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The looming labour disaster

Ian Ollis is currently a candidate for the Masters of City Planning (Transportation) programme at MIT in Boston. He formerly served as a South African MP, (Shadow Transport, Labour and Education Minister). He has also worked as a city councillor in Johannesburg, briefly lectured at Wits University and ran a real estate company. He has no dogs!

When my ANC colleagues in Parliament told me Cosatu wanted my head on a plate, I had genuine problems understanding the reason they’re so upset. Turns out I’m just one of those bloody slave-trading labour brokers.

Truth is, I had never really met a labour broker, or in fact realised the intricacies of the difference between them and regular employment agencies. All that changed when the DA nominated me to serve on the labour committee. I had to learn very quickly that what I didn’t know about labour in South Africa could well kill you!

So what’s the trouble all about? The newly deployed labour minister, Mildred Olifant, published the draft new labour laws on 17 December in the Government Gazette, her first big step as minister.

Of course, the drafts had already been leaked to the press in the middle of 2010, banning labour broking and “declaring all temporary employment to be permanent”. These were prepared under minister Membathisi Mdladlana and director general Jimmy Manyi’s reign, and rubber-stamped by Olifant before being released for public comment.

The process has been fraught with complications, intrigue and perhaps even irregularity from the start. The public hearings organised for the labour committee in 2010 were highly contentious. As I repeatedly pointed out at the time, they were dominated by Cosatu members reading from pre-prepared faxes sent to them from head office. People who disagreed were intimidated by union members in their fire-engine-red T-shirts.

One poor man from the Unemployed People’s Party had bottles thrown at him and sharp sticks pointed an inch from his eye-ball because he wouldn’t accede to Cosatu’s demands, calling instead for a system of regulating the labour broking industry. In that particular hearing in Germiston, I witnessed people carry long assegai-shaped wooden rods, bottles and one loaded revolver into the meeting. It ended in chaos and we chose to leave when it became clear that the “public” really could make their views heard as long as they agreed with Cosatu.

Jimmy Manyi disclosed to the labour committee he had already signed off the draft bills and handed them to the minister for tabling at cabinet, before the labour committee had even met to draft its own summary report on the public hearings!

But what genuinely worries me most is not the flawed process (Cosatu and the ANC are still not accustomed to genuine listening to the public at large), but the actual content of the drafts. The Regulatory Impact Assessment was called for very early in the process, before the full cabinet or National Economic Development and Labour Council had received the drafts. This in itself is an indication of the confidence insiders had in the laws. The RIA is quite damning ( It makes several important points about the new legislation:

  • A number of the provisions in the new laws are probably unconstitutional.
  • Many jobs will be lost
  • It will create uncertainty in the labour market leading to a drop in labour-intensive investment in SA and a large administrative burden on existing companies
  • An envisaged dramatic rise in legal action and work for labour attorneys trying to interpret the new proposals,  and
  • Abnormally punitive measures for non-compliance.

The most surprising thing about the RIA, tabled in September, is that the labour department and the new minister seem to have largely ignored its findings.

The 17 December drafts are little changed from the mid-year versions (I think four sentences were altered). It still contains several very contentious provisions, which are sure to be challenged in court:

  • The Employment Services Bill requires private companies to provide sensitive employee information and vacancy details to the department of labour which will give the state employment agency an unfair advantage over the private sector – that’s forced co-operation with a state entity. It’s like having to tell SAA first that you are a customer wanting to fly to a certain destination and are mandated to receive a tailor-made itinerary before you are allowed to contact Kulula!
  • There is a provision providing for a fine of up to 10% of annual turnover for non-compliance with Employment Equity requirements. (This is only usually done where “ill-gotten gains” are at stake, similar to the fine levied on Pioneer Foods for their price fixing of bread.) There is, however, no cash advantage to non-complaint companies  if they merely fail to employ enough disabled people or women for example, so why the extreme fines.
  • The clauses prohibiting Temporary Employment Services appears to contravene International Labour Organisation’s conventions on sectoral interests as it discriminates against categories of employment. (e.g. the Namibian debacle in which the Namibian supreme court rejected the attempted ban on labour broking through legislation).
  • The criminalisation of certain breaches of the Basic Conditions of Employment Act and the Employment Equity Act is new and unprecedented.
  • The Amendments make both a subcontractor and the client liable for unfair labour practices. This violates contractual law in South Africa.

Now I hear the sound of frantic typing and arguing coming from the department of labour’s head office. Rumour has it that the Basic Conditions of Employment Act is being rewritten to save millions in legal fees when these laws are promulgated. And even if the reason for the re-write is not common sense but the issue of the department’s money, for the sake of this country’s future, I hope the rumour is correct. DM

Ian Illis is DA MP.


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