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SASLAW

SASLAW. SA’s labour laws are inflexible and hinder investment: myth or reality? Barney Jordaan. Some assumptions to begin with. 1. The debate must be informed by our vision of the type of society we want to create and maintain

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SASLAW

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  1. SASLAW SA’s labour laws are inflexible and hinder investment: myth or reality? Barney Jordaan

  2. Some assumptions to begin with

  3. 1. The debate must be informed by our vision of the type of society we want to create and maintain 2. No labour market is totally unregulated: what matters is the type of regulation we need and to what end 3. We can only legislate good intentions, not legislate changes of heart

  4. Nailing my colours … Little hard evidence exists that labour market regulation restricts economic growth Available evidence in fact suggests absence of a causal link

  5. Nailing my colours … If that’s not the problem, then what is?

  6. Background

  7. Extreme and persistent levels of inequality Medium level of human development (89th on HDI): whites ± 19 but Africans ± 117 - 120 Poverty: 54% of Africans versus 0.5% whites Racial wage gap: whites 63%+ over Africans Casualisation of labour

  8. The economy does not deliver jobs Growth rate: ± 2.5% - 3%p.a. (6% needed) Unemployment: 28 - 32% Shift from labour to capital intensive sectors: under-utilisationof labour

  9. Resources & manufacturing shrinking; services sector expanding • Chronic shortage of appropriately skilled labour • Low levels of productivity

  10. Perspectives

  11. One (narrow) view … • ‘Labour market regulation is predominantly aimed at protection of workers, restricts flexibility and limits economic growth’

  12. Less regulation = better economic performance • In order to improve overall economic performance, it is necessary to deregulate the labour market and to remove or reduce minimum levels of protection Translated …

  13. Many economists question the theoretical and empirical basis of the wisdom that castigates protective labour market interventions as a hindrance to development But …

  14. On the contrary, they take the position that such interventions may have a variety of positive effects, leading to more and not less decent work

  15. Arguments in favour of this view (in favour of deregulation) are based mostly on ‘perception’ surveys, not hard data • e.g. WEF’s 2010 World Competitiveness Report but …… only 37 SA executives responded! Also …

  16. Even the World Bank is changing its mind …. • No relationship between labour market deregulation and any genuine improvement in economic performance, such as higher growth, investment or employment rates

  17. It also acknowledges that the sole focus on improving the business climate is not a sound basis for economic policy, which must balance other goals, including -

  18. Political stability • Social safety nets to protect the poor and vulnerable from unacceptable levels of risk and • Protecting worker rights

  19. Another (broader) view… ‘Well-designed protection of workers benefits society as a whole’

  20. Translated … • Labour market regulation is both necessary and desirable • It should not be seen in isolation from other economic regulatory measures, e.g. competition law, protection of consumers, shareholders, investors, etc.

  21. OECD Country Survey of SA, 2008 Rates our employment protection legislation as relatively flexible Of the OECD's 29 members (which include most developed economies) only the US has less restrictive laws on hiring and hours of work

  22. OECD Country Survey of SA, 2008 Our dismissal laws more flexible than the average for OECD countries SA's employment protection legislation is more flexible than that of countries such as Brazil, Chile, China and India, with which we are often compared

  23. A personal perspective

  24. Government policy underpinning labour market regulation is essentially sound

  25. Policy framework State ‘Self-regulation’ ‘Regulated flexibility’ ' Capital Individual Labour Collective

  26. ‘Regulated flexibility’ = protecting security of employment while providing flexibility

  27. ‘Flexibility’ has 3 components Ease of hiring & firing Wage flexibility Functional flexibility (deployment of labour)

  28. ‘Security’: 4 components Opportunities for work Protection against arbitrary dismissal Representation security Workplace safety

  29. Fact versus fiction

  30. Much of the debate about the restrictive nature of our labour laws is based on myth

  31. ‘Dismissal laws favour workers’ The reality: • More than 1m dismissed between 2008 – 2009 • Dismissal rate has not decreased over past 4 years, nor has employer no-shows at arbitration

  32. Our framework is similar to that of other ILO members that have ratified the 1982 Convention • This includes most members states, except the delinquent, failed and oppressive ones • We are out of step as far as ‘no fault’ terminations are concerned

  33. ‘Schedule 8 is a far cry from the perception of employers that the LRA’s requirements for dismissal are onerous – it does in fact propagate an informal and fair procedure. It is rather employers who must be blamed for having onerous disciplinary policies and procedures which they are then correctly held to by commissioners’ - Dispute Resolution Digest, 2011

  34. ‘The CCMA is biased against employers’ Tokiso Dispute Resolution Digest 2011 The reality: employers ‘win’ most of the time

  35. Tokiso Dispute Resolution Digest 2011 • Reality: compensation is the primary remedy in practice

  36. Size of compensation orders Dispute Resolution Digest 2011

  37. Granted, there are real problems • Legal uncertainty • Process costs & ease of access to CCMA • Perhaps the bar is too high where there is fault and too low where there is none?

  38. But the sources of our problems go beyond this … • Required competencies often lacking, at all levels • Internal procedures and agreements often too onerous and inflexible

  39. But the sources of our problems go beyond this … Workplace relations, generally, are in a shocking state • Leads to over-reliance on procedures and rules • Increases risk of litigation

  40. Trust: the key ingredient for an improved IR climate Trust 10 1 1 4 0 10 Formalisation 2 3 3 0

  41. Creating trust ‘Trust’ • Communication (‘involvement’; ‘engagement’; ‘consultation’) • Credibility • Competence • Consistency (‘predictable behaviour’) • Concern • Respect

  42. ‘Trust arrives on foot … but leaves on horse back’

  43. What exactly is being done elsewhere? • Coherent government labour policies with the involvement of social partners • Acceptance of global market & economic realities • Increased management – union collaboration

  44. What’s happening in SA? • Adversarialism continues to prevail in spite of new LRA model • Unions cling to old model of capital exploitation of labour • Unions in disarray

  45. What’s happening in SA? • Social partner institutions de-valued • Levels of conflict (and strike violence) very high …

  46. What’s happening in SA? • Fact: the CCMA is the busiest labour dispute resolution agency in the world!

  47. What’s happening in SA? • The prevailing model of leadership in companies is one of ‘decisiveness’, not ‘inclusion’

  48. Is there hope? Well, maybe … • Two solutions, one ‘pragmatic’ and the other ‘miraculous’ • (Paraphrasing Clive Thompson)

  49. The pragmatic solution: • Prayer!

  50. The miraculous one: • Let the parties get together and find common ground to achieve the goals of the LRA ….

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