“We need to confront the uncomfortable reality that where bargaining councils are strong, companies are uncompetitive and do not create jobs.  This means that the transformation drive must not only focus on tackling the social and economic iniquities that result from the apartheid era.  It must include the revision and scrapping of policies put in place since 1994 that are scuppering growth, contributing to unemployment and preventing us from benefiting from SA’s inherent vibrancy, ingenuity and all our people’s potential to contribute and benefit from productive, economically active lives”.

Bargaining councils fail small business: Jonathan Yudelowitz, joint MD at YSA and the author of Smart Leadership, in BusinessLive today published by Business Day.

Further excerpts

SA’s economy is hamstrung by poor productivity and high labour costs; symptoms of a struggling economy.  The population increases but the formal economy sheds rather than creates employment.

Small businesses are the biggest creators of jobs in any economy.  But their potential in SA to create employment is strangled by the corporatist labour market, which discourages the flexibility that the small owner-managed business sector needs to thrive and grow.

The dominant players in bargaining councils have won many battles, but have lost the war for job creation and improved economic competitiveness.  It is significant that Cosatu and most of the corporate founders of the current system are now mere shadows of their former selves; as are the garment, textile, mining, metal and engineering industries — where bargaining councils have been strongest.

SA’s labour relations framework was developed during the mid-1990s by the government, big business as well as organised labour.

Big business arrogated to itself the right to speak for all business, as if small business was merely a less sophisticated version of the conglomerates.  It grossly underestimated the intense, profound and personal connection an owner-manager has with his business, or how this is harnessed to evolve and create jobs.

Similarly, the trade union movement conflated its interests with those of non-unionised workers and the unemployed.

. . . . .

The Metal Industries’ Bargaining Council apes the industrial council system of the 1920s: a pillar of SA’s monopolistic economy that for almost 60 years protected the white working class from real competition from black workers and kept business rivals at bay.  The bargaining council also discourages businesses and organised labour from tackling the minute particulars that distinguish each business’s circumstances from other businesses’s.  In contrast is the era from 1979 to 1996, when labour unions organised and negotiated enterprise by enterprise, securing a stake for workers of all backgrounds.

. . . . .

Initially, the bargaining council demanded the closure of the small businesses.  But the South African Textile and Clothing Workers Union (Sactwu) successfully pressured the bargaining council to not close factories that survived the hostile attack and that pay below the stipulated level.  This suggests that the entrepreneurs and Sactwu respect market realities and are prioritising employment over protection of vested interests.