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By Gerhard Papenfus


19 June 2018


While unemployment and poverty remain some of South Africa’s biggest threats, our centralised collective bargaining model, which culminates in bargaining councils extending agreements to non-parties, remains the biggest deterrent to employment in affected industries.

The beneficiaries of the bargaining council system – monopoly capital and trade unions – defend the system, suggesting that ‘reducing disproportionate income differentials is one of collective bargaining’s purposes’. This, however, is wherein the weakness of the South African version of collective bargaining lies.

The cover-up for this economic delusion, is ‘social justice’. However, how can it be ‘social justice’ when:

• a statutory dispensation, as contained in the Labour Relations Act, expressly, completely marginalises the voting power of SMMEs, for the purpose of preserving the selfish interests of big business, big trade unions and socialist policies;
• an employer, whose cost of labour as a percentage of turnover is less than 5 percent, enforce a wage on an employer whose cost of labour as a percentage of turnover is more than 50 percent;
• a small employer in a rural area, where completely different economic realities apply, which drastically differs in each and every respect from a big business situated in an economic hub, is judged by the same economic and operational measures;
• the system strengthens monopolies at the cost of entrepreneurship and SMMEs, which are the main drivers in addressing unemployment and poverty;
• it has already caused the complete demise of certain industries and is rapidly contributing to the demise of others;
• it denies a work seeker the right to work for a wage he finds acceptable, allowing him to escape the clutches of unemployment, poverty and humiliation;
• it dictates that, unless a business can afford to pay a specified amount for certain work done, that particular job may just as well be exported;
• the system denies the honest reality that employers, without exception:

  – only pay wages which they can afford;
  – which will not affect the long-term sustainability of the business;
  – which fits into the realm created by market realities;
  – what they want to pay; and
  – that any arrangement which expects them to operate outside of these parametres, will discourage employment.

This approach, which is criticized by economists, successive governors of the Reserve Bank and the International Monetary Fund, defies all logic.

How is this even possible that in a country where unemployment and poverty pose a serious threats to peace and stability, even more so when the ability to pay social grants will inevitably come under pressure, people are denied the right to, without external interference, agree on a wage? How can this go unchallenged?

One cannot be overly surprised when a socialist orientated government and short-sighted socialist trade unions drive the system; which is their lifeline. One can also understand that monopoly capitalists sustain the system: it disguises their weakness in negotiations and affords them the advantage to pass the impact of weak wage deals onto SMMEs, which have to absorb the devastating effect of these poor policies, thereby eliminating competition. All of this is perpetrated under the guise of social justice.

However, what is most concerning, is the blatant dishonesty of employers who defend the system. At the commencement of each and every round of negotiations these dishonest employers agree that the system has to change. They agree that the ‘one size fits all’ approach has caused immeasurable hardship and that drastic change is urgently required. They even agree to the nature of the required changes. However, without exception, they buckle under perceived pressure and then, in utter selfish weakness, pass on what they can’t afford themselves to SMMEs.

They even publicly go further and defend a system which they, behind closed doors, in employer caucuses, admit is indefensible. How utterly weak? How utterly dishonest? It is sickening, to say the least.

The words of Trevor Manuel are so valid: “There is no counterweight in society if you have cowards in business”. Weak, dishonest and self-serving monopoly capitalists, fittingly portrayed as the ‘nobles’ in the movie Braveheart, remains a prominent threat to the well-being of South Africa. It will eventually catch up with everybody; maybe it already has.


This opinion piece is by Gerhard Papenfus, Chief Executive of the National Employers’ Association of South Africa (NEASA).


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Marietha Thirion