Nedlac Annual Report: briefing

Ms O Kasienyane (ANC)

Documents handed out:
NEDLAC Annual Report 2004/05 PowerPoint presentation
NEDLAC Annual Report 2004/05

SUMMARY
The National Economic and Development Labour Council (NEDLAC) provided background information on NEDLAC, which included outlining its mandate and structure. The delegation then discussed the achievements of NEDLAC’s four Chambers in 2004/05, and of the Joint Processes. Officials further discussed implementation of the Growth and Development Summit (GDS) agreements that informed all of NEDLAC’s working programmes. A GDS Implementation Committee had been established. A report on the Section 77 protest actions, which took place in 2004/05, was also provided. Through negotiations at NEDLAC, 65% of Section 77 Notices from trade unions had been resolved.

The delegation then discussed the 2004/05 financial statements. NEDLAC had had an income of approximately R9.5 million in 2004/05. Most of this had been derived from grants. NEDLAC’s total operational costs for 2004/05 had been R8.74 million. This meant that NEDLAC had a net surplus of R855 317 in 2004/05. They concluded that NEDLAC had performed well in 2004/05. Indeed, NEDLAC had proved the ongoing value of ‘social dialogue’.

In the ensuing discussion, Members asked:
- how Parliament could further assist NEDLAC;
- whether NEDLAC was contributing to the goals of halving poverty and unemployment by 2014;
- whether all the social partners still viewed NEDLAC as a vital institution;
- whether the Expanded Public Works Programme (EPWP) was offering beneficiaries relevant skills development;
- whether NEDLAC was assisting small-, medium- and micro-sized enterprises (SMMEs) and co-operatives;
- how the NEDLAC social partners were addressing the impact of cheap imports on South African industries;
- whether there should be a Social Accord in South Africa;
- and whether NEDLAC had sufficient staff capacity.

MINUTES

NEDLAC briefing
Mr H Mkhize (NEDLAC Chief Executive Officer) began by providing background information. NEDLAC had been formed in 1995, and had been instrumental in initiating the Growth and Development Summit (GDS) in 2003. It had brought together government, civil society organised labour and organised business in ‘social dialogue’, to ensure that there was sustainable economic growth and greater social equity. NEDLAC also facilitated social dialogue in order to consider proposed labour legislation; considered changes to social and economic policies; and promoted the formulation of co-ordinated policy.

Mr Mkhize then outlined the structure of NEDLAC, and the configuration and performance of its Executive Council and Management Committee. During 2004/05, these two bodies had held meetings to focus on the implementation of the GDS agreements; to consider the National Health Policy; to consider the National Budget; to focus on the Proudly South African Campaign; to examine NEDLAC’s work programme; to consider the Co-operatives Bill; and to resolve Section 77 Notices.

Mr Mkhize then discussed the performance of NEDLAC’s four Chambers, which were:
- The Development Chamber. In this Chamber, the social partners would deliberate; reach consensus and conclude agreements on all matters pertaining to development in South Africa. During 2004/05, this Chamber had held 22 meetings that covered social security; transport; the Co-operatives Bill and strategy; energy policy; local government; and the implementation of the GDS agreements.
- The Labour Market Chamber. In this Chamber, the social partners would meet to consider all proposed labour legislation and labour market policies prior to their submission to Parliament. In 2004/05, this Chamber had held numerous meetings around demarcation; employment equity (EE); the business rescue model, the growth of casualisation in the labour market; the maternity convention protection; the Superior Courts Bill; the Protected Disclosures Act; and the Immigration Act and regulations.
- The Trade and Industry Chamber. In this Chamber, the social partners would meet to reach consensus and make agreements on matters relating to the socio-economic dimensions of trade and industry, mining, agricultural and service policies. During 2004/05, this Chamber had met to consider corporate law reform; consumer policy; consumer credit policy; air pollution; the modernisation of South Africa’s technical infrastructure; and the broad-based black economic empowerment (BBBEE) ‘scorecard’. The Chamber had also established task teams to work on issues surrounding South Africa’s free trade negotiations with the European Free Trade Association (EFTA), the United States; and the Mercosur countries (Brazil, Argentina, Uruguay and Paraguay). This Chamber had also been involved in researching industrial development, growth and equity through the Fund for Industrial Development, Growth and Equity (FRIDGE). Through FRIDGE, NEDLAC had also examined how South Africa’s different industries could become more globally competitive.
- The Public Finance and Monetary Chamber. In this Chamber, the social partners met to reach consensus on the framework within which financial, fiscal, monetary and exchange rates were formulated. In 2004/05, this Chamber held meetings on import parity; pension and provident funds; the Financial Sector Summit Agreement; and the national budget process.

