by Piet Coetzer

Legal challenge to labour law

Unions hold economy, businesses to ransom

A top leadership consultant Jonathan Yudelowitz says trade unions are holding the economy and businesses to ransom.
Jonathan Yudelowitz.jpg

For some time now, we have been reporting that the legal framework of South Africa’s labour relations is in trouble. Last week the Free Market Foundation (FMF) announced it will challenge the constitutionality of particularly Section 32 of the Labour Relations Act in the Gauteng North High Court. A top leadership consultant Jonathan Yudelowitz says trade unions are holding the economy and businesses to ransom.

The trade union movement helped destroy apartheid because it responded to the issues of the time and negotiated workable deals with business, despite what were considered intractable differences.

It created an oasis of democracy within the ‘Old South Africa’; building skills and common ground, without which the Codesa (Convention for a Democratic South Africa) talks would never have succeeded.

Abraham Lincoln said: “If you want to test a man’s character, give him power.”

The power of the Congress of South African Trade Unions (Cosatu) since 1994 has been consolidated by the centralised bargaining system with its sectoral bargaining councils enshrined in the labour law it virtually wrote.

The bargaining councils are biased toward what is convenient for unions rather than economic logic, ignoring the regional differences and individual idiosyncrasies that define each business reality.

As a result, wage settlements and industrial policy cater to the ‘lowest common denominator’; they do not improve productivity or innovation, nor count good employee relations as a competitive edge.

In the textile industry, metropolitan, highly sophisticated businesses belong to the same bargaining council as rural start-ups that do unskilled work, often outsourced to them by the big manufacturers – proof that they operate according to different economic models.

Unsurprisingly, the bargaining council system has presided over a catastrophic decline in the textile industry and has collaborated with the department of labour to close non-compliant factories, destroying jobs and keeping wages and working conditions unaffordable for smaller businesses – blocking entrepreneurs who could provide work for the unskilled, rural poor.

This typifies Cosatu’s antipathy toward market realities. While employing militant ‘progressive’ rhetoric, Cosatu has become conservative and defensive. It demands change and concession from everyone else, while deploying legislation, political influence and violent intimidation to get its way.

Yet, its members are increasingly disillusioned. Mining and transport sector workers are deserting Cosatu unions for new trade unions that focus exclusively on worker interests as opposed to political influence.

Foreign investors, who can choose their investment destinations, are not as inured as we are to workers getting away with savagery while keeping the right to strike and hugely advantageous workers’ rights.

Reserve Bank governor Gill Marcus pointed out that strikes and waning investor confidence caused R10 billion in equity to leave South Africa, in a “vicious cycle” of currency depreciation, slower growth and likely increased unemployment.

The unions demand the highest governance, ethical and legal compliance from business. But after the Marikana debacle, they did not call for the dismissal of shop stewards for their failure to represent workers. Nor did they call for heads to roll among their allies in the North West government for not spending the royalties and rates collected from mining houses, or failing to deliver decent basic services.

It is worth considering what the outcome of recent labour disputes would have been if unions had played by the rules and eschewed violence, intimidation and political patronage.

In the gold and platinum sectors, Cosatu has had the sobering experience of being at the receiving end of the sort of violent intimidation that its affiliates often employ. Hopefully it has learnt some lessons.

Meanwhile, the ministries of police, finance, planning and minerals are routinely left to deal with the social and economic mayhem caused by the violence, for which the unions take no responsibility and which they excuse as the expression of the frustrations of disadvantaged citizens. This is forcing the government to confront the dissonance in the tripartite alliance.

Labour relations may become healthier if participants, having tested relationships to their limits, realise what needs to be changed. As a result, it is possible that after all the upheaval and purging, the mining industry may emerge more viable and attractive to foreign investors.

Many commentators have suggested an ‘economic Codesa’ to address the problems of our economy. That does not stand a chance unless the unions embrace discipline and integrity, practise what they preach, abide by the standards to which they hold others, and stop the intimidating violence that was once excused as a means to end apartheid.

Jonathan Yudelowitz is joint managing director at Yudelowitz Shannon & Associatesand the author of Smart Leadership


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