National Economic Development & Labour Council 2006/7 Annual Report : briefing

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Labour

18 February 2008
Chairperson: Ms O Kasienyane (ANC)
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Meeting Summary

The National Economic Development and Labour Council (NEDLAC) briefed the Committee on its work, role and function, pointing out that it was never intended to implement programmes or actions, but rather to develop and shape policies, and promote social equity. It acted as a conduit between the Executive and other institutions. It was building enduring partnerships between organised business, government, society and organised labour. It aimed to deliver formal consensus-based agreements, and in some instances to consult on issues prior to negotiation or implementation. An outstanding issue was that of constituency involvement in all structures of NEDLAC, although there were temporary task teams including the constituencies currently discussing matters. The four main chambers were tabled, and their functions and powers outlined. The work of the Standing Committees was also mentioned, focusing on the Section 77 Standing Committee. A report was given on achievements, highlighting foreign trade, employment creation, remuneration, productivity and employment. There was a list of legislation tabled. NEDLAC had received visits from a number of other countries. The financial performance was summarised, and it was indicated that there were recommendations to increase the funding.

Members raised queries around the progress with the Accelerated Shared Growth Initiative, its linkage with the 2003 Growth and Development Summit, casualisation of labour, the representation of small enterprises in NEDLAC, the allegations of imminent economic recession and the problems with demarcation. Other questions, which could not be answered at this meeting, related to public transport disruptions, the progress of the labour market policy review, criteria for the community participation awareness drive, imports of foreign goods, the implications of the 40-hour week and the areas of the policy undergoing review. It was suggested that legislation on labour brokers should be fast-tracked and a progress report given on casualised labour and local procurement of services.

Meeting report

National Economic Development and Labour Council (NEDLAC) presentation
Mr Herbert Mkhize, Executive Director, NEDLAC, and Professor Raymond Parsons, Business Constituency Overall Convener, NEDLAC, briefed the Committee. 

Mr Mkhize gave an overview of NEDLAC, and mentioned that the constituencies of it included government, business, labour and community, who aimed through social dialogue to address the economic and development challenges of South Africa. The focus was guided by the leadership of the country, with the President’s State of the Nation address spelling out some of the key focus areas for 2008.The constituencies also would raise important issues.

Mr Mkhize noted that there was often confusion about the role and function of NEDLAC with questions posed on the implementation progress. However, NEDLAC from its inception was never conceptualised as a forum to implement programmes or actions. The forum’s primary role was to develop and shape policies, although this had been broadened recently to include the promotion of social equity and similar matters. In executing that role NEDLAC essentially provided the right architecture for the policies and legislation, after which they would be handed over to the relevant institutions responsible for implementation. The question was therefore whether NEDLAC had provided the framework to address particular issues, rather than whether it had completely resolved the issues. He added that NEDLAC could also be viewed as a conduit between the Executive Authority and other institutions.

 NEDLAC, like many other forums and institutions, sought to further participatory democracy in South Africa. It aimed to build an enduring partnership between organised business, government, society and organised labour. It promoted the goals of economic growth, participation in economic decision-making, and social equity. It would reach consensus and conclude agreements on social and economic policy. It considered all proposed labour legislation and significant changes to social and economic policy, before these would be introduced into parliament. The entire South African labour legislation was developed and passed through NEDLAC, and it must bear some responsibility if the policies and legislation did not achieve their intended goals in terms of regulatory framework.

Mr Mkhize noted that there was no voting in the forum and no party within NEDLAC had an official veto. NEDLAC was essentially a negotiating forum that aimed to deliver formal consensus-based agreements on issues tabled by the leadership and the four constituencies.  There were also instances when there was consultation on issues prior to negotiation or implementation. Information sharing was used by the forum, as one or more constituencies may be experts on certain issues. NEDLAC would also resolve socio-economic disputes in terms of section 77 of the Labour Relations Act (LRA), and these were issues falling outside the usual collective bargaining domain or other forums and institutions, such as the Commission for Conciliation, Mediation and Arbitration (CCMA).
 
Mr Mkhize tabled a diagram of the structure of NEDLAC, and commented that the community constituency involvement in all structures was still unresolved, although there were bilateral discussions taking place to discuss how the community constituency could best participate in all structures. In the meantime a Task Team, including the community constituency, was set up to participate on issues tabled in each of the four NEDLAC chambers. A recent example was the task team to address the current electricity challenges being faced by the country. In normal circumstances such issues would be dealt with in the Trade and Industry Chamber, in which the community constituency did not have a seat. A further unresolved issue emanated from the Global Summit in 2003, where a recommendation was made that the community constituency be given a seat on the Sector Education and Training Authority (SETA) board. Currently it was only the business and labour constituencies that sat on the board.

