A BUSINESS PERSPECTIVE ON THE BILLS AMENDING THE LABOUR RELATIONS ACT (66 of 1995) AND THE BASIC CONDITIONS OF EMPLOYMENT ACT (75 of 1997)

While Business Unity South Africa (BUSA) supports the need to protect vulnerable workers, we are unable to endorse the Bills being placed before Parliament given the extensive areas of disagreement and their impact on job creation, business and the economy. The framework of the original, postApartheid Labour Relations Act and Basic Conditions of Employment Act has been fundamentally undermined.

The original legislation was based on a floor of rights for the most vulnerable, combined with organisational rights to promote collective bargaining so that workers could negotiate for better terms and conditions of employment. The new proposals destabilise the framework and principles of the original post-Apartheid labour legislation.

BUSA welcomes the confirmation that government will retain section 198 of the Labour Relations Act, regulating labour brokers. BUSA, however, is disappointed that Cabinet has approved the Basic Conditions of Employment Amendment Bill and the Labour Relations Amendment Bill without conducting a regulatory impact assessment (RIA), or waiting for the final Nedlac Report on these matters.

Business has repeatedly requested that a RIA be conducted on the Bills, prior to their approval, in order to ensure the best possible regulatory solutions are adopted. The areas of disagreement currently contained in the Bills, nonetheless, compromise existing jobs and pose considerable risks to further job creation, business and the economy.The Department of Labour has acknowledged that it did not consider all the recommendations of the RIA requested by Cabinet in 2010.

Given that the content of the current Bills is substantially different from the 2010 Bills, there are further grounds to subject the new areas to a comprehensive RIA. In addition, the significant changes to the Bills, supports the need for an additional RIA to be conducted. Business has urged that government conduct a comprehensive RIA on the Bills in order to avoid the Bills resulting in dramatic and unintended consequences.

BUSA has conducted its own analysis which identifies some of the impacts of the Bills on jobs. These include:

• Certain amendments, if enacted, would raise the cost and complexity of conducting business in South Africa - this disproportionately affects small businesses - by making employment more difficult, more complex, and increasing uncertainty and risk as they relate to employment.
• Over-regulation of atypical employment, most notably the new equal treatment requirements across categories of work, will result in the cost of employment rising significantly. This will require complex and administratively onerous processes be put in place. The amendments do not seem to successfully balance worker security with the promotion of a competitive economic environment.
• The labour elasticity ratio is 0.7% in South Africa - i.e. for every 1% increase in employment cost there is a corresponding 0.7% decrease in employment levels. The equal treatment provision for contract and parttime workers will result in a considerable increase in the cost of employment and consequently have a negative impact on job creation.
• The minimum prescribed increases in actual rates of pay, will also result in less employment and additional wage restraint in lower earning categories. This could result in employers using less labour-intensive methods. Alternatively, employers will resort to paying at the minimum wage, rather than above the minimum. This will further undermine collective bargaining, weaken trade unions and result in job losses.
• The amendments related to strikes and lock-outs are weak, misdirected and will not achieve their intended purpose of protecting people and property. This will increase the risks and costs associated with doing business and diminish business confidence around fair labour practices.
• The amendments proposed to sections 68 - 73 of the Basic Conditions of Employment Amendment Bill intended to remove bottlenecks and delays in the enforcement process are punitive and will not achieve the intended outcome. This proposal will have little positive impact on improving compliance, and will result in costly legal processes that will take much longer to conclude.

Business believes that in their current format, the Bills are hugely onerous and punitive and will have a negative impact on business. We are also concerned that these amendments will limit the employer's ability to adjust and adapt consistently to changing market conditions. For example, the proposed changes to section 187 of the Labour Relations Amendment Bill make it an automatically unfair dismissal if an employee refuses to accept a change due to the employer's operational requirements. Proposed changes to section 189A of the Bill extend the time period for facilitation prior to retrenchment beyond the current 60 days.

The proposed amendments go way beyond preventing abusive practices, and actually interfere with the flexibility of daily business operations and practices, which is an important factor in making business more competitive. BUSA, therefore, does not consider the two Bills to be employment friendly. The amended Bills are instead hostile to employment and inconsistent with the job creation goals of the New Growth Path, as well as being inconsistent with the principle of social cohesion articulated in the National Development Plan.

South Africa has one of the highest levels of unemployed youth in the world.

Many of these individuals have no formal training and lack an opportunity to gain valuable work experience. The amendments to these Bills make it more difficult for them to enter the workplace. The amendments also place additional burdens on small businesses. Furthermore, the amendments do not support the commitment of the G-20 Ministers and Governors to increased labour market flexibility in order to support inclusive growth and the creation of decent jobs.

As BUSA we do not regard the Bills as being ready for Parliament. We would like government to first conduct a RIA in order to understand the potential impact of these changes on the economy, as well as their alignment to national development goals.

BUSA remains committed to negotiation at all levels. BUSA remains open to engagement with the Minister of Labour and her department. It is imperative that there is support for the effective regulation of the labour market and that this takes place in a manner that is less harmful to the country's job-creation objectives, business and to the economy as a whole.

Statement issued by BUSA, March 27 2012

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