SA's labour legislation is not working

WE NEED to consider how

resources are allocated to promote

all forms of work, I have argued, and

not just employment in a standard

job. That would necessitate a review

of SA’s entire post-1994 labour dispensation,

including NEDLAC, the

Labour Relations Act (LRA), its primary

institutional innovation, the

CCMA, and much more.

Three of SA’s most prominent

labour lawyers advocated something

like a review in an article they wrote

at the end of last year (“Pragmatic

reform of labour legislation needed

urgently”, Business Day, November

15, 2011), premised on “a new social

compact”. Given that one of them

was the principal architect of the

LRA, it is surprising how little comment

it elicited.

“For as long as employers and

unions see the workplace as simply

a site of struggle, South African

business will never be able to prosper…

Whether one is dealing with

the public or private sector, more

efficient ways of organising work

and delivering goods and services

have to be a priority. If the debate

between labour and capital is confined

to the distributive elements of

collective bargaining no real

progress can be made.”

However, like much commentary

on labour matters nowadays, the

analysis on which the article is

based is tinged by unreality.

Perhaps there is a need to create

a new social compact, but the question

the three lawyers do not

squarely address is who the partners

to this compact will be. Moreover,

the way they propose to create

less adversarial relations is to resuscitate

the workplace forum.

The LRA did indeed provide for

workplace forums with a view to

instituting “joint decision-making”,

and bringing about less adversarial

relations. However, these provisions

have by and large been a dead letter

since they were adopted.

This is surely not because workers

choose to have adversarial relations.

It is because of the historical

baggage associated with what the

apartheid government called liaison

committees. It is surely obvious

by now that this duck is dead.

As with crime, adversarial

labour relations have causes. If one

was looking for the word that best

explains the levels of anger that

have manifested in strikes in the

public sector, which the three

lawyers describe as “pathological”,

it is surely inequality.

Placards expressing outrage at

what DGs earn express as much.

Inequality in the private sector is

better camouflaged, precisely

because business had begun implementing

“more efficient ways of

organising work” even before the

LRA was adopted. Needless to say

this was done unilaterally.

Fifteen years after the introduction

of the Employment Equity Act

(EEA) the workplace in the formal

economy is probably a more

unequal place than when it was


Certainly it is a more unequal

place than in the 1980s, when trade

unions were in ascendancy, and the

foundations of the present labour

dispensation were being laid. However,

the inequality that prevails is

no longer between managers and

employees, or skilled and lesser

skilled workers employed by the

same employer.

In legal form, it is between different

workforces engaged in the same

operation: the workforce of a core

business, who is the client, on the

one hand, and the workforces of the

contractors or service providers the

client engages, on the other.

Mindful of the need to locate this

analysis in the context of the labour

market as a whole, I suggested in my

case study of a local authority (Cape

Times, July 23, 2012) that the workforce

of the core business be

regarded as representing the top

tier and the workforces employed by

contractors be regarded as representing

a second tier. At least two

other tiers were discernible, and a

similar scenario prevails in other

sectors. Take the example of retail,

the sector in which more people are

employed than any other.

The top tier comprises a core of

workers in standard jobs that the big

retailers employ.

They also employ large numbers

of part-time workers who, because

they are directly employed, can be

regarded as belonging to the same

tier, although this is debatable.

The equivalent of the second tier

in retail would include the same

kind of services as are provided in

other sectors, as well as specialised

services, specific to retail, such as

the merchandisers that pack the

retailers’ shelves with products but

who are not employed by them.

When commentators talk about

the rigidity of the SA labour market,

they have in mind workers in standard

employment, in the top tier.

There is very little rigidity in the

second tier, and practically none

where it concerns contractors providing

services. Although to outward

appearances the workers they

employ are in standard jobs, in fact

they are in a highly insecure form of

employment which may be terminated

by a third party, be it a local

authority or retailer or other client

firm, against whom they have no


The kind of hard questions a

review such as I envisage would

have to confront, therefore, is

whether the unfair dismissal provisions

of the LRA have actually

achieved greater employment security

for workers, or merely raised

the costs of terminating workers in

the top tier, in standard jobs.

