Looking back to the early days and before the introduction of the Labour Relations Act of 1995 it is interesting to find out what the new government had in mind at the time. Recently a speech delivered by the current Minister of Finance was found while sorting old files.
The New Labour Market: Prospects for accommodation and conflict.
Speech by former Minister of Labour (as it was then known) Mr. Tito Mboweni delivered at the Labour Law Conference in Durban on 14 July 1994
What are the ‘new’ features that characterise our labour market. There are essentially three.
Firstly, we have in place a government firmly committed to a social partnership. Key pillars of this partnership are workers and their organisations. Although one does not need to explain to South Africans in this audience, it is nevertheless important to explain to others the organic link or relationship between the new government and the trade union movement.
This relationship should be understood within the context of the historic relationship between the ANC and the trade union movement – a relationship which was built over many years and dictated to by the material conditions in which our people found themselves. (By “our people” is meant the majority of working people, whether they are employed or unemployed.) The material conditions were those primarily of colonialism and apartheid in which black people whether they were workers or non-workers were subjected to a system of oppression and exploitation.
In addition, those of our people who were employed were perhaps put under conditions of super exploitation because they had no political rights and as such they could not articulate in a manner in which white workers could, their interests within a free environment. So therefore, the struggle of the workers for political freedom has historically been interlinked with the struggle for trade union rights. Hence, we have a situation in South Africa today in which the trade union movement does not need to count the government as petitioners, at least in the current period.
The trade union movement is part and parcel of the forces of transformation which ushered in the new South Africa. Therefore, it is trite to say that this new government will seek to support and advance worker rights, including their rights to organize. But it is important to add that we support a role for workers and their unions beyond the traditional defensive and elsewhere. This commitment will have a major impact on labour market policy and on the institutions that bear responsibility for its further elaboration and implementation.
Secondly, we are irrevocably committed to dismantling the protective barriers that have long insulated South African producers from the International market. This is the much talked about global restructuring as far as South Africa is concerned. As we all know we are now signatories to the GATT agreement and as such there are certain requirements with GATT which the South African producers and the trade union movement has to be part of. This demands a central role for labour.
We are going to have to learn to compete with imports on the domestic market. Across a wide range this will be possible through significant increases in productivity. However, important areas of production, those that compete with the low wage and low productivity Asian economies, are unlikely to withstand our entry into the global markets for these commodities. The employment and output loss that occurs in these areas will have to be compensated for by gains in areas of higher productivity and by penetration of the international markets for these high value commodities. Again, this will only be possible through dramatic increases in productivity.
Thirdly, we have in place for the first time a government with a major commitment to the millions of unemployed and to the development of small business. There is a vocal lobby that insists that the needs of both of these acutely disadvantages sectors of society will be accommodated by a free-for-all on the labour market, by wholesale elimination of the regulations that govern key areas of conduct of those who participate on the labour market.
The first and second of these features offer considerable room for accommodation between employers, workers and their organisations, and the government. There is a substantial body of international experience – gleaned from a diverse range of highly successful industrialised economies such as Germany, Japan and Sweden – which establishes an inextricable link between rapid and sustainable gains in productivity, on the one hand, and various form of social partnership, on the other.
What can we learn from these diverse experiences?
We learn, firstly, from their very diversity that there are no neat formulae to be applied in constructing a partnership. Each nation has found its own form of accommodation, for the most part forged out of substantial social conflict. We must examine our own history and our own strengths and weaknesses and construct a uniquely South African partnership.
We learn, secondly, that a social partnership does not spell the end of the basic contradiction between capital and labour. Far from it. To a significant extent, however, social partnership moves this contradiction out of the narrow distributional realm into areas like employment security and creation, labour skills development, work organisation and also corporate governance and industrial restructuring. It reflects a new ordering, a new institutionalization of this basic contradiction. In a strong sense it demands an intensified role for the state in these areas of action. The state cannot hide’ behind industrial self-governance but has to be a key player in this whole process since we are involved in the process of democratic transformation.
Thirdly, and this is a vital lesson, it demands of each member of the social partnership re-examination of some of their most revered sacred cows. Can we really expect unions and workers to downplay distributional issues in the context of the unusually large earnings disparities that characterise South African corporations and workplaces? Can we expect flexibility and participation from workers when our grading and payment systems are built on hierarchy and command, hierarchies that still, for the most part, embody an overwhelming racial dimension? Can we expect managers to compromise their managerial authority when unions brook no flexibility in their bargaining arrangements, often bargaining arrangements that we established 70 years ago. In a different industrial epoch? And what of the Government’s right to govern, to formulate policy? Will it compromise this in the name of an as yet untested social accord?
We should not then kid ourselves that this social partnership can be built simply out of goodwill and exhortation. It will take commitment and a certain amount of sacrifice all round. But, in my view, just as we have constructed, a uniquely South African accord in the constitutional realm, we are well placed to build an industrial partnership.
We have much going for ourselves. We have strong unions that have demonstrated flexibility and a willingness to sacrifice for the national interest; we have well organised employers that although hitherto inclined to defend a narrow parochial interest, have recently demonstrated a new willingness to take on the political challenges of the new democratic order in South Africa as well as the competitive winds blowing in from the world economy; we have well established .bargaining institutions on both the shop floor and at the industrial level, institutions that are by no means perfect, but that offer a solid basis for partnership building; we have our unique experience of tripartite policy formulation and implementation through institutions like the NEF, the NMC and the various sectoral fora.
