# Regulatory Compliance Category > General Regulatory Compliance Forum >  M Mdladlana: Annual Labour Law Conference

## I Robot

Speech given by Minister of Labour Honourable Mr Membathisi Mdladlana at 21st Annual Labour Law Conference,
Sandton Convention Centre 25 June 2008

Programme director
Leaders of organised business and organised labour
Academia
Labour law specialists
Distinguished guests
Ladies and gentlemen

Friedrich List the 19th-century German economist wrote in 1841 that – "It is a very common clever device that when anyone has attained the summit of greatness, he kicks away the ladder by which he has climbed up, in order to deprive others of the means of climbing up after him". Today, those that have been deprived have also learnt something about this 'common clever device' – and that they need to kick this ladder before 'anyone has attained the summit of greatness'.

Ladies and gentleman, our people are restless and as we have been told before – 'when you have robbed a man of everything, he is no longer in your power, he is free again' and we all know what that means.

Can we afford to talk about legal compliance and competitive advantage when our people continue to die in their workplaces at the rate at which they are currently dying in mining and construction? Can we talk about competitive advantage and legal compliance when our people are working longer hours with less pay, no leave, no Unemployment Insurance Fund (UIF) and no permanent employment? We are leaving in a world where more workers are earning wages that cannot even put food on the table.

Workers are increasingly unable to afford their own transport costs to be able to work, let alone clothe and entertain their families. A Human Sciences Research Council (HSRC) Student Pathways study has found that 50% of students who enrol in higher education programmes do not complete their studies and drop-out due to poverty and lack of finances – costing government R4,5 billion in lost grants, 70% of the students who drop-out are 'extremely poor with monthly household income between R400 and R1 600' and most of them are black. Can we therefore afford to talk legal compliance and competitive advantage in this context? The ladder has become shaky and no one can attain the summit of greatness.

My department recently looked at the issue of minimum wages and its effects on household poverty and we have found, through research conducted by the Development Policy Research Unit (DPRU) that 'wage income is not a major income source for the poor'. The majority of our people are increasingly reliant on state grants and self-employment. Less than half of the poor and ultra poor workers will benefit from minimum wages. This raises the issue of compliance, which I shall return to later. Lastly and more importantly that, 'the fact that poor households are larger in size compared to non-poor households adds further concern about the effectiveness of minimum wages in reaching the poor. For every R1 gained in a poor household, over five people have to share that income (approximately 20c each)'.

The study then concludes by reminding us of what we have always known and it is that "poverty levels are likely to decline if employers comply fully with minimum wage regulations". Allow me to add to this conclusion and say that no employer can gain any competitive advantage from employing hungry workers.

Bargaining councils are also not creating any competitive advantage for our workplaces. First their coverage is very weak. Studies show that, according to the DPRU, whilst in 1995 about 15 percent of those in private formal employment were covered by bargaining council agreements – this had declined to 13 percent in 2005. This translates to just over one million private sector workers. Secondly, similar to the finding on sectoral determinations I mentioned earlier, there "did not appear to have been any significant remunerative advantage associated with bargaining council membership in either 1995 or 2005".

Therefore, "in both 1995 and 2005, the aggregate estimates indicate that membership of a bargaining council was not associated with higher mean earnings". In this same period, using statistics from the Labour Force Survey (LFS), there has been an increase in the number of hours worked of approximately 1,5 hours, from 47,6 hours in 2000 to 49,1 hours in 2005. Productivity South Africa also points to a 3,2% per annum increase in private sector productivity since 1996 largely spurred by 3,6% labour productivity. Let me put this in another way our people are working harder, longer, for less.

Yet we continue to be told that our labour market is rigid and needs to be reformed. We are told that we scare investors away and that our labour force is not productive. How can our workers be more productive when they have no means of coming to work in the first place? How can they be more productive when they come to work on hungry stomachs? Productivity depends on investment. It is only when we invest more in our workers that we can demand more from them. We must realise our goals of achieving a forty hour week, we must train our workers and must reward them accordingly.

When we promulgated the Labour Relations Act and the Basic Conditions of Employment Act more than ten years ago, we had hoped that ten years later these problems would not be persisting. But clearly we were wrong and the actions of our people on the ground are confirming this. In the last five years we have witnessed working days lost to strikes increasing from 79 working days lost per 1 000 employees in 2003 to 753 in 2007.

