Finance 101: Is a consensus emerging in the labour market?

We are constantly reminded that the biggest problem facing South Africa is unemployment (particularly among the youth). This is a global phenomenon driven for the past thirty years by globalisation and technology that has favoured capital, which has ruthlessly exploited the most productive and cost effective labour (hence the growth in unemployment in countries where labour productivity lags). For you the business owner, this has been a source of frustration but there are promising signs that the situation is going to improve in the medium term. This should bring increased profitability and labour harmony to your business. So what exactly is happening? A recent Organisation for Economic Co-operation and Development (OECD) survey of South Africa recommended, among other things –

  • Vocational and educational training for youth should be stepped up and reformed,

  • Barriers to entrepreneurs (as the main drivers of employment) should be lifted with the following changes suggested –
    • That the practice whereby the Minister of Labour extends a collective wage bargaining agreement to all businesses in that sector needs to be “curtailed”. For example: if there is, say, a collective bargaining agreement in the steel sector, the Minister will extend this agreement to the entire sector despite many individual businesses not being party to the negotiations.

    • That participation in these decision-making processes be extended to other groups such as Nedlac.

The recent ANC conference at Mangaung endorsed the National Development Plan (NDP) as government’s future road-map. The NDP and the OECD are not that far apart – the NDP also strongly advocates vocational training and is also in favour of labour reform. The recent Budget made provision for a youth incentive employment program. A significant factor is that since 1997 the number of members belonging to unions has fallen from 35% of the working population to less than 17.5% today. Throw into the mix recent court cases challenging restrictive labour practices and it does appear as if a consensus is emerging to reform labour law. Expect the militancy shown last year to continue in the short term but any moves to make the labour market more competitive will benefit businesses, and reducing unemployment will also greatly benefit the country.

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