 Programme. This included providing a history of NEDLAC and outlining its mission. The delegation outlined the weaknesses of NEDLAC, and the challenges that it faced. From there, the delegation discussed NEDLAC’s 2005/06 objectives. These included: maximising its value for the social partners; working towards the goals of the Growth and Development Summit (GDS); and ensuring that NEDLAC remained a site for constructive social dialogue. NEDLAC would be undertaking six broad activities in 2005/06. These activities covered its work in the following areas: sector development strategies; fiscal and monetary policy; the labour market; trade and industry; development; and the GDS.

In the discussion that followed, the Committee raised questions about NEDLAC’s relevance; Section 77 notices; the impact of the strong Rand on job creation and the economy; the relevance of learnership programmes and the courses offered by Sector Education Training Authorities (SETAs); NEDLAC’s role in monitoring and implementing policies; NEDLAC’s views on the upcoming Free Trade Agreement (FTA) with China; whether NEDLAC conducted research into the casualisation of the workforce; its public outreach programme; and the unemployment rate.

MINUTES

NEDLAC 2005 Programme: Briefing
Mr H Mkhize (Executive Director) began by providing the background history of NEDLAC. The mission of NEDLAC was to promote economic growth, broad participation in economic decision-making, and social equality. The aim was to achieve this mission through consensus agreements between the NEDLAC partners, which were labour, government, business and community organisations. NEDLAC’s other roles were to consider, and promote, the formulation of labour legislation and socio-economic policies.

Mr Mkhize highlighted some of the past achievements of NEDLAC. These included formulating such legislation as the Labour Relations Act, the National Small Business Bill, the Insolvency Amendment Act, and the Basic Conditions of Employment Act. Of specific interest was the Social Clause, which was formulated by NEDLAC in 1996/97. This was a provision that government included in all its multilateral and bilateral trade agreements. It stipulated that these agreements needed to respect labour rights. Other NEDLAC achievements included the Masakhane Campaign and formulating Black Economic Empowerment (BEE) guidelines. NEDLAC had also been involved in building, and strengthening, partnerships. This included its involvement in the Growth and Development Summit (GDS). These partnerships aimed to address South Africa’s social and economic challenges.

Mr Mkhize noted that South Africa faced a challenge in transforming the current economic growth into employment creation and greater social equity. This appeared to be hampered by the fact that South Africa was comprised of a first and second economy. It was the first economy that was benefiting and not the second. The challenge was to use the SETAs and learnerships to enable people to shift from the second economy to the first. If this did not take place, and people’s socio-economic needs were not met, then NEDLAC would have failed.

Mr Mkhize outlined some of the weaknesses of NEDLAC. To a degree, NEDLAC had become dominated by ‘technocrats and economists’. These people tended to focus on technical issues, which made the negotiations within NEDLAC time consuming. Some of them also lacked a political mandate, which meant that when they negotiated they would constantly return to their political leadership for mandates. This caused delays. Certain Departments, therefore, no longer brought issues to NEDLAC, as they felt that the delays hampered service delivery. In the light of this, the challenge for NEDLAC was to maintain a good rapport with government. Another challenge for NEDLAC was that most of the legislation, which it formulated, had been implemented. This meant that NEDLAC had to shift its focus. It needed to become involved in monitoring implementation and evaluating the impact of legislation. A further problem was that some of the NEDLAC constituencies claimed that NEDLAC had outlived its usefulness. They preferred to use less formal structures that avoided social dialogue to lobby for their own interests.

Mr Mkhize discussed some of the 2005/06 NEDLAC objectives. It would aim to maximise its value for the social partners; provide excellent secretariat services; establish national and international partnerships with socio-economic bodies; work towards attaining the goals of the GDS agreements; raise the public awareness of NEDLAC; provide training for its staff; and ensure NEDLAC remained a relevant site for social dialogue.

Mr Mkhize stated that NEDLAC’s 2005/06 draft work programme comprised of six key activities. These were:
- Activity one. This would involve NEDLAC formulating development strategies for various sectors, which included: the Chemicals Sector; the Mining and Metals Sector; the Construction Sector; the Information, Communications and Technology Sector; and the Clothing and Textile Sector. Part of this would involve examining how the various sectors could deliver on employment creation.
- Activity two. This would entail NEDLAC being involved in, and examining, fiscal and monetary policy. This would include NEDLAC engaging in the National Budget process through discussions and inputs. It would also involve NEDLAC engaging with the medium-term budget policy statement.
- Activity three. This would encompass NEDLAC’s work on the labour market. Some of the initiatives NEDLAC would undertake included: ensuring that the NEDLAC agreements were incorporated in the Superior Courts Bill, reaching an agreement on the Unemployment Insurance Fund review; developing agreed upon mechanisms to address atypical forms of employment; and raising awareness of Employment Equity.
- Activity four. This would encompass NEDLAC’s work around trade and industry. Specifically, it would entail NEDLAC consolidating its position on the Southern African Customs Union (SACU) and free trade with the USA, India and China. This activity would also involve NEDLAC finalising a BEE strategy and Bill; establishing a BEE advisory council; and conducting research on the automotive trade.
- Activity five. This activity would comprise of NEDLACs work on development. This would include NEDLAC’s focus on health care issues; social security; housing; education; the Expanded Public Works Programme; transport; and land issues. Each of the Departments involved in these areas would be briefing NEDLAC. It was in the development activity that the community constituency of NEDLAC played a major role.
- Activity six. This activity would embrace NEDLAC’s involvement in the GDS. This would include the formulation of the GDS draft reports. These would quantify the progress made by the social partners towards meeting the long and medium term goals of the GDS.

