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'Labour Bills need RIA'

Amendments to the Labour Relations Act and the Basic Conditions of Employment Act will see the loss of about 285 000 jobs, according to Business Unity SA (BUSA).

Presenting at the Parliamentary hearings on the proposed amendments yesterday, the association requested Parliament to conduct a regulatory impact assessment (RIA) before it passes the Bills.

Small Business Project conducted an RIA on behalf of BUSA and the assessment confirmed the loss of close to 300 000 jobs, as a result of the amendments.

“The assessment conducted by BUSA has demonstrated that the amendments will have impact on two major areas where SA can least afford it. First, they will damage the prospects of small business. Secondly, they will take a heavy toll on those most vulnerable and marginalised in the labour market – young people and recent entrants to the labour market, women, Africans, and those with lower levels of education.”

RIA please

Government intends to impose greater regulation on the labour broking industry to prevent past abuses of outsourced workers.

“While BUSA supports the need to protect vulnerable workers... [it] is unable to endorse the Bills being placed before the [labour parliamentary portfolio] committee.” 

It explains that the regulatory impact of the amendments is largely unknown. Therefore, BUSA is calling for an RIA to be conducted before the Bills are approved.

The Democratic Alliance this week also made a request for an RIA to be done on the amendments.

Deeply problematic

“Business has identified in both Bills substantial areas of significant concern,” says BUSA in its submission.

“We believe that the proposals contained in the two Bills, among others, will inevitably result in concentration of work among fewer people; make the law more complex – harder to understand for employers, workers and for the inspectorate to enforce; create significant burdens for the CCMA and Labour Courts; will result in fundamental restructuring in employment; and create excessive administration and punitive outcomes for business – resulting in risk and uncertainty.”

It explains that the reasons for this are that the proposed amendments increase the cost of doing business. They also tackle the problem of the abuse of vulnerable workers employed in atypical employment in an overly complex legalistic manner that is unlikely to achieve the stated objectives.

“The proposals undermine the basic agreed architecture of labour law in the country, which combines statutory minimum standards of employment with the encouragement of collective bargaining for improved conditions.

“The amendments being contemplated are deeply problematic. They will place a burden on the whole business community for uncertain benefits, and will have a particularly negative impact on small and growing businesses, probably forcing some to close down.”

Job shedding

BUSA says a minimum of 215 150 jobs will be lost as a direct consequence of the amendment, dealing with equalising conditions of service between atypical and permanent, full-time staff.

“Smaller firms do not have the resources to provide benefits on the scale of larger ones, and need to be particularly careful about managing their personnel costs. For many, additional costs can mean the difference between viability and closure.

“What does this imply for the overall labour market, should the amendments be passed? Raising the costs of contract and part-time work can be expected to cause a noticeable shedding of jobs among workers so employed.”

Tight regulation

The amendments initially proposed a repeal of section 198 of the LRA, which regulates labour brokers, effectively prohibiting the sector.

However, government said there would be no ban on labour broking. An outright ban would harm the ICT services sector, as it would push up operating costs, hamper bottom line profit, and could worsen the sector's current skills shortage, according to analysts.

With the current amendments, temporary employment is now limited to genuine temporary work that does not exceed six months. In general, greater regulation of the industry has been proposed, with the principle of equal pay for employees.

Effectively, equal pay includes benefits like pension and medical aid, and this will shoot up payroll costs to such an extent that business will be totally deterred to employ, say industry players.

Harming BEE

DA shadow minister of labour Sej Motau says presentations made to the labour portfolio committee this week point to a growing consensus that the amendments will drastically increase the cost of doing business and destroy jobs.

Important points raised were that the Bills' suggestions for prohibitions of subcontracting, will harm black economic empowerment initiatives; undue increases in the minimum wage will incentivise employers to stick to minimum wage remuneration, effectively making the minimum wage the pay ceiling for unskilled workers; and that limitations on deductions from employees' remuneration, which will pose a threat to medical aid schemes.

“With unemployment currently sitting at 25.2% and youth unemployment at roughly 60%, we cannot afford legislation that will exacerbate the jobs crisis.”


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