SA dangerously moving the wrong way?

International experts are increasingly warning that many countries around the globe are running the danger of being plunged into destabilising turmoil by hardening unemployment figures, especially for the youth. In the meantime South Africa, with changes to labour legislation presently on the table, seems to be heading in exactly the wrong direction to what is needed to meet the challenge.

At the root of the recent uprisings and regime changes in both Tunisia and Egypt were an army of unemployed youth who lost hope that prevailing systems and structures could deliver a constructive and meaningful life to them.

Listing countries ranging from the United States, Britain and Japan to even fast-growing China Bloomberg Business in February in an article under the heading A message from the Streets, wrote: “In each of these nations, an economy that can’t generate enough jobs to absorb its young people has created a lost generation of the disaffected, unemployed, or underemployed … Tunisia’s Jasmine Revolution was not the first time these alienated men and women have made themselves heard.

“Last year, British students outraged by proposed tuition fees … attacked the Conservative Party’s headquarters … Scuffles with police have repeatedly broken out across Continental Europe … in Oakland, California  students protesting … walked onto Interstate 880, shutting it down for an hour in both directions.”

The latest employment figures for South Africa indicate that while jobs in the formal sector of the economy, excluding the agricultural sector have grown marginally during the fourth quarter of last year, the overall employment figure has come down by 1.9%.  Of the unemployed in the country some 73% are younger than 35 and according to the minister of finance Pravin Gordhan between 40% and 50% of South Africans between ages 17 and 25 are unemployed.

Policy and deeds at odds

While it is the government’s declared policy to create new jobs, with special emphasis on opportunities for the youth, labour legislation is heading in exactly the opposite direction according to many experts ­– including warnings contained in the department of labour’s own regulatory impact analysis.

“The Government's New Growth Path envisages the creation of 5m new jobs by 2020. Instead, however, the four labour bills approved by the Cabinet in December 2010 are likely to put an end to the millions of atypical or temporary jobs that have proliferated in the past decade, largely in response to already rigid labour laws,” Anthea Jeffery wrote last week in an article for the Research and Policy Brief of the South African Institute of Race Relations.

Ever since the Polokwane conference in December 2007, the Congress of South African Trade Unions (Cosatu) has been pushing for an end to the atypical jobs (3.89m of them in 2010 alone) that undermine its power in the workplace.  However, instead of acknowledging its real concerns, it has dressed up its demand as a humanitarian call for the banning of the labour brokers allegedly responsible for ‘human trafficking', ‘slavery', and the like.

“The four labour bills recently approved by the Cabinet - the Labour Relations Amendment Bill (LRA bill), the Basic Conditions of Employment Amendment Bill (BCEA bill), the Employment Equity Amendment Bill (EE bill), and the Employment Services Bill (ESB) - are intended to meet Cosatu's demands for an end to casual work. They are also supposed to bring about an upsurge in permanent employment, so helping to meet the Government's job-creation goals.

“However, while atypical employment will clearly be curtailed, any significant increase in permanent jobs is most unlikely to occur - especially given the cost to business of the bills,” Jeffery wrote.

Stating that the full practical ramifications of the bills are difficult to identify, she uses a hypothetical construction company (ABC) with an initial staff complement of 200, consisting of 60 permanent employees, 100 fixed-term temporary staff with 40 youth as first-time job seekers assigned by a labour broker to illustrate some of the implications and comes to the conclusion that should the bills take effect in their current form:

The 40 youths will become the employees of ABC -- LRA bill, BCEA bill, EE bill --  which must register them for tax, UIF, and workmen's compensation and assume all the other obligations of employers in relation to them;

The 100 fixed-term employees, plus the 40 youths, must all be employed permanently unless ABC can ‘establish a justification' for their fixed-term contracts; [LRA bill];

Assuming ABC is able to provide such a justification (on the basis of criteria the state has yet to clarify), the company must ensure that all 140 receive the same or similar benefits as its permanent employees. These additional employment costs may be difficult to pass on to clients, perhaps putting the survival of ABC in question;

ABC will be responsible, together with any electrical or plumbing firm to which it has sub-contracted parts of the main building contract, for any unfair labour practice (a failure to pay overtime, for instance) perpetrated by that electrical or plumbing firm in relation to its own staff, even though such individuals are not employees of ABC itself; [LRA bill];

If ABC, under pressure to meet contract deadlines, allows its staff to skip statutory rest periods or do more overtime than is sanctioned by the Basic Conditions of Employment Act, this will constitute a criminal offence;

ABC must notify the Department of Labour of any vacancies it might have or job appointments it might make, adding to its compliance burdens [ESB];

If ABC has not made ‘reasonable progress' towards a senior management team that is demographically representative (87% black, 46% female, and 2% disabled), it could face fines of up to 2% of turnover for a first ‘offence', rising to a maximum of 10% of turnover for a fifth contravention within three years; [EE bill];

In arguing that its progress has been ‘reasonable', ABC will no longer be able to rely on skills shortages, similarly slow progress by other employers, or financial constraints, as these defences will fall away; [EE bill]

If ABC is based in the Western Cape, where the Coloured share of the economically active population is 55% and the African share stands at 29%, the company will no longer be able to use regional demographics in setting its employment equity targets but will have to use national ones instead. [EE bill] Yet the new national targets will be almost impossible to attain, for the Coloured share of the workforce will have to be reduced (on pain of the bill's new turnover-based fines) to 11%, while the African share will have to be increased to 74%: more than double the entire African population in the Western Cape;

If ABC, across race or gender lines, provides different pay for work that is ‘substantially the same', this could amount to unfair discrimination, irrespective (on the current wording of the bill) of salient differences in experience and productivity. Penalties will again range from 2% of turnover