# Regulatory Compliance Category > Labour Relations and Legislation Forum >  Is the Labour Relations Act balanced and sustainable?

## Dave A

It is my opinion that the Labour Relations Act is fundamentally flawed as it puts the relationship between employer and employee in an unnatural, unsustainable balance.

I was going to say that the Act has failed to achieve its stated objectives which for some wierd reason I took as improving the relationship between employer and employee, trying to reduce strikes, workplace disruption etc., but reading the actual purpose and aims... well, that certainly isn't one of the stated objectives.

Unless you count _"the effective resolution of labour disputes"_ as aiming to improve the employer-employee relationship, in which case every strike probably should be scored as a failure of the Act to achieve this particular objective.

I think if this legislation remains unchallenged, it is only a matter of time before this skewed relationship is going to kill the goose that lays the golden egg. I also have to concede that my view on this might be skewed by the fact that I'm an employer. So to try to challenge my own paradigm, I'd appreciate a few opinions on the following holy cows:

1. Is the right to strike by an employee equally balanced by the right to lockout by an employer?

2. Is the ability of an employee to resign in equal balance with the employer's ability to dismiss?

3. Is it reasonable that if 50% + 1 of a sector wishes to engage in collective bargaining and use all the powers assigned to them in terms of the Act, they can override the individual rights of the remainder who are not interested in collective bargaining and central agreements?

All views on this most welcome.

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## IanF

Dave from my point of view 2 factors which affect our growth in SA are the labour relations act and BEE/AA. The latest I have seen is 



> According to a well placed source Telkomâs highest cost to provide services is staff related expenses, and here Telkom became uncompetitive.
> 
> It is understood that Telkom would be far more competitive if they paid their staff market related salaries for their skills, but unions pushed the company to increase salaries across the board instead of differentiated performance-based increases.  This means top performers and key-skilled employees get the same increases as average workers â not a recipe for becoming competitive.
> 
> An added factor is that the unions have forced Telkom to move all staff earning below a certain percentile of their salary range to a minimum salary scale regardless of performance and skills


This if from MYBB explaining why ADSL costs are high compared to other countries. 

So does the ANC will to change the legislation? My guess not until Cosatu splits from the alliance and forms their own Labour Party. Then the government should take a stronger line with the intimidation from the unions. Will this happen, politics doesn't follow logic so who knows.

If this is too off topic please move it.

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## sterne.law@gmail.com

The fact that the LRA has relatively few amendments, and none of consequence, is indicative of governments not being prepared to accept reality.

Of course politics is about votes, and in a country where votes are about my person or side I like, rather than fundamentals of who can do the best job, keeping the masses happy is what it is about. A move toward employers is not good for votes.

A few years back, a person who only dealt with wage negotiations described the difficulties as follows -
 In the first year the duly elected official of the union come swith crazy demands. You try and expalin how economics and business works, to no avail, the crazy demand continues. In the second year, the official comes back with a crazy demand again, but this time around he has more understanding and there really are REAL discussions, and things are a bit easier. In the third year the official now fully understands the way it works, so when the members say they want 50% he tries to save time and shortcut the proces andexplains that is not possible etc,etc and tehy should make a more reasonable demand..............Result:Members think he is siding with the employer and vote him out. So you start all over again

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## Dave A

> If this is too off topic please move it.


Not at all. I'm trying to collect as many paradigms as possible - hopefully also some totally different from my own.

I'm not even sure I'm asking the right questions at this point. I just see a problem that seems to be snowballing and it needs tackling.

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## AndyD

I think what we're seeing with the LRA is the far end of the pendulum swing. 10-20 Years ago the work force did in many respects get the sharp end of the stick, farm labourers paid in wine and getting rid of workers was often as easy as deleting them from the payroll. I think what we're seeing with the new LRA is just over-compensation in favour of the employees. Hopefully in a year or two after a few amendments it will settle down somewhere nearer middle ground.

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## Dave A

OK - if the LRA is going to be reviewed, I suggest there needs to be some discussion on what needs to change.  :Wink: 

Personally, my opening gambit would be the scrapping of extension of collective agreements to non-parties. It's grossly abused and the very foundation behind it (it's supposed to "level the playing fields") is so far off economic reality I'm amazed anyone swallowed it in the first place.

Second is the objective of "democratisation of the workplace." What twaddle! If that produced viable, competitive companies, the top performing companies would have no hierarchy at all. Just pass around memos and decide everything by universal ballot.

Bad enough top management at some companies get away with voting on their own salaries - imagine if everyone could do that! Recipe for a flaming disaster  :Mad: 

I'm all for employee forums and mechanisms for staff to voice opinions and send feedback up the line, but the final decisions need to come from the top down (and if they're wise they'll listen to that feedback before making those decisions).

And then there's...

 :Hmmm:  Maybe I'm preaching to the choir here. 

Does COSATU have a forum?  :Whistling:

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## wynn

If I am not allowed to fire them, why should I hire them?

Admitted this is a little difficult to apply to businesses that employ a large amount of people!

The reason the unemployment figure is so high is that small, informal businesses which should be the backbone of any growing, vibrant economy are forced into a 'straight jacket' of employment obstacles before they are able to employ people, so they rather start and do the kind of business that requires no labour. QED

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## Dave A

> If I am not allowed to fire them, why should I hire them?