Mr Mkhize outlined the performance of NEDLAC’s Joint Processes. Through this programme in the past year, NEDLAC’s constituencies had jointly established a Summit Planning Committee for the metals and engineering sector; and undertaken negotiations around the restructuring of the chemicals sector, housing delivery, investment challenges, and skills development in the economy.

Mr Mkhize discussed the implementation of the GDS agreements. In 2003, their constituencies had signed the GDS agreements, which were aimed at ensuring that certain common developmental gaols were achieved. Indeed, the aim of the GDS was to ensure that South Africa’s economy became globally competitive, while increasing social equity, reducing poverty, and maintaining labour standards. The constituencies had jointly identified certain priorities, which included the need to: mobilise investments; create decent work for all; address the legacy of underdevelopment; and to strategically engage with globalisation. In order to manage the implement the GDS agreements, the constituencies had ensured that the GDS was on the agenda of all the NEDLAC statutory meetings. A GDS implementation committee had also been established.

Mr Mkhize then reported on issues around the Section 77 Notices that had been lodged at NEDLAC in 2004/05. Section 77 of the Labour Relations Act (LRA) ensured that workers had the right to participate in protest action to promote or defend their socio-economic interests. The LRA had tasked NEDLAC with the responsibility of bringing the parties together to avoid Section 77 protest action. Mr Mkhize noted that in 2004/05, NEDLAC had been able to resolve 65% of the Section 77 Notices that had been tabled by various trade unions. Nonetheless, a number of protest actions had been undertaken by COSATU, the SA Clothing and Textile Workers Union a (SACTWU), the SA Municipal Workers Union (SAMWU), and the National Union Of Mineworkers (NUM). In order to be more effective in solving grievances, NEDLAC was considering initiating an extensive partnership with the Commission for Conciliation, Mediation and Arbitration (CCMA).

Mr Mkhize then discussed the 2004/05 financial statements. NEDLAC had an income of R9.45 million in 2004/05. Most of this income had been derived from grants. However, the total had not included the additional R132 318 that NEDLAC had received from its constituencies. NEDLAC’s total operational costs for 2004/05 had been R8.74 million which meant a net surplus of R855 317.

Mr Mkhize outlined some of their work for 2005/06. NEDLAC was working towards ensuring that the mandate processes of the constituencies were streamlined, and that parties promptly brought issues to them. There needed to be better synergy between the social partners to enable government’s target of 6% economic growth. NEDLAC was also undertaking a review of its mandate and operations. The constituencies had signalled their willingness to enter into discussions on a possible Social Accord. This would perhaps open up the space for organised labour and organised business to begin to consider the types of sacrifices, which they would be willing to make, to ensure economic growth and address unemployment. For example, through a Social Accord, business would perhaps agree to not retrench any people for five years, if labour perhaps agreed to lower wage increases for five years. Mr Mkhize concluded that NEDLAC’s performance in 2004/05 had been excellent. Indeed, NEDLAC had demonstrated the ongoing value of social dialogue. Social dialogue was the key to growth, decent work, development, and social equity.

Discussion
Mr B Mkongi (ANC) asked how Parliament could be involved in strengthening NEDLAC. Mkhize responded that in the past, when government departments brought socio-economic issues to Parliament, MPs would enquire whether these matters had been referred to NEDLAC. If they had not, Parliament would insist that these issues were referred to NEDLAC. Perhaps such a relationship could be re-instituted.

Mr Mkongi stated that government’s aim was to halve poverty and unemployment by 2014. He enquired whether NEDLAC was involved in this drive. Mr Mkhize responded that all of NEDLAC’s working programmes were driven by these goals, as were the GDS agreements. However, proper co-ordination was necessary if these targets were to be met.

Mr Mkongi recalled that during NEDLAC’s last visit to Parliament, it had stated that there was a problem around the constituencies sending junior officials to certain NEDLAC meetings. This would specifically take place when one of the social partners wished to stall negotiations around a certain issue. NEDLAC was now reporting that all the social partners were sending high-ranking officials to meetings. He asked how they had turned this situation around.