Discussion
The Chairperson requested more information about the view of some of NEDLAC’s constituencies that it had become irrelevant.

Mr Mkhize responded that it was a DA Member that had originally stated in early 2003 that NEDLAC was irrelevant. Amendments to the LRA, before early 2003, may have sparked this comment. In the process of the negotiations at NEDLAC, business wanted to deny workers the right to strike against retrenchments. Labour managed to stop this, and succeeded in ensuring that the right of workers to strike against retrenchments was included in LRA amendments. This then upset business and possibly resulted in the DA statement. Shortly after this, another Member of a different opposition party also made a similar statement. They suggested that NEDLAC was irrelevant because business had direct access to the Executive. The opposition Member also stated that business would prefer not to use NEDLAC because, in NEDLAC, it had to deal with “radical labour”. This, according to the Member, meant that their initiatives were often ‘watered down’ in NEDLAC. Mr Mkhize noted, however, that NEDLAC was still an extremely useful entity, because it was the only mechanism that involved negotiations between all the social partners.

Mr Mkhize stated that NEDLAC also experienced problems in the negotiations process. Different parties would sometimes send different levels of negotiators, depending on their interests. For example, if an issue were important to one party, they would send in a high level delegation. If a second party felt that the issue was not in their interest, they would send in a junior delegation. This would cause the negotiations to stall. He noted that government was also selective about the issues that it brought to NEDLAC. Mr Mkhize then noted that it was mostly the people who did not participate in NEDLAC that were the most vocal about it being irrelevant. The parties involved in NEDLAC, for the most part, believed it was relevant.

Mr M Mzondeki (ANC) stated that he felt that NEDLAC was relevant because it was involved in the ongoing challenge of development. NEDLAC was also the only structure that could review policies without being biased. It was also a structure that brought all the social parties together in dialogue.

Mr O Mogale (ANC) asked if the presenter believed that NEDLAC would still be relevant in five years. This was because most of the policies that NEDLAC had developed were now legislated.

Mr Mkhize responded that NEDLAC would remain relevant for as long as the majority of South Africans remained poor. NEDLAC was a crucial instrument for improving socio-economic conditions in the country. If NEDLAC were disbanded, then government would have to rely on public hearings. Public hearings did not offer the constituencies the opportunity to fully engage with government.

The Chairperson asked Mr Mkhize to elaborate on Section 77 notices. Mr Mkhize replied that one of the aims of NEDLAC was to try and prevent disputes that could result in labour action. If a trade union wanted to undertake action due to socio-economic issues, they were required to file a notice with NEDLAC. This notice would cite respondents, such as government or business. NEDLAC would then convene a meeting of the parties involved. In this meeting the issues given by the trade unions for wanting to embark on action would then be discussed. For example, the National Union of Mineworkers (NUM) filed a notice that it planned to embark on action because of the strength of the Rand. They cited the Reserve Bank, National Treasury and the Chamber of Mines as respondents. NUM also raised three issues in their notice. The first was that the Reserve Bank should explore possible mechanisms to alleviate the strength of the Rand. The second was that rail and port facilities in South Africa were inadequate. This caused higher transport costs, which impact on employment. NEDLAC then drew out nine key issues from NUM’s notice. If these could be addressed then NEDLAC would be able to formulate a rescue plan for the mining sector.

The Chairperson and Ms N Ncengwane (ANC) enquired about the impact of the Rand’s value on the economy and employment. Ms Ncengwane noted that the strong Rand was a sign of a strong economy, but it was also leading to job losses. She enquired whether a balance could be achieved regarding the value of the Rand. Added to this, would a weaker Rand even create more jobs?

Mr Mkhize acknowledged that the strong Rand was a problem for employment retention. However, a weak Rand would also be a problem. There needed to be equilibrium. The strong Rand was also a sign of a healthy economy and one should not rashly attempt to weaken the Rand. The main aim should be to have a more stable Rand.

Prince N Zulu (IFP) and Mr M Mzondeki (ANC) enquired about NEDLAC’s capacity.

Prince Zulu enquired about the type of skills that were being developed through learnerships and the SETAs. Where these skills relevant?

Mr Mkhize responded that employers were responsible for initiating learnerships. Indeed, it operated in a similar manner to the old apprenticeship system. Hence, sectors decided on the types of skills that were needed and then businesses were meant to train the learners they selected in these skills. The learners would also be exposed to a business environment. The employers that registered learners would receive incentives. Unfortunately, it appeared that many businesses were merely registering learners in order to receive the incentives, and not to skill learners for future employment. This often resulted in learners finishing a programme and then becoming unemployed again. In the light of this, some people were beginning to doubt the genuineness of some of the learnership programmes. This was a challenge that NEDLAC was responding to, and it had already initiated studies into learnership programmes.

