Rigid labour laws kill jobs

The proposed amendments to the Basic Conditions of Employment Act and Labour Relations Act will increase the cost of doing business, reduce South Africa’s attractiveness as an investment destination and, ultimately, destroy jobs.

This is why the DA cannot support the amendment bills in their current form.

The Department of Labour is not currently in a position to predict the impact of the amendments on the South African economy. A Regulatory Impact Assessment (RIA) conducted in 2010 suggested that the jobs of 2.13 million temporarily employed South Africans would be jeopardised if the bills were implemented in their original form. Important changes have since been made to the bills, but the current drafts are yet to be subjected to a RIA.

We cannot gamble with the future of South African workers. The DA therefore calls for a new RIA to be completed to determine the effect of the current proposals on economic growth and job creation before any decision is taken on this draft legislation.

South Africa has the highest unemployment rate amongst developed and developing countries, with 3.2 million people between the ages of 15 and 34 currently unemployed.

According to the 2011 World Economic Forum Global Competitiveness Survey, South Africa currently ranks fourth to last in the world in terms of “flexibility in wage determination” and third last in “hiring and firing practices”.

This is not a co-incidence. More restrictive labour markets mean less investment in labour intensive industry and less incentive to employ more workers and, ultimately, fewer jobs.

Given our prevailing restrictive climate, businesses have begun to rely more heavily on temporary employment services (labour brokers) in an attempt to reduce costs and remain globally competitive.

Adcorp’s monthly employment numbers show that temporary workers now make up over 3.9 million or approximately 30% of the official sector labour force. Overall, permanent employment has increased just 2% since the 2009 recession, whilst total employment – comprising permanent and temporary workers – has increased 12.2%.

The current labour amendments introduce regulatory rigidity that will strangle temporary employment services. We are particularly opposed to the amendments in section 198, which limit contracted employment and workers hired through temporary employment services to six months. The Department of Labour has presented no compelling reason for these limits, which we believe will place onerous restrictions on business and ultimately lead to job losses.

The amendment bills do make improvements in a number of key areas which we will support when they are discussed in the labour portfolio committee next month. These include:

  • Stronger protection against child labour and an increase in jail sentences for those employers found guilty of employing child labour;
  • Provisions requiring unionised workers to complete a secret ballot to approve a strike before the union can go ahead with any proposed strike action;
  • Clearer guidelines for the functioning of the Essential Services Committee.

If passed in its current form, the labour amendment bills will exacerbate the unemployment crisis in South Africa. This legislation surely represents a step in the wrong direction in terms of sustainable economic development. We will use the deliberations in Parliament to push for significant changes to be made before this new labour regime is imposed on an already struggling South African economy.

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