The grossest examples of this

cost are the indeterminate suspensions

that occur in the public sector.

At the same time it is not a

review that should be focused only

on the relationship between the top

two tiers.

Why, for example, given our levels

of unemployment, do we have an

unemployment fund with a surplus

of billions (it increased to R9.6 billion

in the 2010/11 year, according to

a department of labour report, “due

to decreased benefits payments”).

Yet the unemployed have no right

to unemployment benefits unless

they have been employed, and contributed

to the fund.

Or why does a worker who has

contributed to the fund, and resigns

his job to start his own enterprise,

also have no claim on the fund?

The problems with our skills

development policies and laws are

of particular relevance in the context

of the proposed youth wage


The institution of learnerships

was designed to meet much the same

social need as the youth wage subsidy

is now proposed to do.

Yet it is not clear that we have

digested the lessons to be learned

from doling out money to enterprises

that operate on a for-profit

basis, ostensibly for a social purpose.

By the same token, although

all workers in an employment

relationship are supposed to pay

skills development levies, it is

arguably only workers in standard

jobs who benefit.

Take the case of workers

employed by a contractor to provide

municipal services to a local authority.

Compliance with labour legislation

is likely to be a condition of the

tender. Payment of the levy is a

token of compliance. But what conceivable

benefit do unskilled workers

derive from the monies they

contribute? What about compliance

with the more substantive provisions

of the law?

The amendments to the LRA and

Basic Conditions of Employment

Act that are currently the subject of

public hearings in the National

Assembly have put pay to the fiction

that workers in the second tier are

protected by labour legislation to the

same extent as workers in the first

tier. They acknowledge the reality

that these workers are in effect

denied the right to organise, in circumstances

where they are

employed at the workplace of a

client. The right of workers to form

their own organisations, and the

right of such organisations to bargain

on their behalf, are the sine qua

non of decent work.

The amendments also represent

a welcome departure from the

assumption that has prevailed up

until now, that what is good for the

worker in a standard job is good for

all workers. For the first time there

will be legislative recognition that

one size does not fit all, and that specific

forms of non-standard work,

such as temporary and part-time

work, are in need of specific protection.

The benefit for employers is

recognition that these forms of

employment, subject to appropriate

safeguards, are legitimate.

Yet the limitations of these

amendments must also be noted.

Workers can more easily organise

themselves into trade unions,

perhaps. Yet it remains to be seen

whether trade unions will prove

effective in this context. For what

purpose does it serve to bargain

with an employer when it is in fact

the core business, or client, that

determines what they earn?

This is a problem the amendments

fail to address.

Consequently, these workers

remain in the unconscionable situation

of being taxed without the benefit

of any form of representation.

Workers employed in the small

economic units of the third tier, or

self-employed workers in both the

third and fourth tiers, may or may

not be taxed, whether in the form of

levies or otherwise. They nevertheless

contribute to the economic

good, and are also without representation.

Creating forums where all

workers can be represented is one of

the critical issues for the review I

am advocating. Or perhaps it is the

kind of innovation best piloted in


Perhaps there is merit in the proposal

of a workplace forum, after all.

But it will bear no resemblance to

the workplace forum envisaged by

the LRA. It needs to be a forum that

is inclusive of all the tiers of an

organisation. Or it may be more

appropriate to constitute such a

forum at the level of the sector. I am

not able to deal with the issues that

would be discussed in such a forum

within the scope of this article.

Suffice it to say that any attempt

to forge a social compact that is not

inclusive will only aggravate existing

inequalities, and the potential

for conflict.

. This is the fourth in a six-part

series. Former trade unionist Theron

is a labour lawyer, and is co-ordinator

of the labour and enterprise policy

research group (LEP) in the law

faculty at UCT.

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