An alliance at war with itself

Trying to appease both South Africa’s business and labour sectors, President Jacob Zuma’s state-of-the-nation address last week again brought home the untenable polarity of a formal alliance between a governing party and organised labour. While government prepares to launch a major job-creating industrialisation and infrastructure plan, talks on a new labour law dispensation have broken down. With yet another national strike threatening, this could deny thousands of South Africans a job.

President Zuma’s speech had the hallmark of a, by now familiar, cat-and-mouse game: balancing the requirements of business with the demands of labour that arguably poses one of the most serious challenges to economic growth in South Africa.

Zuma announced an ambitious multi-billion rand plan to re-industrialise South Africa and create new infrastructure with a strong underlying aim of creating jobs.

“Read together with trying to leverage investment in the mining sector and making the most of that, I think this is a government trying to use the state to its maximum potential,” independent analyst Nic Borraine was quoted as saying.

Referring to just-released figures indicating official unemployment rate easing to 23.9% in the fourth quarter of 2011, down from 25% in the third, Zuma said much more was needed to make a significant dent on unemployment. This remains one of government’s biggest challenges.

Repeating a central message of the New Growth Path the president said all South Africans should work together to achieve job creation and the elimination of inequality and poverty.

Zuma announced that the Nedlac process on the Atypical Forms of Employment and Labour Broking had been completed. He made it clear that labour broking would be regulated. It will not be outrightly banned as Cosatu demands it is.

Nonetheless, Zuma emphatically stated that “Government seeks to eliminate all forms of abusive practices inherent in labour broking, in order to strengthen the protection of vulnerable workers”.

Nedlac is the forum in which labour, government and business seek compromised solutions to problems. However, talks around labour brokers and other issues contained in draft labour law amendment bills, have broken down. Cosatu since announced a national strike on 7 March to protest against labour brokers and the proposed Gauteng toll roads.

Nomaxabiso Majokweni, CEO of Business Unity SA, writes in the Business Times that the impasse over labour laws comes at a perilous time for South Africa.

“Last year, the government, labour and business tried to steer South Africa [in]to the future by negotiating a labour framework for the country. We were sailing by the chart of the New Growth Path, the Industrial Policy Action Plan and the proposed National Development Plan. Our destination was economic growth and job creation. But so far we have failed.” In 26 meetings at Nedlac last year, the government, labour and business could not come to an agreement on how to achieve this.

“For the first time since democracy, our labour laws have not been agreed upon. To make it worse, we have stalled during a worldwide economic downturn – with a quarter of the population unemployed. Business and investor confidence has been damaged by the uncertainties in the labour framework, an essential requirement for attracting investment,” she wrote.

The labour law amendment process has been dragging on for three years.

“At the request of the cabinet, a regulatory impact assessment was completed in September 2010. Three months later, revisions to the amendments were published; they clearly had not taken the impact study into account. Repeated requests by business to pay attention to the study's findings fell on deaf ears,” says Majokweni.

Cosatu’s call for a ban on labour brokers has been cast in a seriously dubious light by the latest research data just released by the Development Policy Research Unit at the University of Cape Town. It shows that of the 3.4-million jobs created since 1994, about 1.2-million jobs were created in the financial and business services category.  An impressive 900,000 of these were created through labour brokers and security service; almost a quarter of the 3.4-million jobs created.

But if Cosatu had its way, none of these almost one million people would have had the privilege of having a job.

Prof Haroon Bhorat, director of the unit, reportedly said that instead of dismissing it of out of hand, creative solutions to the issue of labour brokering should be sought by all parties. Other researchers say it is a fallacy that work provided through brokers is short-lived as most temporary workers move from one job to the next and many eventually end up being permanently employed.

However, Cosatu’s position does not stem only from its socialist ideological convictions or what it deems to be in the best interest of workers. Another rather selfish economic component is that since the labour federation relies on permanent workers for union membership in its affiliated unions – the source of its massive income.

"The union federation gains funds from permanent workers, so it will always aim to make workers permanent," labour analyst Ivan Israelstam says. Cosatu’s also does not represent all workers. Its biggest rival for members, the 560 000-strong Federation of Unions of South Africa (Fedusa), supports the government’s stance that labour brokers should be regulated and not banned.