Wednesday’s day of action will express the union’s demand for decent jobs and wages for the youth, writes Andrew Chirwa.
The National Union of Metalworkers of South Africa (Numsa), representing 341 150 workers, will come out on a protected strike on Wednesday.
The union is calling on all workers to join the protest to demand sustainable jobs and decent wages for South Africa’s youth.
Joining Numsa on the streets will be workers from other unions and thousands of civil society activists.
Today, of the 26 million South Africans who live in abject poverty, 25 million are Africans.
Unemployment grew from 36 percent in 2007 to 37 percent in 2012; among Africans it grew from 40 percent in 2008 to 46 percent in 2012. For every one unemployed white worker, there are 80 unemployed African workers.
Between 2008 and 2012 the number of “discouraged work-seekers” nearly doubled (from 1.2 million to 2.3 million).
Since November, Numsa has been involved in negotiations with the government at the National Economic Development and Labour Council (Nedlac), where we objected to the Employment Tax Incentive Bill the government has bulldozed through Parliament.
Contrary to the Nedlac Act of 1994, which requires that socio-economic policies be discussed with labour, business and community constituencies within the social dialogue body before being tabled in Parliament, the government took the bill directly to the legislature.
The Treasury claimed that it took into account “concerns raised in the Nedlac consultations” in its “Confronting Youth Unemployment: policy options for South Africa” discussion paper, but the Nedlac process on this was not completed.
Nedlac was given no opportunity to consider the Employment Tax Incentive Bill as such, and only after it had been signed into law was there a grudging “concession” that Nedlac could discuss the regulations for administering the act.
This is not acceptable. The whole bill should have gone to Nedlac!
Numsa’s argument is that the act is a false solution to the burning crisis of youth unemployment.
The government will simply hand over billions of rands to employers, in the form of a tax rebate, while making no dent on the high levels of youth unemployment.
The union has consistently argued that the tax incentive scheme would lead to the following negative consequences:
a) Subsidising employers for taking on workers whom they would have employed anyway.
b) Displacement of older, unsubsidised workers.
c) Creation of a multitiered labour market where workers in the same establishment and who are doing the same job will have different wages, benefits and overall employment conditions.
d) Widening of inequality.
The act provides for tax rebates for employers, for up to 24 months, for workers between the ages of 19 and 29. It applies only to workers who earn up to R6 000 a month, and who therefore pay little or no income tax.
However, the incentive claimed by the employer will be retained from the employees’ tax that would ordinarily be paid over to the South African Revenue Service.
The act is claimed to be compliant with sectoral determinations and minimum wages, but inadvertently allows for a multitiered labour market, as employers will receive the subsidy only where employees are paid in accordance with the “minimum wage” set down through bargaining councils or sectoral determinations.
The biggest problem with this is that the vast majority of workers in this country do not even negotiate wages, never mind having agreements that cover their conditions! Where this is the case, a R2 000 minimum wage would be applicable. No provision is made to recognise collective agreements in sectors where there are no bargaining councils.
It also does not acknowledge that individual workplaces may pay higher actual wages than the minimum set down through bargaining council agreements, sectoral determinations or the R2 000 minimum. This would effectively allow for subsidised workers to be paid less than unsubsidised workers.
The act also fails to acknowledge that determinations and collective agreements extend to employment conditions such as retirement benefits, medical aid and leave, so subsidised workers could be excluded from rights to these benefits.
This big difference in the cost of employing unsubsidised workers, relative to subsidised workers, will create downward pressure on the wages of unsubsidised workers, who pay income tax that will be helping to finance the subsidy.
While the act says that employers will be disqualified should they “unfairly” dismiss an employee to access the tax incentive for others, this will be extremely difficult to enforce in practice.
Nothing stops employers, especially bigger ones, from finding other “fair” reasons why the unsubsidised worker was fired, especially as the burden of proof would rest with the employee to prove not only an unfair dismissal but also that the dismissal was aimed at accessing the incentive.
This could take years to resolve should either party take the matter to court.
Other concerns include:
1. To get around restrictions on displacing workers, employers may use labour brokers, subcontractors and outsourcing arrangements, all of which would increase the downward pressure on the wages of directly employed, unsubsidised workers.
2. The subsidies can be applied retrospectively to October 1, 2013, the earliest date from which (but not before) a worker may have been employed with the employer claiming the subsidy, but this does not mean that a worker could not previously have worked for another employer.
So, contrary to the Treasury’s claims, the subsidies are not limited to new entrants.
There is nothing stopping an employer from hiring an experienced worker and claiming the subsidy.
3. The subsidies are not conditional on mandatory skills development or training. Many subsidised workers are likely to be appointed to low-skilled positions, allowing for easy replacement once they no longer qualify for the incentive. The level of skills and experience gained may not help them in finding further employment.
4. All the incentives could be implemented concurrently with other subsidies an employer may claim. Those in Special Economic Zones (SEZs) will benefit from other SEZ-specific incentives, such as the relaxed customs and excise rules and support measures provided through the Department of Trade and Industry, as well as any general industry or sector support measures from the department, which would not be restricted in terms of age or to SEZs.
This would be a big potential windfall for employers with no guarantee of meaningful job creation benefits. Solving the crisis of youth unemployment in the long term requires solutions to the broader problem of unemployment.
The 2013 World Bank Development Report concluded that wage subsidies had minimal impact on job creation.
There is significant potential for deadweight losses – such as employers claiming the incentive for workers they would have employed anyway.
The act is also premised on the false assumption that wages are too high and that this acts as a specific disincentive to the hiring of youth, whereas studies by the AIDC and others have indicated that young workers are being hired at rates discounted by as much as 20 percent.
The money, billions of rands, that is going to be doled out to employers could be far better spent funding some of the proposals in the Youth Employment Accord, signed by the government, business and labour in July.
It could also be used to ensure that young people complete schooling and have post-school training and education. The Youth Employment Accord, incidentally, makes no mention of the Employment Tax Incentive Bill, although the Treasury must have been drafting it at the time. It also states that any subsidies would be discussed.
The legislation, in practice, will translate into a fundamental attack on the security of employment of workers, decent work standards and collective bargaining rights.
It will also have minimal benefits for those workers at whom the subsidies are supposedly targeted.
Numsa calls on the workers and the poor of our country to support our action on Wednesday, which will take place in all the major towns and cities.
We want to assure workers that this action will be protected, and that no employer will be able to dismiss workers for participating on the day.
* Chirwa is the president of the National Union of Metalworkers of South Africa.
** The views expressed here are not necessarily those of Independent Newspapers.