Mr Mkhize noted that there were four main chambers in NEDLAC. The Trade and Industry Chamber had equal representation of the Labour, Government and Business constituencies with 6 seats each. The Labour Market Chamber dealt with all matters relating to the Labour Market at policy level. The Public Finance and Monetary Policy Chamber dealt with the Fiscal and Monetary Policies, and regularly interacted with the Reserve Bank and National Treasury. The fourth and most powerful was the Development Chamber, as it could veto decisions made in the other Chambers. It also had an equal number of seats in the NEDLAC Management Committee and the Executive Council. The Development Chamber also checked whether the policies emerging from the Labour Market Chamber addressed key developmental challenges. It therefore acted as a quasi-policing and monitoring arm of the policies generated within NEDLAC.

NEDLAC also had various Standing Committees, of which the three most critical were the Section 77 Standing Committee, the Demarcations Standing Committee and the Trade and Industry Chamber's Technical Sectoral Liaison Committee (TESELICO). The Section 77 Standing Committee was currently dealing with six notices of different trade unions, who were  seeking to embark on protest action for socio-economic reasons. Another recent issue dealt with in this Committee involved discussions with a federation that had stated its intention to embark on protest action over the electricity situation. The Demarcations Standing Committee dealt with issues around Bargaining Council demarcation, and the TESELICO Standing Committee with trade issues.

Mr Mkhize then tabled a number of graphs. NEDLAC was to promote economic growth, and the graphs on percentage change in Real Gross Domestic Product (RGDP) essentially indicated the outcomes of these efforts. Progress had been made but there was still a lot more work to do.

Mr Mkhize presented further graphs on South African Foreign Trade, noting that the widening gaps between the imports and exports from September 2003 was currently being addressed in NEDLAC’s Trade and Industry Chamber. The increase in imports relative to exports had partly been a consequence of the increase in preparations for the 2010 World Cup, as this  required the importation of machinery and material that were either not locally produced or not locally available.

Mr Mkhize tabled a graph on employment creation, stating that the situation was more critical in the 15-24 year age group, followed by the 25-35 year group. There was a need to target interventions at these age groups.
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The graph on real remuneration, productivity and employments indicated that labour productivity was now also rising. The graph on employment by industry indicated that the highest employment generating sectors in the economy were construction, trade and finance.

Mr Mkhize outlined the key achievements, noting that the International Labour Organisation (ILO) Convention on Maritime Labour had been concluded and would be tabled to the committee in the near future. He listed other policies and agreements also concluded. The Cooperatives Bill addressed an enabling environment for cooperatives and the threat of undermining of labour standards. Other legislation concluded was listed.

Mr Mkhize also outlined the publications, public information and media coverage over the last year. There had been international visits to NEDLAC from five countries to study the South African model of social dialogue. Tanzania was very keen to set up a similar forum, and particularly liked the involvement of the community constituency. Zimbabwe had studied the NEDLAC social dialogue model as a possible way to address its economic and political situation in their country. Other visitors included Angola, Algeria and Turkey.

Mr Mkhize tabled a statement of financial performance. There had been an increase in grants received by NEDLAC. NEDLAC had performed very well considering the funding it received. However, a recent review of NEDLAC resulted in recommendations to seriously consider requesting more funding to in order to achieve set objectives.

The key focus areas for 2007/08 were tabled across the sectors. Atypical forms of Employment had been a focus area for some time, and there was emphasis on trying to understand the phenomenon rather than focusing on eradicating it. ILO had recently launched a project on Decent Work Country. He summarised that more organisations were seeking affiliation and more government departments were bringing issues to NEDLAC.

Discussion
The Chairperson asked the progress made with regards to Accelerated Shared Growth for South Africa (AsgiSA)

Mr E Mtshali (ANC) commented that the casualisation, in addition to the adverse effects it had on workers, led to poor service delivery by employers.

Ms A Dreyer (DA) said she was pleased to see NEDLAC’s emphasis on social dialogue. She added that job creation was achieved through economic growth, particularly through the Small Micro and Medium Enterprises (SMMEs). She asked why big business appeared to have the most representation in NEDLAC whereas SMMEs, who were central to job creation, had little.

Professor Parsons replied that business was represented by Business Unity South Africa (BUSA), and its current structure was 4 years old. He added that BUSA was the result of a merger between Black Business and Business South Africa, had 40 members and had recently progressed to include SMMEs. 

