WHY DOES SA FAIL TO CREATE JOBS? SACCI LABOUR SURVEY AND IMF REPORT

The South African Chamber of Commerce and Industry (SACCI) is concerned by the recent research of the International Monetary Fund (IMF)[1] that the rapid growth of the real wage in SA outpaced labour productivity growth in most sectors and suppressed employment creation. The IMF provides a clear message that the South African labour market is less competitive than other emerging markets in this regard and it is essential for this imbalance to be urgently addressed in order to create more jobs.

The research is all the more pertinent given the proposed amendments to the Basic Conditions of Employment Act and Labour Relations Act. In broad terms, the amendments in their current form will reduce the flexibility in the labour market and thereby dampen job creation.

SACCI recently conducted a survey of our members regarding labour market conditions and the role of labour regulations in job creation. The general finding of the survey is that a simplification of the statutory disciplinary process would lead to greater employment creation. The survey also shows that smaller firms are more vulnerable to the administrative costs associated with labour regulations. This strengthens the argument in favour of the simplification of the disciplinary and dismissal processes as the SME sector is widely recognized as pivotal to job creation.

Other key findings of the survey include:

• Economic conditions are the biggest overall hindrance to employment creation (42.5%), followed by burdensome dismissal processes in the current labour legislation (26%), a skills-shortage (23.3%) and high wage demands (8.2%).
• Within the regulatory framework specifically, the burdensome disciplinary process is the largest obstacle to employing more people (45%).
• The preferred changes to current labour legislation are a simplification of the statutory disciplinary processes (50.7%), followed by a more favorable B-BBEE rating for education grants and bursaries (19.2%).

SACCI is preparing comments on the proposed amendments to the South African labour legislation to be presented to the parliamentary labour portfolio committee in due course. The ultimate goal of the interaction is to add value to the process of regulatory design. SACCI is hosting its labour committee on 16 April wherein business leaders will engage with labour law experts to this end. SACCI's Annual Convention on the 4^th and 5^th of October will also address employment creation as its central theme.

Footnote:

[1] Real Wage, Labor Productivity, and Employment Trends in South Africa: A Closer Look by Nir Klein. April 2012. 

Statement issued by CEO of SACCI, Mr Neren Rau, April 12 2012

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