Mr Maduna felt that government viewed NEDLAC as a vital institution and, as a result, it sent high-level delegates to NEDLAC. However, some of the other social partners seemed to have a less favourable view. Indeed, organised labour had only sent a regional secretary to chair one of NEDLAC’s Executive Council meetings.

Mr Mkhize responded that all the stakeholders sent high-level officials to NEDLAC meetings. For example, Mr Motsepe usually led the Business Unity South Africa’s delegation to NEDLAC’s Executive Council meetings; Mr Vavi led COSATU’s delegation to NEDLAC Executive meetings; and people like Mr Blade Nzimande headed the community constituency delegation in Executive Council meetings. Nonetheless, senior officials from the labour, business, and community constituencies would usually not attend Chamber meetings. This, however, was due to the technical nature of these meetings. As a result, the constituencies would send lower-ranking officials, who were specialists, into the chamber meetings.

Mr Mkongi enquired whether the South African Non-Governmental Organisation Coalition (SANGOCO) was part of NEDLAC’s community constituency.

Mr L Maduna (ANC) commented that there still seemed to be much disagreement between the social partners. The number of Section 77 Notices was evidence of these disagreements. Organised labour and organised business seemed to differ on how employment could be created. Mr Mkhize responded that 65% of Section 77 Notices had been resolved through negotiations at NEDLAC. However, issues that related purely to the macro-economic framework were almost impossible to resolve. Hence, it had been almost completely impossible to prevent COSATU’s strike against unemployment and the high value of the Rand.

Ms Maduna noted that the EPWP was mainly creating temporary jobs. He questioned whether such jobs were linked to skills development. Were the EPWP workers receiving critical skills training that could be used in the wider economy? The skills gap in South Africa could only be closed if people were receiving training in critical skills.

Mr Mkhize responded that the EPWP had a number of objectives, which were to:
- promote poverty alleviation through creating employment opportunities. Even though most of the EPWP jobs were temporary, they impacted positively on people’s lives. Working, even on a temporary basis, provided people with a sense of pride. Added to this, their income went towards poverty alleviation.
- expose people to skills. Indeed, some people had gained scarce skills through the EPWP for use in the wider economy.

Mr Mkhize explained that certain unintended consequences had arisen out of the Skills Development Act. In order to receive a grant, companies needed to produce Workplace Skills Plans (WSPs). These WSPs needed to demonstrate that the company was providing skills training to employees, which was relevant for their work careers. However, many of the mines were in the process of closing down. Due to the Act, such mines could not get grants to train people in skills, other than those that were related to mining. These mines however, should be training miners to enter into alternative forms of employment. This problem needed to be further addressed.

Mr Maduna noted that NEDLAC was in the processes of considering the Co-operatives Bill and strategy. The Department of Trade and Industry had created a task team to assist with the establishment of co-operatives. He asked whether this task team had made progress towards establishing co-operatives.

Ms S Rajbally (MF) enquired whether NEDLAC had examined the feasibility of establishing ‘kibbutz-style’ co-operatives. Mr Mkhize responded that the Department of Trade and Industry had a directorate that was working on the issue of co-operatives. He could not provide an in-depth progress report here, but such a report would be provided to the Committee at a later stage. The correct environment needed to be created to ensure that co-operatives were successful. If this was achieved, the co-operatives could form part of the possible solution to unemployment. Co-operatives could also economically empower communities. There was a potential to transform stokvels into co-operative banks.

Ms Rajbally enquired whether South Africa was prepared for climate change. Were there any regulations to reduce air pollution? If so, were these regulations strictly monitored? Mr Mkhize replied that NEDLAC, along with the Department of Trade and Industry, had recently finalised a policy framework on pollution-related issues. The Department of Minerals and Energy was also ensuring that leaded fuel was phased in over the next few years. In addition, the Department of Environmental Affairs and Tourism was researching, and dealing with, issues around global warming.

Ms Rajbally enquired whether unemployment was being reduced. She also noted that South Africa had a number of multilateral and bilateral free trade agreements with other countries. However, some foreign corporations were abusing these trade agreements by dumping products on the South African market. She asked whether there were any effective controls to prevent this. The Chairperson added that some foreign-owned companies in South Africa were illegally importing goods, and not paying taxes. She enquired whether the NEDLAC social partners had discussed mechanisms to address this problem.

