Daan Groeneveldt is a highly skilled and experienced human resource practitioner and this is what he has to say.  South Africa should avoid adopting labour market ‘terms’ from other economies without clearly understanding the implications. The expression “two-tier system” and the reasons for adopting such a system are already covered by the pay practices in South Africa and have been developed through negotiations at the various bargaining councils over many years based on:

• Experience and seniority.
• Performance and productivity.
• Reduction of wage costs.

The minimum pay costs for entry level jobs in South Africa are too high to allow employers to create and sustain additional jobs. The ultimate worth of any job is the employer’s ability to pay for it.  By reducing the minimum pay cost levels the following question arises –

• Will there be different output requirements between the higher cost entry level employees and the additional lower cost entry level employees ?

There must be concerns about the vision of ‘equal pay for equal work’ if the output requirements are no different.

In addition smaller employers will not be able to create additional jobs, regardless of the cost reduction, unless they terminate the services of the higher cost employees who are doing the same level of work.

In other words they will terminate 3 higher cost employees and employ 4 new lower cost employees – the net gain being just 1 new job. This scenario is made possible in terms of sections 189 and 189A of the Labour Relations Act 66 of 1995.

Surely it is much better to adopt the following initiatives:

• Translate existing experience (and cost levels) of individual employees into more senior job levels to improve performance and increase productivity.
• Encourage individual employees to grow their abilities to add value and progress up a defined reward structure.
• Withstand the pressure to resort to coercive industrial action to ‘win’ an additional 1% or 2% upward adjustment on a minimum wage.
• Take the purpose of the Employment Equity Act 55 of 1998 to the lowest occupational levels of employment.

Adopting these positive alternatives will provide both employers and employees with the opportunity to jointly explore mutually beneficial employment relationships.

This must be done in a single structure of job opportunities and reward, leaving the minimum cost and job level open to new entrants to an industry that will require increasing numbers of jobs.