WHILE THE PRESIDENT WANTS TO CREATE JOBS
This newsletter was also published as a Press Release
When it comes to the vital issue of job creation, the President says the right things and I believe that he is sincere.
While business in general, big and small, are important in creating jobs, the President, on many occasions, has stressed the importance of South Africa’s small and medium size enterprises in curing many of our social and economic ills. There is no better example than the President’s statements on this issue during his State of the Nation address earlier this year.
Recently, the President admitted, and rightfully so, that governments are not effective job creators and that it is government’s primary function to act as an enabler for the private sector to create jobs.
The Department of Labour, however, champions exactly the opposite. Notwithstanding the absolute necessity for job creation and the well-informed advice contradicting their actions, they are persisting with their anti-SMME legislative framework.
CENTRALISED COLLECTIVE BARGAINING ARRANGEMENT DISCRIMINATES AGAINST SMMEs
In respect of centralised collective bargaining, the Department of Labour continues with the diabolical legislative arrangement of negating the voting power of SMMEs when it comes to the extension of big business’ collective agreements to SMMEs.
MINISTER NOW WANTS TO NEGATE SMMEs
Adding insult to injury, now that SMMEs have organised itself to a level where they have sufficient bargaining power to lawfully resist these hostile extensions, the Department has introduced legislation which will enable the Minister of Labour to, in considering the extension of these agreements, to not only completely ignore the levels of representativity of SMMEs, but to disregard SMMEs in their totality.
This proposed amendment, if promulgated, will have the effect that it will be entirely futile for organised SMMEs to even participate in industry negotiations in future. While this amendment is obviously unconstitutional, it does not in any way deter the Department to press ahead with this biased and ill-considered approach.
MORE HOSTILE EE REQUIREMENTS
In the midst of this, the Minister of Labour will soon publish proposed draconic legislative amendments to the Employment Equity Act, in order to speed up race driven transformation, more specifically to improve equitable representation of ‘designated’ groups in the workplace.
Any business looking for skilled employees without looking for them, among others, within the ranks of Africans, Coloureds and people with disabilities, is unwise and will without doubt prejudice themselves. However, for the Minister to introduce numerical targets, will deny the entrepreneur the right to choose who he or she wants to employ, and that constitutes a huge deterrent to job creation.
As certain as night follows day, when you tell an employer who to employ, while also burdening him with all the legislative risks if the relationship turns sour, he will not employ, and employment will consequently decline. A government can prescribe to the employer who to employ; however, government cannot force employers to employ.
Automatisation, instead of labour-intensive employment, is becoming more and more attractive, and the tools are becoming cheaper and more readily available. In the face of everything possible that’s been done to make it less attractive for employers to employ, who can blame them if they are looking for alternatives and then seize it when the opportunity presents itself?
BB-BEE LIMITS SA’s FULL POTENTIAL
Further to this there is the current BEE arrangement which is aimed at marginalising a particular race group from full participation in South Africa’s commercial environment. This race group, however, is not the only one that is currently prejudiced. Apart from the absolute top layer of current supposed – but only temporary – benefactors, everything and everyone is losing out: service delivery, consumers, tax resources, employees, job seekers, the unemployed and last, but definitely not least, business.
As a consequence of the above, business, in large numbers, is already relocating to neighbouring states.
CONDITIONS FOR ENTREPRENEURSHIP REQUIRES GOVERNMENT UNDERSTANDING
There’s something in the spirit of entrepreneurship which resists being prescribed to. Government may be offended by this or choose to ignore it; however, this attitude is inherent to entrepreneurship.
To the extent that a government embraces or is resistant to that spirit, will determine the extent to which employment will increase or decline. This is simply the ‘employment law of nature’.
Interfering in market powers, as part of the social re-engineering project, will lead to a decline in business activity, resulting in the constant decline in employment.
Unemployment in South Africa stands at an all-time high and it is progressively getting worse. In the first quarter of 2018 the manufacturing sector has lost 105 000 jobs. According to StatsSA a further 69 000 jobs – across all sectors – were lost in the second quarter of 2018. It should be borne in mind that, in most cases, it is not only the employees being affected, but also their extended families. How can this slide be arrested when government gets the basics wrong?
WHAT NEEDS TO BE DONE?
Words aren’t going to create jobs; good intentions neither. Unless sound policies are adopted and executed, the downward employment trend will continue. If government, being responsible for creating the enabling environment, will bring about the following legislative changes, it will go a long way to stimulate employment:
• the modernisation of the centralised collective bargaining regime;
• the scrapping of the extension of collective agreements;
• the radical overhauling of the laws surrounding industrial relations so that it no longer serves as a deterrent to employment; and
• the adopting of a different approach towards ‘transformation’, both in terms of employment equity and BB-BEE, in order not to inhibit economic growth and employment, but rather to be maximally inclusive in order to serve as an economic stimulant.
Obviously, it is not only within the ambit of the Department of Labour to stimulate economic growth and employment, but it will require the concerted effort of all government departments.
The reality is that, for any of the above to be realised, brave political decisions will have to be taken. That’s not going to happen now – the ruling party simply does not possess enough political capital to embark on such an adventure. In the meantime, expect unemployment to worsen.
Privileged and challenged to be South African.
We are all in this together.