Mr Mkhize replied that there had been discussions on customs and excise. Added to this, some companies produced false invoices in order to avoid paying full import duties. The business sector was considering how it could deal with this issue. Some cheap legal imports were also undermining South Africa industries. This could only be addressed through a long-term strategy. South Africa needed to ensure that it was not only an exporter of raw materials, but also an importer of value-added goods. South Africa needed to expand its secondary industries to produce value-added products locally. Imposing import barriers was not a sustainable solution.

Ms Rajbally asked whether affirmative action was being fairly implemented and monitored. Mr Mkhize replied that the Employment Equity Act required employers to submit Employment Equity Reports. The Commission on Employment Equity was also responsible for monitoring.

Ms Rajbally observed that the delegation had stated that part of a Social Accord could entail business guaranteeing jobs for five years, if labour forfeited increases for five years. She asked whether inflation would be calculated into such a deal.

Mr N Gogotya (ANC, Member of the Public Works Portfolio Committee) added that perhaps South Africa should not use the Netherlands and Irish Social Accords as examples to emulate. South Africa had its own set of unique dynamics. For example, most of the businesses in South Africa were owned by white people.

Mr E Mtshal (ANC) was concerned that a Social Accord would lead to further exploitation of the working class. Workers would have to forfeit increases, while employers still continued to make profits. In Britain and the United States, the employers had benefited most from Social Accords.

Mr Mkhize responded that during the presentation, he had used a bad example to highlight the types of sacrifices that business and labour might make. Nonetheless, he explained that a wage increase was different from an inflation-based wage adjustment. Most of the collective bargaining in South Africa was not ensuring that workers received real wage increases; but rather that they received wage adjustments in line with the inflation rate. In a possible Social Accord, workers would be forfeiting wage increases, and not wage adjustments. Indeed, a Social Accord would include automatic wage adjustments, which were in line with the inflation rate. Hence, a Social Accord would not further impoverish South African workers. COSATU had been wary of the idea of a Social Accord. It was only recently that they had demonstrated a willingness to engage in a dialogue about it.

Mr Gogotya stated that the problem of job casualisation was historical, as the apartheid government had viewed black people as temporary sojourners in the urban areas, and most people were employed on a contract basis. White-owned businesses were thus geared towards job casualisation, and this had not changed. As a result, casual jobs had a historical stigma for black people.

Mr Mkhize acknowledged that South Africa had a difficult historical legacy. However, it was questionable whether black-owned businesses would act fundamentally differently from white-owned businesses. Both black and white business people were taught, and adhered to, the same business economic models and practices. Indeed, investors tended to shy away from businesses that did not adhere to certain models.

Mr G Anthony (ANC) enquired whether NEDLAC, as an institution, had sufficient staff capacity.

Mr Mkhize responded that NEDLAC’s Secretariat was experiencing a capacity problem, as were some of their constituencies. The issues that were being dealt with in NEDLAC were becoming more complex and technical, and some of the constituencies did not have sufficient specialists, which could delay progress. In addition, the quality of the outcomes of that meeting would also be compromised. Due to capacity constraints, some of the constituencies would send a single competent representative to most of the meetings. A problem would then arise when two meetings were scheduled for the same day. Constituency representatives were not deployed on a full-time basis at NEDLAC. Indeed, attending NEDLAC meetings was an additional responsibility for the constituency representatives. NEDLAC’s review process was taking these issues into account. One possible solution was for the constituencies to deploy permanent staff at NEDLAC. However, if the social partners had permanent staff at NEDLAC, accountability could possibly become an issue.

Mr Mkhize explained that during NEDLAC’s initial phase, it had dealt with policy issues. As a result, it had initially employed policy experts. However, the nature of NEDLAC was changing dramatically. NEDLAC was now focusing on implementation, monitoring and review, so it required project managers, mediators and researchers. NEDLAC was considering whether to retrain its current staff to better fulfill these new roles. NEDLAC was also entering into a partnership with the CCMA to ensure that it had access to mediation skills.

Mr Anthony noted that SMMEs were potential drivers of economic growth and job creation. He enquired whether SMMEs were being provided with skills development, financing, and general support, from NEDLAC.

Mr Mkhize said that NEDLAC and the GDS had prioritised the development of SMMEs in a supportive environment. The Financial Sector Charter was meant to ensure that SMMEs had access to financing. Government should begin to provide tenders to SMMEs. There also needed to be effective co-ordination between the government agencies to ensure that SMMEs were supported.

The meeting was adjourned.