I support the action brought by Herman Mashaba that seeks to ensure small businesses are not bound by decisions of national bargaining councils, mostly dominated by big business and big labour. This system is patently unfair and the provision that small business can apply for exemption does not provide relief. It entails more work and costs for the small company to ultimately get exempted.
This is a quote from Thami Mazwai (see below Not all red tape emanates from the state).
One of the main concerns about an exemption process is the onus placed on farmers to provide relevant information. There is inadequate recognition given to regarding the farm itself as a ‘going concern’ and the need for the farmers to provide salaries for themselves based on proportional income differentials as required by section 27 of the Employment Equity Act.
Earlier relevant posts
To illustrate the importance of applying labour law correctly, in 2012 the annual earnings of government ministers were R2 006 292 and the public service minimum pay was R59 226. Ministers earned 34 times more than entry-level public servants. At the quoted annual entry level of R30 275 for farm owners they only earn just over 13 times more.
Small private farm owners are not ‘rent-seeking capitalists’ (“Rent-seeking implies extraction of uncompensated value from others without making any contribution to productivity“). They are entitled to remunerate themselves like any other employee. So what is ‘sauce for the goose is sauce for the gander’. Apart from all the risks inherent in farming, private hands-on farmers are required to take policy decisions, adopt strategies, make tactical decisions and supervise all the other employees. Farmers, like other businesses, are obliged by section 27 of the Employment Equity Act (“EEA”) to eliminate all ‘disproportionate income differentials’. Based on schedule EEA 9 the farmers would be on occupational level six, with the entry-level employees on level one. If the entry-level wage determined by the Minister of Labour is R2 274 per month (R105 per day) then the ‘entry-level wage’ for the farm owners is between R30 275 and R36 943 per month. This is in addition to the usual farm operating expenses.
“The Bureau for Food and Agricultural Policy research says that R105 a day is the maximum level that agriculture can afford. You can’t set the entry-level (wage) at the maximum”. Agri SA president Johan Moller said commercial farmers who could afford it would be encouraged by Agri SA to “pay more than the minimum wage and to develop proper structures for wages in which a person can move and improve himself”.
If the Minister of Labour sets the entry-level at R105 per day, as is being speculated, there are more than likely to be massive structural adjustments in the agricultural sector.
Link to Business Day article
Thami Mazwai is resident executive at the Wits Business School and also consults on small business development. His latest column Not all red tape emanates from the state was first published in Business Day today.
NOW that there seems to be acceptance that the small business sector holds the key to future prosperity, is it not time that we look more deeply into issues that stimulate or constrain small business development? We simply have to move away from slogans, clichés, anecdotes and innuendos when we discuss small business.
Last week’s criticism of the Licensing of Business Bill piloted by the Department of Trade and Industry (DTI) is a case in point. Every avenue or situation is being used to drive home the point that the regulatory environment kills small business. It is time that we looked at the facts to chart the way forward.
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Regarding other aspects of the regulatory environment, I tend to agree that labour legislation is problematic, but only as far as it relates to small business. I support the action brought by Herman Mashaba that seeks to ensure small businesses are not bound by decisions of national bargaining councils, mostly dominated by big business and big labour. This system is patently unfair and the provision that small business can apply for exemption does not provide relief. It entails more work and costs for the small company to ultimately get exempted.
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However, and here’s the rub; most opponents of regulations look the other way and/or do not mention or acknowledge that the market and the private sector together have the most regulations and it is these that kill small businesses in their thousands. Sectors in the economy have industry norms and standards to which all in the sector must conform. These are not small business-friendly and very few small businesses are able to comply.
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But South Africa needs to do more research into the regulatory environment and include all players — specifically the private sector. We will then be able to decide, from an informed position, which regulations must be enforced, taking into account that regulations are essential for any market economy. After all, how do you ensure fair play and, on the other hand, also protect the vulnerable?