Which reminds me...

Apparently there's a draft floating around the corridors of power proposing that businesses won't be able to do their own hiring selections. If a post opens up, you'll have to inform DoL and they'll make the appointment for you from someone on their list of jobseekers.

(or something along those lines - haven't seen the draft myself - could even be an urban legend doing the rounds  :Roll Eyes (Sarcastic):  ).

Can anyone confirm?

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## sterne.law@gmail.com

I just read it myself a day or 2 ago, but cant for the life of me think where.
Will try and remember and paste the link!

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## sterne.law@gmail.com

Google it - Employment Services Bill
It is still a draft so you wont find it on Gov web site just yet.

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Dave A (27-Aug-10)

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## Dave A

According to the DA -



> Private employers would also have to report and notify the department of any new vacancies or new positions in their establishment within 14 working days after the position become vacant.
> 
> The bill then afforded the minister the power to prescribe how employers should notify the Public Employment Service of all vacancies, going so far as to detail a technocratic list of requirements the minister might impose on firms in this requirement.
> 
> An employer was given the extra administrative burden of having to provide written reasons within 14 days to the director general as to why any departmentally preferred candidate with the required profiles could not be appointed.
> from Business Report here


 :No:

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## IanF

By making it harder to employ someone is going to increase unemployment how?
 :Slap:

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## wynn

We need a more conservative approach by 'Gubbemint' to business, a lot more conservatism instead of this rampant interferism.

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Dave A (07-Sep-10)

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## Dave S

> According to the DA -


I can almost gaurantee the responses that business will get will all be pre-disadvantaged individuals that have a degree/diploma/qualification that was awarded (not earned) after a 2-3 week training course.

The question is, business is to survive how?

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## Dave A

This story on a recent IMF report puts a different slant on things.



> Contrary to a common perception that the labour market was inflexible, the IMF said the way in which jobs responded to the upswing of 2000 to 2007 and the downswing of 2007 to 2009 demonstrated that this was not the case. It said: "The response of employment to growth was the highest among the G20." 
> 
> However, it described wages as "much stickier". The report said: "As economic growth slowed and eventually turned negative during the period 2007 to 2009, wage growth remained strong. The average wage settlement between unions and businesses last year reached 9.3 percent, led by the public sector wage increase of 11.2 percent, significantly outstripping inflation and productivity gains."
> 
> Due to the recession, firms were unable to pass on the higher labour costs and were forced to shed jobs. The report concluded that the wage bargaining framework was not sufficiently flexible. 
> 
> Data released yesterday by Statistics SA show the trend was still in place. Between June last year and June this year earnings in the formal sector rose more than 14 percent while 114 000 jobs were lost - a decline in employment of 1.4 percent. 
> 
> Kevin Lings, the economist at Stanlib, said: "The reason annual incomes rose despite job losses, was that average monthly earnings of formal sector employees rose by a dramatic 19.2 percent over the year to the end of May."
> full story from Business Report here


The big takeaway in there would be "The report concluded that the wage bargaining framework was not sufficiently flexible."

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## Dave A

Kevin Davie gives an interesting analysis here.



> We are in the strange situation of having shed more than one million jobs but the people with jobs have been winning inflationbusting wage increases. There was a herd of elephants in the convention centre in Durban where the ANC held its national general council. Did anyone notice? 
> 
> The ruling party produced a 38-page report, of which two pages are devoted to economic transformation.
> 
> The word "jobs" is mentioned twice. That is one less than the three mentions -- "Jobs, Jobs, Jobs" -- it got on the 1994 election posters. Overall, the two pages reflect a holding pattern, a kicking for touch on key issues.

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## sterne.law@gmail.com

Interesting to see some more activity on this thread. Over the pst 3 days I have been contemplating submitting a paper to the SA Law Reform Commision with the LRA and it's shortcomings as the topic.

In the interest of fair disclosure, it is a essay competition on critical law studies but they do take heed of submissions, presuming they make sense of course.

Perhaps if folks can post actual points or issues, it would make good research based on real business and not merely political stances. One of my pressing issues is to erradicate or minimize frivolous referrals and also to make unions more accountable for members behaviour when striking and where unions are making CCMA referrals.
Any points welcome. As i go along I will post my findings or views for comment and feedback and hopefully I can present a paper based on the real worlds feelings and realities.

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Dave A (04-Oct-10)

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## Dave A

The Kumba strike illustrates a point, perhaps.

Here we have a union going on strike where the gap between the employer and employee seems to be quite narrow. According to the report:



> The NUM is demanding pay rises of between 7,5% and 10% on a one-year deal, depending on workers' category, for its members at Kumba.
> 
> Kumba, the 10th-largest global iron ore producer, had offered wage increases of between 7% and 9,5% on a two-year deal.


When we look at the economic consequences of strike action, (most recent example being the motor industry), and the effect it has on (ultimately) future employment prospects, you would hope that resorting to strike action would be a *last resort on matters of serious consequence*, not pretty much a standard step in "negotiations".

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AndyD (04-Oct-10)

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## Dave A

> One of my pressing issues is to erradicate or minimize frivolous referrals...


Interesting problem - not least because the scale of the problem is probably going to be hard to prove. Lots of businesses settle at mediation on frivilous referrals just to save the time and hassle of running through the full process.

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