Mr O Mogale (ANC) referred to Professor Parson’s presentation, noting that there had been rejection of the recent talks and assertions of an imminent economic recession. He asked why Business Unity South Africa (BUSA) had not challenged these talks through the media, as it appears that the fear of economic recession was rampant amongst the public.

Professor Parsons replied that BUSA had aired its disagreement about imminent economic recession as soon as the comments and remarks were made. He added that according to current research and statistics, it was highly improbable that there would be an economic recession in the near future. The assertions about the recession had no factual basis.

Mr Mogale referred to the commitment to closely align the outcomes of the 2003 Growth and Development Summit (GDS) with the targets and goals of Asgisa. He asked what follow ups, if any, were made on the proposed alignment, and what were the benefits of the initiative to provinces. He also asked to know how the two initiatives were linked.  

Professors Parsons replied that AsgiSA Annual report was due next month, and thus it had been decided to provide a separate presentation on the current progress and outcomes of the initiative.

Mr Mogale asked whether there had been any problems with regards to demarcation, and how they were addressed.

Mr Mkhize replied that 65% of the disputes brought to NEDLAC concerned rates by councils and involved companies refuting Council’s jurisdiction over the company and requesting clarification over demarcation. Employees would take disputes to NEDLAC as to which bargaining councils covered them and the sector they worked in.  He commented that employees would be trying to switch to those bargaining councils who were providing the best benefits and working conditions through their collective agreements.

Mr Mogale aired his concern about the recent burning of trains and the resultant public transport disruption. He asked to know the broader implications of these events on national transport and security.

Mr Mogale asked to know the progress made so far in the labour market policy review.

Ms S Rajbally (MF) asked to know the criteria used in the community participation awareness drive.

Ms Rajbally asked if anything had been done to address the situation regarding the importation of cheap foreign goods that had led to the closure of local business.

Ms Rajbally asked in which sector was the highest unemployment rate.

Ms Rajbally asked to know the implications of the 40 hour week on the salaries of employees.

Mr B Mkongi (ANC) asked which specific areas of the Labour Market Policy were being reviewed.

Mr Mkhalipi replied saying that the last two round-table discussions that were hosted by the Minister of Labour had led to agreement that there was nothing wrong with the labour legislation and that no major amendments were necessary. He added that there were however problems with regard to the implementation and enforcement of the legislation.

Mr Mkongi asked what exactly was being changed through the SETA Amendment Bill. He commented that he thought the SETA review had resulted in recommendations on the functions of the SETAs with no major changes.

Mr Mkongi commented that the commitment of Business to social dialogue was doubtful, as they had in the past chosen not to vote on resolutions that the public and other stakeholders had voted on.

Mr Mkongi commented that strengthening of the institutional framework was a crucial challenge, particularly for the CCMA and NEDLAC. He asked whether this challenge was due to the disparities between labour and business in terms of negotiating or bargaining strength.

Mr Mkongi commented that it might be necessary to fast track legislation regulating labour brokers as the working conditions were sub-standard.

The Chairperson concurred with Mr Mkongi’s assertion on labour broking. She asked whether the Labour Market Policy Review addressed the issue.

Mr Mkhalipi replied that there was a broad consensus that casualisation was bad. The Decent Work Country Project and social dialogue was meant to address the phenomenon. However, a drawback of social dialogue was the slow formulation of legislation. He added that it would take time to agree on legislation and a regulatory framework to address the issue

Mr T Anthony (ANC) commented that the 40 hour week had been opposed by companies in previous proposals. He asked whether NEDLAC had considered the implications of the proposal in terms of economic growth and development, productivity and the previous objections raised in the previous proposals.

Mr Mkhalipi replied that the Basic Conditions of Employment Act (BCEA) effectively regulated working hours, limiting them to 45 hours a week. The Act did nonetheless provide and allow, after consultation and negotiation, for agreements on the promulgation of a 40-hour week. He added that this was a voluntary process and NEDLAC had assessed the implications, and that consultations and negotiations would entail consideration of issues such productivity and workers’ salaries.

Mr Mkongi referred to the declaration of the third Congress of South African Trade Unions (COSATU) that indicated that NEDLAC had begun formulating measures to protect casualised labour. The declaration further indicated that NEDLAC had also put in place measures ensuring local procurement of various services. He asked for NEDLAC’s comment, as well as the progress made regarding these issues.

The Chairperson noted that a number of questions could not be answered today, due to shortage of time. She requested written responses to the outstanding questions.

The meeting was adjourned.

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