To secure more votes Prime Minister JC Smuts enacted the Industrial Conciliation Act of 1924, the precursor to our Labour Relations Act of 1995. Solely for his own ‘political’ purposes Smuts excluded most ‘blacks’ from the law’s protection and legalised collusion between parties to the old industrial councils; large employers and ‘white’ trade unions. It did not have anything to do with ‘orderly’ collective bargaining.
The colluders were legally allowed to force the government to disrupt the labour market by barring competition and fixing higher wages for ‘white’ workers. The Pact Government of Hertzog and Cresswell prevented Smuts from being re-elected as Prime Minister. They also embraced the legal right to protect ‘white’ workers from any real competition for jobs from ‘black’ workers.
How ironic that a similar law now forces the Minister to exclude millions of job-seekers, but without any regard to race. The parties to bargaining councils are registered trade unions and employer associations. Employers agree to higher wages in return for lack of competition and the Minster is ‘forced’ by law to extend the agreement to non-parties.
How bizarre. Investopedia defines collusion as:
“A non-competitive agreement between rivals that attempts to disrupt the market’s equilibrium. By collaborating with each other, rival firms look to alter the price of a good to their advantage. The parties may collectively choose to restrict the supply of a good, and/or agree to increase its price in order to maximize profits. Groups may also collude by sharing private information, allowing them to benefit from insider knowledge”.
In his latest column that appeared today on BDlive, published by Business Day, All eyes on court over ‘collusion act’ clause, Leon Louw implores all South Africans to reflect very seriously on the ‘emotional and material suffering endured by millions of innocent victims’ because we have the world’s ‘highest persistent unemployment rate, and most young people do not have, have never had, and are unlikely to ever get, a job’.
Excerpts
Entrepreneurs, willing and able to provide jobs, are denied profits they might have earned. Workers, willing and able to work, are denied incomes and on-the-job training followed by rising incomes and life prospects. Consumers are forced to endure curtailed living standards.
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The dim light at the end of a long dark tunnel is that the High Court in Pretoria will be asked later this month to declare one of the culprits, a single word in section 32 of the Labour Relations Act, unconstitutional. The case is extremely bizarre. Section 32 forces the labour minister not only to allow collusion — which, but for the act, is banned — but to require it. It gets worse. Once colluders have colluded, she must do what they say. If they tell her to impose collusive contracts on noncolluders, she must (given certain conditions) do so, even if she is convinced that it would harm the country, especially the unemployed, marginal businesses and prospective investors. She is routinely required to do what she might consider extremely destructive.
. . . . .
Parliament’s laws must be of general application (equally applicable to all), but she must impose private “bargaining council agreements” that apply in arbitrary and discriminatory ways to whoever happens to be targeted in them. And it does not end there. Instead of supporting the removal of an insulting and demeaning provision, the minister is opposing it. Stripped of obfuscatory legalese, her counsel will say to the court: “My minister does not want the right to think. She prefers being forced by private people to do what they say, even if she thinks it’s a very bad idea.”
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The Free Market Foundation wants section 32 to say that the minister “may” rather than “must” apply private contacts to nonparties, so that she will be allowed and required to consider the implications of her actions. She will remain free to prescribe employment conditions for nonparties. If the foundation wins, SA will win. That victory alone will not be enough, but it might herald a new era in which workers gain the right to work, and entrepreneurs the right to be enterprising.