National Economic Development and Labour Council Annual Report 2005/6 briefing

LABOUR PORTFOLIO COMMITTEE
07 NOVEMBER 2006
NATIONAL ECONOMIC DEVELOPMENT AND LABOUR COUNCIL ANNUAL REPORT 2005/6 BRIEFING

Chairperson: Ms O Kasienyane (ANC)

Documents handed out:
Nedlac Annual Report for the Period 2005/6 presentation
Protocol for tabling issues at Nedlac

SUMMARY
The National Economic Development and Labour Council, NEDLAC, briefed the Committee. It was the vehicle by which government, labour, business and the community organisation sought to co operate in problem solving and negotiation. It tried to meet the goals of economic growth, reach consensus and conclude agreements on social and economic policy. The structures, management committee, work stream, scope, process flow were outlined. It was noted that Nedlac recognised the sovereignty of Parliament, and parties were bound not to reopen discussions in Parliament on any area where agreement had already been reached at Nedlac. The programme performance was summarised. The Growth and Development Summit remained a flagship programme. 75% of the tasks had been implemented and completed, and these tasks were listed and explained. Highlights for 2005/6 included the lowest interest rate in over 20 years, the lowest inflation rate for several years, higher social expenditure, a debt below 50% of gross domestic product and good growth. Examples for each industry were tabled. Promotion of international dialogue was improving. Key priority areas for 2007 included a labour market policy review, the Superior Courts Bill, the Code of Good Practice, the changing nature of work, legislative reform on retirement funds, social health insurance and other relevant legislation. The financial statements were tabled. The audit report was unqualified. Challenges included the complexity of issues, relationships becoming more adversarial, uncertainty arising from the current review process, short timeframes, relationships with parliament, government departments and coordination. Members asked questions on the relationships with parliament, comparisons with Malaysia, the co operation with the Local Government Association, the position of casual workers and the results of the research on casualisation. Nedlac was asked to research agriculture and it was suggested that Nedlac and the Committee should arrange a further meeting to discus all issues.

MINUTES
Briefing on Annual Report 2005/6 by National Economic Development and Labour Council
Mr Herbert Mkhize, Executive Director, National Economic Development and Labour Council (Nedlac) summarised the history, structures and process flow of the Council. Nedlac was the vehicle by which government, labour, business and the community organisation sought to co operate in problem solving and negotiation. It strove to meet the goals of economic growth, reach consensus and conclude agreements on social and economic policy. It would consider all proposed labour legislation before it was introduced in Parliament. It was funded by the Department of Labour, and had four social partners, none of whom had the formal veto.

Mr Mkhize outlined the structures, management committee, work stream and scope and governance of Nedlac. He outlined the process flow, and the circumstance where the intervention of the relevant Minister would be required. Nedlac recognised the sovereignty of Parliament, and parties were bound not to reopen discussions in Parliament on any area where agreement had already been reached at Nedlac. However, the social partners were often asked to address parliamentary Committees when dealing with specific issues and were free to raise issues where there had been no agreement or on which Nedlac had been silent.

Mr Mkhize summarised the programme performance, which had included a summit in August 2005. The Executive Committee had convened two meeting to discussion monetary policy, skill development and implementation of the Accelerated Shared Growth Initiative for South Africa (ASGISA). The Management Committee had considered a number of listed pieces of legislation. The performance overall was tabled and described.

The Growth and Development Summit (GDS) remained a flagship programme and its achievements were listed. Over 75% of the tasks had been implemented and completed. Bottlenecks had been resolved. The constituents had agreed to conduct peer review exercises. Coordination of issues remained a challenge. Completed tasks included the Retirement Fund Trustee conference, study tours, the Municipal Infrastructure Grant programme, and a framework for the Expanded Public Works Programme projects, codes for broad based black economic empowerment (BBBEE) and strengthening the Sector Education and Training Authorities (SETAs).

Highlights for 2005/6 included the lowest interest rate in over 20 years, the lowest inflation rate for several years, higher social expenditure, a debt below 50% of gross domestic product (GDP) and good GDP growth. Examples for each industry were tabled. The promotion of dialogue internationally was improving and examples were tabled.

Key priority areas for 2007 included a labour market policy review, the Superior Courts Bill, the Code of Good Practice, the changing nature of work, legislative reform on retirement funds, social health insurance and other relevant legislation.

