Frans Rautenbach, a practising advocate, skilled and experienced in employment law and industrial relations, has drawn attention to issues that need very serious consideration.

THE Congress of South African Trade Unions (Cosatu) poses a large political dilemma for SA.   This is because the labour federation straddles two fundamental viewpoints, one of which is good for us, and one of which is bad for us.

Unemployment in SA is clearly the result of a regulatory or structural environment that is not conducive to job creation.

It is important to view or download the article that first appeared in Business Day today –  Regulation: Cosatu fights corruption but holds back economic growth because it contains useful statistics and comparisons.   Consent has kindly been given to including  the extracts appearing herein.

Cosatu is good for us in one important respect.   It shines in civil society for its clear, firm and commendable stand against corruption in any form.   This is important as it holds real power in the tripartite alliance.

Besides corruption, the biggest problem in our society is unemployment.   Virtually all other problems are offshoots of this problem.   The direct cause of poverty in all its forms is unemployment.   Poverty is a major cause of crime, drug abuse, family breakdown, SA’s health, transport and infrastructure problems, and the lack of education.

Besides labour law, SA’s economy is also hopelessly over-regulated in a number of other respects.   The 2010 edition of Freedom of the World, which measures economic freedom in a large number of countries, placed SA 82nd out of the 181 countries measured.   The index divides the list of countries into four quartiles, and then shows the relationship between the average achievement of the quartile in, say, per capita income, and a particular quartile.

Cosatu is wrong.   A good example of a country where there has been light regulation of labour markets is Taiwan.   In the three decades from 1960 to 1990, Taiwan enjoyed virtually full employment — achieved through a market that had a high degree of labour mobility and a minimum of state restriction on labour movement or contracts.   Initially workers were employed at low wages, but as there soon was no unemployment, the demand for workers was high.   The result was that real wages in manufacturing, for example, grew about 8% per capita per year.   Note, that is after adjusting for inflation.

More to the point, Cosatu is wedded to labour laws.   For it to vote against labour laws would be like a turkey voting for Christmas — even though the evidence in favour of such a vote is staring it in the face.   Cosatu is a major cause of unemployment due to its insistence on regulation.

Cosatu is also an obstacle to educational reform.   Our education system is bureaucratic and centralised.   It is also the most unionised sector in our economy.   There is almost no room to reward individual merit among teachers.   Teachers must be paid standard union-negotiated wages unless a school’s governing body tops up the teacher’s salary on the grounds of individual excellence.

Cosatu stands squarely in the path of such a change.   Sine 1994 the state sector has become the growth area for unions.   Cosatu is not about to give that up.

Our government on the other hand, is so paralysed by its lack of leadership that it will not be able to confront this dilemma that is Cosatu.   Does it cut its ties with Cosatu and introduce critical labour reform, or does it hold Cosatu close to its bosom and exert whatever influence it can to keep the anti-corruption outcry at bay?