In the last two months we have also seen our people being easily misled into believing that their genuine concerns on poverty and unemployment are caused by our fellow brothers and sisters from Africa. Our own analysis on labour migration has shown that South Africa gains economically from entry by fellow Africans. In 2004, based on figures from Statistics South Africa (Stats SA), spending in South Africa by visitors from Africa and the Middle East exceeded the combined expenditure of visitors from the Americas.

According to the South African Tourism Strategic Research Unit in 2005 seven of the top ten spending countries in South Africa were from Southern African Development Community (SADC) – Mozambique, Zimbabwe, Botswana and Lesotho. It is therefore a misconception to conclude that migrants steal jobs from South Africans. The opposite is actually true. They are job creators, first for themselves – and for the rest of us. However, the rumblings by our people are all signs of a ladder beginning to shake. People don't want to hear carrot and stick anymore because the carrot is not working, now is the time for the stick to come out.

Researchers from the Sociology of Work Programme at Wits University are telling us that "there is very little merit in the assertion that they, qualified blacks and women were not out there". A separate study by the HSRC has also found that our labour market continues to discriminate against graduates from historically disadvantaged institutions, thus choosing not to employ black graduates possessing similar qualifications to their white counterparts. Therefore employers must stop telling us that they cannot find any qualified black people to employ.

Legal compliance, competitive advantage! How can that be, when 332 workers died in their workplaces in the last year and continue to die even today - and many remain unregistered according to Compensation for Occupational Injuries and Diseases Act (COIDA) and struggle to have their claims processed quickly and efficiently by the compensation fund.

Compliance can no longer be an option when half of our workers – 5, 8 million according to Stats SA – are not registered for UIF and 4, 1 million of them do not even have paid leave entitlement in their places of work.

We must also regularise migration – which is predominantly based on labour. It does not benefit anyone, whether it is an illegal migrant labourer or an employer, to allow illegal migration to persist. It only encourages exploitation on the part of the migrant worker and risk on the part of an employer. We should encourage legal entry of fellow Africans into our country and ensure that all migrant labourers are properly documented like any other South African and that the laws of the country should equally apply to them.

After all the constitution talks about everyone in a number of areas, the Labour Court recently ruled that even undocumented migrants and refugees have the same labour rights as enshrined in the Labour Relations Act (LRA) and Basic Conditions of Employment Act (BCEA) if they are in a working relationship. They are also protected by the constitution. Everyone has a right to fair labour practices. There is therefore no escaping compliance by anyone, whether employing South Africans, legal migrants or illegal migrants.

Ladies and gentleman let me however conclude by making a very personal plea. The issues I have raised here are not about legal compliance anymore. Neither are they about the labour market exclusively. They are about human dignity, mutual respect and ubuntu – all the ethos that we seem to all be increasingly forgetting in our rush to climb up the proverbial ladder in pursuit of the summit of greatness. It is only when we regain these values and abide by them, both as employers and workers, that we can truly regain our competitive advantage.

I thank you.

More...

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## Dave A

Vodacom is stuffing me around too much for me to clean this up - but it is an extraordinary read. I'm going to make a point of coming back to this when I get the chance (and have a stable connection).

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## duncan drennan

It is a fascinating speech, but leaves me with so many questions.

Why are only half of the country's employees registered for UIF? Who does not pay their workers minimum wage? Why are employers not complying with the law?

Surely this is a relatively simple thing - comply with that law, it is far easier that way.

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## Dave A

Exactly! And it is the answers to these very questions and more importantly the measures that should be taken to deal with it that he is trying to divert discussion away from.

But wait - I'm going to get to his "kicking away the ladders" bit too. Because guess who did the kicking - none other than the honourable minister himself!

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## Dave A

Reading the following reminded me that I had wanted to come back to this thread.



> Speaking at a Black Management Forum (BMF) dinner to honour him, Zuma said: "We see a very critical role of state-owned enterprises."
> 
> He wants to see the enterprises responding to "a clearly defined public development mandate" while helping with the country's transformation.
> 
> Referring to the role of the enterprises in training the youth, he said: "We would like to see the enterprises resuming the role they played in the past, of training young people for various trades as artisans." He said such skills are badly needed in the country.
> 
> Despite the country's progress in "transforming the economy to benefit the majority, serious challenges of unemployment remain".
> full story from M&G here


"We would like to see the enterprises resuming the role they played in the past, of training young people for various trades as artisans."