The financial statements showed that there had been a surplus of income over expenditure. The Audit Report was unqualified but had contained a matter of emphasis on the non-submission of materiality and significance framework. This had since been submitted. The Challenges included the fact that issues were becoming more complex, that relationships were more adversarial, there was uncertainty arising from the current review process, issues being tabled with short timeframes, relationships with parliament, government departments and coordination. The way forward would include engaging with review recommendations, streamlining the programme, increasing the capacity of the Secretariat, research, building relationships and searching for improved policy co ordination.

Discussion
Mr Lowe (DA) said there was a contradiction in the presentation. On the one hand Nedlac recognised parliament supremacy but on the other would not permit Nedlac parties to re-open discussion in Parliament on areas where they disagreed with Nedlac’s decision.

Mr Mkhize replied that the Nedlac relationship with Parliament was fine, and he insisted that Nedlac fully recognised Parliament’s sovereignty. He added that Nedlac wished to avoid the situation where a party in their constituency would enter an agreement in Nedlac on the one hand but and in Parliament lobby against the agreement. That was what Nedlac considered must be avoided.

Mr Lowe asked why South Africa was not comparable in position to Malaysia.

Mr Mkhize said that Malaysian factories had risen in production while South African went down. The major difference arose through difference in skills. He said that ASGISA was an initiative to develop those skills. However he admitted that South Africa was far behind Malaysia and that is why Nedlac were focusing on manufacturing, as they believed it was the Malaysian highest point of development.

Mr L Maduma (ANC) asked if Nedlac was working with the South African Local Government Association (SALGA) as it was involved with communities.

Mr Mkhize replied that SALGA had once made an application to be a Nedlac constituent member, but had not qualified, as it was a broad body. He added that some people had suggested that SALGA be put under the development chamber as a community entity, but communities had argued that SALGA was their line manager, and that this was inappropriate. For these reasons, SALGA was not a constituent and Nedlac did not currently work with them.

Mr E Mtshali (ANC) asked Nedlac to give a motivation why a community constituency was not allowed to participate in other chambers beside the development chamber.

Mr Mkhize replied that in two weeks time the Nedlac management would be meeting to discuss this issue of including communities in other chambers. However, he warned that most of the members in other chambers did not want community members to join them and others had threatened to walk out if the communities did so.

Mr T Anthony (ANC) asked if Nedlac had done any research on the position of casual workers. ,  Large companies had employees who had been casual workers for more than five years.

Mr Mkhize replied that the Minister of Labour has looked at this and other related matters. Six pages of research were synthesised and tabled in front of Nedlac, and casual employment was found to be the favoured option. He also said the view of favouring casual workers was influenced by Americans who preferred part-time jobs as they wanted to spend more time with their families.

Mr Bheki Ntshalintshali, member of Nedlac Executive Council, added that casualisation was a new form of exploitation and that there was a new term for casual workers, who were called “permanent part-time workers”. He also said in relation to rural areas land was a critical issue and he gave examples on how farmers would use land under private law to violate their workers’ human rights. He also suggested that Nedlac needed more funds, especially when one considered how much money was being allocated elsewhere to institutions that did not do as much as Nedlac to serve the nation.

The Chairperson and Prince Zulu objected to a particular example that Mr Ntshalintshali had used. Mr Ntshalintshali apologized for his remarks and motivated that he was not trying to offend anyone but was raising an issue of budgetary importance on the government’s side.

The Chairperson asked how effective Nedlac was in finding compromises in relation to retrenchment and unemployment

Mr Mkhize replied that Nedlac had not agreed that there would be no retrenchment, and also said there were only two constituencies in Nedlac that employed people – namely the government and business. He added that it was Nedlac’s goal to formulate policies that were geared towards addressing the high levels of poverty and high levels of unemployment.

Prince N Zulu (IFP) asked if Nedlac could use its influence to commission a study on why agriculture was producing the way it did, in relation to employment

Mr Mkhize replied that Nedlac had not researched how agriculture had failed them after being a champion of employment. However, he said he could speculate that the reason would be the issue of land. He insisted that land reform had been a major concern for Nedlac.

Prince Zulu appreciated the way the question on land was answered.

Mr S Mashudulu (ANC) suggested that there should be a two-day project when the Committee and Nedlac could meet and discuss issues

Mr Sizwe Shezi, Overall Convenor for Community, Nedlac, added that there should be two sessions so that Nedlac could in turn learn from the parliamentarians.

The meeting was adjourned