The Ministry of Labour is committed to the strengthening of these institutions. High levels of flexibility are required from each one of these institutions. At the same time, we will not heed the strident and short-sighted demands to deregulate the labour market and dismantle some of its vital institutions without which this country’s industrial relations would have been at a complete disarray.
What of government’s role in this accommodation? It is fair to say that the tripartite arrangements that sprung up in the last four years, were, in large part, created in a governmental vacuum. They were tripartite in name. In substance they were bipartite with an illegitimate and increasingly incompetent government playing, at best, a neutral, at worst and more common, an obstructionist role.
Needless to say the role of the new Government will be different. As part of our concrete support and encouragement of this social accommodation, the other parties will have to concede a robust and active participation from Government. We will not simply attend to take the minutes and pick up the bills. We have constitutional and electoral responsibilities; we have interests to represent those whose voice is not loudly enough heard through the medium of organised business and labour.
The prime examples of these underrepresented interests are small business and the unemployed. Just as the quest for high productivity seems to offer a prospect for greater accommodation, so do the requirements of small business and the unemployed seem to threaten the very basis of this accommodation. Whist the reality of this threat should not be underestimated, nor should it be exaggerated. Above all, it should not be allowed to undermine the basis for a high productivity partnership that I have already sketched out.
Again, a certain amount of flexibility and mutual sacrifice is going to be necessary if the imperatives of small business and the unemployed are to be addressed:
Firstly, there is a need for flexibility in bargaining arrangements and collective bargaining agreements. Hence, we will have to recognise the resource constraints of small startups and most probably permit multi-tier remuneration systems that, in a regulated fashion, accommodate the interests of these small businesses in their early years.
Similarly, Public Works programmes will only be effective on a sufficiently large scale if there is a degree of flexibility with respect to collective bargaining contract.
Secondly, we will have to recognise that while small employers may require flexibility in staffing levels, the unions have an absolutely legitimate right to demand employment security and worker rights. Here there is a major role for the state in constructing retraining schemes as well as the unemployment and other welfare schemes that attempt to ameliorate the consequences of these conflicting renouncements.
Thirdly, I insist that the weakness of SME’s and their consequent shortcomings as providers of employment, do not rest with employed workers and unions. They reside in racist regulation, in the barriers to entry established by our high levels of concentration, and in the core of a system built on massive disparities in everything ranging from access to basic residential and industrial infrastructure through to basic Iiteracy and numeracy skills. Overcoming these major constraints will lay the basis for the emergence of sustainable SME’s. Destroying any semblance of order or stability in the labour market might bring short term relief to some, but it will destroy the very basis for rising up the productivity ladder, ultimately the only sustainable basis for an industrialised economy and the long term success of our Reconstruction and Development Programme.
In mapping the role of the new government in the context of globalisation and increasing competition, the overriding guiding principle is our respect for fundamental worker and human rights. We are committed to growth, but not at the expense of rights. As our president Nelson Mandela expressed in the ILO publication – Visions of the Future of Social Justice – “We cannot rebuild our society at the expense of the standard of living of ordinary men and women. We cannot develop at the expense of social justice. We cannot compete without a floor of basic human standards.” (P184) These are the parameters within which the Department of Labour we will seek economic progress and growth.
With all these challenges facing us, the Department of Labour is outlining a five-year transitional plan which would involve restructuring the labour functions of the Department and adapting our labour relations system within the context of a new labour market policy.
A key priority in this regard is to harmonise labour legislation and labour functions of the former TBVC administrations. We currently have five director generals, several more chief directors, duplicate staff members and offices from Ciskei to Bophuthatswana. So, the task of harmonisation is not as simple as a proclamation.
In fact, the task of harmonisation makes amending our Labour Relations Act seem pretty straightforward. On this score, as labour lawyers you may be aware that certain amendments may be tabled in parliament during the next sitting. Perhaps the most significant change will be the freedom given to trade unions to political association and to the funding of any political party of their choice.
The process of formulating a new set of laws governing labour relations in South Africa started before the new government came into being. We fully support this process taking place in the National Manpower Commission and expect that within the five-year time frame of our transition plans South Africans will see the emergence of a progressive and acceptable labour legislation.
Moreover, new legislation must be easily accessible and less cumbersome rather than the complicated legalistic explanations and procedures we see today. With all due respect, if the law is not understood by the constituency it is meant to serve and if it keeps workers waiting in uncertainty for more than a year – because of complicated legal procedures, then we need to seriously address the issue of simplifying laws.
Can we afford to be bogged down with lengthy legal procedures and industrial relations systems, when the world is moving at about ten paces ahead of us in skills development, technological advancement, cross border trade and marketing and new work and employment patterns?
Effective competition on the world market demands that we settle as soon as possible some the very basic industrial relations issues and seek better ways of managing conflict rather than letting conflict be the obstacle of economic and political progress.
The emerging social partnerships between labour and capital must be strengthened to enable us to jointly chart the difficult and complex road ahead. Tri-partism in our view, is a key component of labour market policy and we are fully committed to drawing greater participation from our social partners in both the formulation and implementation of policies. So too, will we draw in the intellectual resources and skills from the likes of those of you attending this conference. Many of you have assisted in the process of transformation from the old order to the new, now your assistance is required in driving the process further.