Mr B Mkongi (ANC) enquired about NEDLAC’s proposal that it should be given powers to monitor the implementation of legislation. Indeed, the presenter had stated that NEDLAC should be allowed to implement the policies it had formulated. Currently, the Act governing NEDLAC’s functions did not allow for this. In the light of this, was NEDLAC proposing an amendment to the Act?

Mr Mkhize answered that NEDLAC was not proposing an amendment to the Act. It was the social partners who negotiated, and made deals within NEDLAC. However, once these deals had been concluded, the social partners were not responsible for the implementation. Some sectors of the public were criticising the government for implementing certain legislation and policies, such as the Labour Relations Act. However, they forgot that it was not government who had formulated the Act, but rather the NEDLAC social partners, which included business. This was why NEDLAC should, to a degree, be responsible for implementing the policies it had formulated. Similarly, the social partners formulated the goals of the GDS, and they should be responsible for implementing those goals.

Ms Ncengwane questioned whether the Proudly South African campaign was at odds with the free trade agreement with China. The Chairperson added that cheap Chinese imports appeared to be a threatening the existence of many small and medium sized enterprises (SMMEs).

Mr Mkhize responded that cheap imports into South Africa were the result of a number of factors. When tariffs were reduced, many South African businesses were not ready for the competition, and suffered as a result. The FTA negotiations with China had not yet begun. When they did, the government would ensure that they were informed by the realities of the situation. These realities included the fact that it was impossible to compete openly with the prices of the Chinese imports, especially clothing. The negotiations with China around a FTA would be delicate, as the Chinese also needed to know that there was a market for their exports in South Africa.

Mr Mkhize noted that a balance needed to be struck between buying Proudly South African and importing goods from China. If the government stipulated that companies should attempt to buy only South African products, problems would be encountered at the World Trade Organization (WTO). They would sanction South Africa for violating free trade.

Mr Mogale enquired whether NEDLAC would be involved in standardising the price of plastic carrier bags. Different shops charged different prices.

Mr Mkhize noted that people were free to charge whatever price they wanted for plastic bags.

Mr Mogale enquired whether NEDLAC had undertaken any studies around the casualisation of work and employment creation.

Mr Mkhize replied that the Department of Labour had conducted a study on work related issues, such as casualisation. It had commissioned five institutions to conduct a study on casualisation. Each of the institutions reached different results and conclusions. The Department then synthesized these results into one report. All the studies, however, reached the conclusion that the number of workers, who fell outside labour legislation, was increasing. Similarly, fewer and fewer workers received benefits, such as medical aid. Due to this, when these workers retired, or were retrenched, they would become dependent on the State. Casualisation was also creating two classes of workers. Those who were permanently employed tended to discriminate against those employed casually. Another finding was that, if South Africa promoted the casualisation of the workforce, it could possibly create more jobs. However, this would include major tradeoffs. For example, these new casual jobs would be very low paid; sweatshop environments would be created; and the workers would have no security, which would negatively impact on society. Labour rights were enshrined in the Constitution, and to allow wholesale casualisation of employment would be a violation of the Constitution. There needed to be a balance between creating jobs and respecting worker rights.

Mr Mzondeki enquired about NEDLAC’s public outreach strategy. The public needed to know what NEDLAC’s functions, and successes, were. The Chairperson also enquired how NEDLAC reported back to its constituencies.

Mr Mkhize answered that NEDLAC reported to the public through an annual summit and report, which provided information on its achievements and challenges. Highlighting the work of NEDLAC in the public arena was also difficult. This was due to the fact that NEDLAC comprised of different constituencies and operated on the basis of mandated representatives. If NEDLAC communicated directly with the public, or constituencies, it might be viewed as interference by the representatives. For example, trade union federations might be unhappy if NEDLAC communicated directly with shop stewards, and not through the union federations. This year, however, NEDLAC would be working closely with the community constituencies, through initiatives such as the Sustainable Livelihoods Conference and the Youth Council.

The Chairperson noted that the Minister of Labour would be undertaking a review of NEDLAC. She asked how the Committee could help NEDLAC during this process. She suggested that perhaps there should be a joint workshop between NEDLAC and a number of the Portfolio Committees. This would allow other Departments to find out more about NEDLAC’s work. It may also help prevent the situation whereby Departments refused to bring issues to NEDLAC.

Mr Mkhize responded that NEDLAC would welcome a joint workshop.

Mr Mogale asked what South Africa’s official unemployment rate was. Mr Mkhize responded that there were difficulties around the definition of what constituted being unemployed. It was also difficult to define who was eligible to work. Indeed, some statistics excluded people who were so despondent that they had stopped seeking work from the definition of unemployed. NEDLAC needed to engage in a debate on the methods and definitions used in gathering unemployment statistics.

The meeting was adjourned.