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Labour legislation to 'kill jobs'

Read time 4min 10sec

The proposed amendments to labour legislation that were submitted to Cabinet in March will ultimately kill jobs, says the Democratic Alliance (DA).

The official opposition says amendments to the Basic Conditions of Employment Act and Labour Relations Act (LRA) will increase the cost of doing business, reduce SA's attractiveness as an investment destination and, as a result, destroy jobs.

“This is why the DA cannot support the amendment Bills in their current form. The Department of Labour is not currently in a position to predict the impact of the amendments on the South African economy.”

It explains that a regulatory impact assessment (RIA), conducted in 2010, suggested that the jobs of 2.13 million temporarily employed South Africans would be jeopardised if the Bills were implemented in their original form.

However, important changes have since been made to the Bills, but the current drafts are yet to be subjected to an RIA.

“We cannot gamble with the future of South African workers. The DA, therefore, calls for a new RIA to be completed to determine the effect of the current proposals on economic growth and job creation, before any decision is taken on this draft legislation.”

Grumbling stakeholders

Parliament's Portfolio Committee on Labour is, from today, holding public hearings on the amendments. This follows the submission by labour minister Mildred Oliphant of the amended Bills to Cabinet, in March. The next step is for the Bills to be tabled before Parliament for debate.

“The hearings will offer stakeholders that have in recent months been grumbling about the amendments a chance to voice their inputs,” says the department.

Cost hike

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

However, Oliphant said there would be no ban on labour broking, and self-regulation of the industry was also not an option in dealing with the kind of abuses that have occurred with labour broking.

An outright ban on labour broking 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.

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.

No coincidence

SA has a high unemployment rate, compared to many developed and developing countries, with 3.2 million people between the ages of 15 and 34 currently without work, says the DA.

“According to the 2011 World Economic Forum Global Competitiveness Survey, SA currently ranks fourth to last in the world in terms of 'flexibility in wage determination' and third last in 'hiring and firing practices'.”

Employment in SA fell sharply at an annualised rate of 2% in June, following an even higher decline in May of 3.1%. Job losses in June amounted to 31 781, bringing the total job losses for the past two months to 82 520, says JSE-listed human capital management group Adcorp.

“This is not a coincidence. More restrictive labour markets mean less investment in labour-intensive industry and less incentive to employ more workers and, ultimately, fewer jobs,” says the DA.

Onerous restrictions

It adds that, given the country's prevailing restrictive climate, businesses have begun to rely more heavily on temporary employment services (labour brokers) in an attempt to reduce costs and remain globally competitive.

“Adcorp's monthly employment numbers show that temporary workers now make up over 3.9 million or approximately 30% of the official sector labour force. The current labour amendments introduce regulatory rigidity that will strangle temporary employment services.”

The DA is particularly opposed to the amendments in section 198 of the LRA, which limit contracted employment and workers hired through temporary employment services to six months.

“The Department of Labour has presented no compelling reason for these limits, which we believe will place onerous restrictions on business and ultimately lead to job losses.

“If passed in its current form, the labour amendment Bills will exacerbate the unemployment crisis in SA. This legislation surely represents a step in the wrong direction in terms of sustainable economic development.”

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