Recent indications  that the proposed amendments to labour laws are being taken back to the drawing board are to be welcomed.   It is also good news that the parties to NEDLAC see the need to identify themes for further debate on the topic.   This is progress towards finding the best way to formulate amendments that take the law forward to a level where our labour dispensation is constitutionally compliant and contributes toward achieving that elusive better life for all through job creation.

Whilst it is that the way ahead will be filled with technical discussion and highfaluting debate, it is important to involve as wide a spectrum of views as possible, to render the outcome relevant and useful.   The identification of appropriate themes is crucial to the success of the new endeavour.

Ifaisa  suggests three themes that are central to achieving appropriate progress toward a labour dispensation that works for the state, the employed, the employers and, importantly, the unemployed.   The themes are

  • #1 the centrality of management prerogative;
  • #2 debunking the “wage gap” myth; and
  • #3 recognizing the value exchange that is at the core of all sound employment relationships.

#1        Contrary to the belief that employment practices in the SA workplace are over-regulated,  existing legislation recognises the pre-eminent role of management in labour relations.   The notion of “operational requirements” allows employers to terminate the services of employees as part of their management prerogative.   This concept covers a multitude of facets, but in law it is the economic [ the employer can no longer afford the  employee ] technological [ the employee is replaced by a gadget ] and structural [ work process requirements, the need for fruit pickers at harvest time].

Employers whose operational circumstances dictate that employees may have to be dismissed based only on operational requirements are obliged to follow a fair and inclusive consultative process, act in good faith with openness and compensate affected employees with notice and severance packages.   But, at the end of the process, the best interests of the business have to be served.   This is legally recognised because the health of the economy is dependent upon the success of business.

Our Constitution guarantees freedom of association, freedom of trade, occupation and profession, the right to fair labour practices and the right to bargain collectively.   When all of this does not achieve the desired result, employees have the right to take collective industrial action by striking, including ‘go-slows’ and ‘work-to-rule’, whereas employers may lock out employees.   Protracted inaction is often a feature of this phenomenon that is used in the power play between employer, employees and their trade unions to resolve their disputes of interest.   Importantly no court has the power to interfere in a protected power play.   Disputes relating to rights, such as dismissals and unfair labour practices, are dealt with by neutral third parties through mediation and arbitration or by judges who adjudicate the more serious disputes.

Strikes are of two kinds, those that are protected by law, after due process and proper observation of preliminary requirements, and those that are unprotected, unlawful or illegal.   It is nevertheless possible, whether strikes are protected or not, to dismiss striking employees based on operational requirements, provided  employers follow the prescribed procedures, compensate the employees with notice pay, and in some instances severance pay, and act in good faith and promote the best interests of the business.

From this it can be seen that employers have and retain the ultimate power to operate their businesses.   If this were not so, there would be little incentive to take the risks inherently involved in running a business for profit.

#2        The second theme concerns the myth of the so-called “apartheid wage gap”.   While it is so that human dignity and the promotion of the achievement of equality are at the forefront of the aims of the new post-apartheid order, the tendency to continue to blame apartheid for  current realities must be challenged.   In the 1970s there was a wage gap back, when people doing the same job were paid different wages because of their race.   This changed after the Wiehahn commission reported in 1979 on its evils.   In the post-liberation era the term “wage gap” has been given a new meaning to denote the gap between the lowest and highest paid employees.   It is so that in the Public Service in 2010 a Minister cost the taxpayer around R1,8 million a year while entry level  cleaners cost a total of R70,000 per year.   In hospitals toilet cleaners do noble and important work, keeping the risks of infection in check to prevent the spread of disease and hospitals becoming places of dying, not healing.   The Minister of Health, by contrast, has enormously complex responsibilities.   The tertiary educational qualifications, skill, training and experience that empowers the Minister to be fit to do the job of developing and creating a sustainable health care system is in no way comparable to the low-skilled work of the toilet cleaners in the same department.   That there should be a differential or ‘gap’ in their incomes is self-evident, provided it is proportionate as required by the Employment Equity Act.   To call it the ‘apartheid wage gap’ is sophistry or the propaganda of irresponsible bargainers for increased wages.   This has had the effect of unrealistically and unsustainably inflating the cost of entry level jobs, thereby limiting these jobs in the economy and leaving many new work-seekers unemployed.

The “apartheid wage gap” argument has been most successful in the public sector, but has had a knock-on effect in the private sector.

It is generally accepted that public sector employment consumes wealth and the private sector creates wealth.   The taxes paid by the private sector are needed to pay for the services provided  by the public sector. Consequently the myth of needing to close the “apartheid wage gap” is a stumbling block to balancing the creation of jobs in the public and private sectors.

#3        The third theme is the oft neglected matter of value exchange in the workplace.   The employer’s ability to pay any wage is the ultimate worth of any job.   If the wage demand is such that the employer does not regard it as worthwhile to pay that wage, no job will be created and jobs will be lost as workforces are trimmed to meet their “operational requirements”

The sustainability of any profit oriented enterprise involves the measurement of job worth.   In this exercise all employers must measure the cost of jobs they need against the value that must be created by the employees doing those jobs.   Simply put, if the wage bill is more than the value generated by those being paid wages, the business will fail.   Trimming down and closing businesses as disparate as clothing manufacturers and newspaper publishers are good practical examples of how the value exchange equation works.   If employees do not add sufficient value to justify the payment of their wages, the job creation project upon which the country has embarked will surely fail.

The measurements involved in the value exchange equation of the employer/employee relationship are the building blocks of individual accountability and empowerment in the workplace.   The forthcoming deliberations should be focussed on this equation and on the promotion of empowerment and accountability at work.   The recently released report of the Planning Commission, which looks toward the future as far away as 2030 is required reading for all who are involved in the discussions of NEDLAC ‘themes’ approach.

Daan Groeneveldt

Is with the Institute for Accountability in Southern Africa

www.ifaisa.org