My question to our Minister of Labour is "who stopped it in the first place?" He only needs to go as far as the mirror to find the answer.

This is not all the Minister must take responsibility for:



> When we promulgated the Labour Relations Act and the Basic Conditions of Employment Act more than ten years ago, we had hoped that ten years later these problems would not be persisting. But clearly we were wrong and the actions of our people on the ground are confirming this. In the last five years we have witnessed working days lost to strikes increasing from 79 working days lost per 1 000 employees in 2003 to 753 in 2007.


Indeed. At what point is the Minister going to realise that his paradigm of increased regulation being the solution is fundamentally flawed?

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## duncan drennan

> Indeed. At what point is the Minister going to realise that his paradigm of increased regulation being the solution is fundamentally flawed?


Where is the "sweet spot"? A laissez-faire approach seems to open up a route for exploitation of the impoverished, while a highly regulated environment does the opposite.

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## Dave A

I think it might be easier to first identify what might have aggrevated the situation before hunting for the sweet spot.

A core problem is that the legislation has institutionalised a conflict relationship between business and labour. Not only have rules of engagement brought certainty as to possible consequence, it has made conflict part of normal process. Worse still, we now have a whole lot of people who rely on there being conflict for their jobs.

If we look at lost working days due to strikes specifically, I'd say the worst problem is the concept of a protected strike. It has given a loaded gun to labour without running the risk of it blowing up in their faces. This has severely shifted the balancing force of uncertainty in negotiations. Labour can call for a strike without risking the consequence of their members losing their jobs.

Add centralised bargaining to the mix, and it is little wonder the number of lost days has exploded.

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duncan drennan (13-Jul-08)

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## duncan drennan

> Not only have rules of engagement brought certainty as to possible consequence, it has made conflict part of normal process.


Slightly off topic, but this is quite an interesting comment in the light of some of the reading I have been doing recently on capitalism and rights. Here is a quote which I am sure you will find interesting.




> When one defines oneself in relation to others not on one's obligations, but on principles of autonomy and rights, then one defines oneself in negative relation to others and societyâthat is, you derive your selfhood based on aspects of your life that you demand are not to be interfered with. Rights as principles of autonomy are not stable; they are based on general agreement and can appear or disappear very quickly. You receive a right to anything only when others agree that you have that rightâfor instance, I don't have the right to drive my car while intoxicated because the social group around me is not willing to agree to let me have that right. In order to secure rights, I need to secure the agreement of the social group around me. In other words, rights are fundamentally contractual. If the social group around me is not willing to grant me rights, then I need to secure them through conflict. Not only that, rights often conflict with one another and people seem to pursue their own self-interest against the interest of othersâsome person's right to smoke may interfere with my right to breathe fresh air. Therefore, rights are fundamentally conflictual. The history of modern Western culture has by and large been a history of the conflict between these principles of autonomy, through which we define ourselves individually, and authority, between conflicting self-interests, and between groups that have certain rights and groups which are denied those very same rights.

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Dave A (14-Jul-08)

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## Jabu

> business and labour.


I must ask that you refer to this by their proper names. It is employer representation and employee representation.



> the worst problem is the concept of a protected strike.


This is balanced by the right to lockout by employer parties. The fact that you do not want to use it is your problem.

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## Dave A

> I must ask that you refer to this by their proper names. It is employer representation and employee representation.


Just checking if you are still stopping by, Jabu  :Wink:

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## Dave A

> This is balanced by the right to lockout by employer parties. The fact that you do not want to use it is your problem.


That is no balancing tool at all. Business regards lockout as an absolute last resort (to be used to protect the business from striking workers, normally) and not a negotiating tool. You are also suggesting that the very mechanism labour so willingly uses against business is equally effective in curbing labour's actions.

Quite clearly one does not balance out the other at all. It's like taking the stick you beat us with, handing it over and saying "go ahead - beat yourself!"

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## duncan drennan

> That is no balancing tool at all.


What do you believe a fair balancing tool would be?

Maybe I need to ask some other questions first (I have no idea how strikes work) - what are the tools and mechanisms for negotiating wages?

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