Cosatu G.S. Zwelinzima Vavi's address to ALLC 05-07-07

COSATU General Secretary, Zwelinzima Vavi's Address to the Annual Labour Law Conference
5 July 2007,

Friends, Delegates and Comrades

We are grateful to have been given an opportunity to address this annual labour law conference.

The Annual Labour Law conference continues to raise challenging and interesting areas for debate. The debate on our labour market remains contentious, with more and more research showing that workers continue to face significant challenges to obtaining basic rights, 13 years into our new democracy.

In South African one cannot have an informed discussion without examining the historical context of our transformation on every front. We are a nation in construction. We are seeking to replace the old and repulsive with the new united, non-racial, non-sexist and democratic South Africa. Our Constitution seeks to provide all citizens a floor of basic protections that are elaborated in a myriad of laws. To understand our expectations as workers and the constraints which we face you have trace our country's history.

The corner stone of colonialism of a special type and apartheid was the oppressive and deeply discriminatory labour laws, intended to forever subjugate the working class and African workers in particular to a super-exploitative system.

Under colonialism and apartheid, the state established a racially based two-tier labour market system. White and much later Asian and Coloured workers enjoyed the right to organise, protection from unfair dismissal, and defined minimum standards. In contrast, African workers initially had virtually no labour rights and were not even recognised as workers.

The most oppressive aspects of this system centred on giving no job security to unskilled black workers. They could be fired for anything or nothing, including organising the union or supporting the ANC. The employer could throw them out without following any procedure, often with other consequences such as losing accommodation. During the apartheid times losing your accommodation meant vulnerability to continuous arrests and harassment by police who were enforcing the pass laws and other apartheid laws meant to keep blacks away from cities and in the labour reserves areas - the homelands.

Most black workers had virtually no prospects of promotion. There was no training. The unpopular instruction was "maak a plan", which forced workers to continuously try different ways of addressing workplace problems, often at the great cost to their lives and health. They could work in the same job for their entire lives, with no hope that their experience would be recognised or respected.

Workers endured on-going discrimination in pay and benefits. Black workers earned less than whites and women less than men for the same work. Many black workers, and especially black women, faced harassment, abuse and even violence on the job.

These conditions went together with oppressive management systems, where workers were treated strictly as a cost of production, to be used when needed, thrown out when no longer wanted, and always paid as little as possible.

The result of this system was massive hostility and conflict in the workplace. But it also meant that large sections of the economy relied on low pay, low productivity and poorly skilled workers. Apartheid bosses didn't invest in skills development or greater efficiency - they relied on the extremely unequal relationship, general oppressive political environment and extreme poverty to force workers to work a lot harder for less pay.

Because the oppression of labour lay at the core of the apartheid system, the democratic state moved swiftly to develop non-discriminatory labour laws that would ensure workers' rights. These laws were aimed explicitly to end oppression of workers as well as the dependence on poorly paid unskilled workers. Integration of previously largely isolated economy to the world demanded better skilling of workers and higher levels of productivity. The conflict-ridden and adversarial labour regime had to give way to more efficient negotiations and dispute-settlement processes. More specifically the new labour law regime seeks:

· To establish a single labour regime for all workers, without discrimination based on race, gender, location or industry.
· To end the dependence on poorly paid, insecure employment, both to stimulate higher productivity and to end oppression and super-exploitation. To this end, the new laws set minimum conditions in terms of working hours and leave, retrenchment pay and dismissal procedures. The skills development and employment equity legislation sought to encourage employers to overcome the legacy of discrimination and abuse, and to contribute to rising productivity and skills.
· To ensure more efficient negotiations and dispute settlement. The legal system was to be a last resort, with most disputes settled through cheaper, faster and more accessible conciliation and arbitration processes managed by the CCMA and Bargaining Councils.
· To regulate strikes, including solidarity and other strikes in support of socio-economic demands so as to avoid unnecessary violence, repression and hostility.
· To establish a basis for sectoral regulation of labour markets through Bargaining Councils. These councils were supposed to respond to sectoral requirements by setting minimum standards and managing disputes.
· To provide a framework for worker organisation. In part, this was to reduce conflict in the workplace, but also served to give workers a stronger voice in democratic debates and strategic discussions, making possible broader participation in policy debates.

In short, the aims of the labour laws were to contribute to broader development based on investment in our people, in a manner that contributes directly to the goal of building a better life for all. This means that in evaluating them, we cannot simply look at the cost of employment in the short run. Instead, we have to ask whether they support the goal to build a new non-racial, non-sexist, united, democratic and prosperous South Africa.

It can be said that this package of legislation constitutes, on balance, a relatively progressive labour law framework. Government's statements at the time, that the labour reform process was underway, indicated that they believed that what they had put in place represented a model of "regulated flexibility". This was an important acknowledgement by government of the flexibility of the labour law regime, given statements to the contrary from business.

In response to these contrary views of business, draft amendments to the LRA and BCEA were tabled in 2001, with the purpose of addressing what was claimed to be labour market rigidity.

From the end of the 90s 'regulated flexibility' fell away and a more flexible labour market was created. This came about as a result of some employers informalising or outsourcing jobs, blurring the margin between formal and informal work. This meant that unemployment - already artificially high thanks to apartheid - doubled, the ability of legislation to protect less skilled workers was undermined and the hard-won rights of workers in the lower end of the formal sector diminished.

Thus while legislation had provided increased protection to those categories of workers - the lower end of the formal sector and in particular less skilled black workers - enjoyed greater protection against dismissal and unfair discrimination, easier and faster dispute settlement, and more protection for organisational work, now large-scale job shedding and poor real enforcement of labour legislation was creating an even higher de facto labour market flexibility.

In these circumstances, the available evidence suggests that the new legal framework was honoured almost only in the breach. Part of the legacy of fiscal restraint has been that the Department of Labour has lacked the resources to implement the mandate given to it under key pieces of legislation. Therefore, the Department of Labour simply does not have enough inspectors to make up for weak worker organisation and government is often unable to enforce the laws on the books.

Increasing flexibility, poor enforcement and a general flouting of the rule of law by employers continues to undermine basic conditions. According to the Labour Force Surveys of 2001 and 2006, the number of workers receiving paid leave in September 2001 was just under 60% of total workers, with just over 40% of workers not receiving any paid leave.

If we compare this to September 2006, there is very little difference in the number of workers getting paid leave, with just under 40% still not receiving paid leave as per the Basic Conditions of Employment Act (BCEA).

If we look at another example, while written contracts of employment for the same period, although indicating an improvement of compliance from 52.6% in September 2001 to 71.3% in 2006, indicate that 28% of workers in September 2006 still do not have a written contract of employment detailing their wage rate, leave provisions, hours of work and other conditions of employment.

This is significant and must be addressed not only by government but also by organised business.

More recently attempts are being made to re-introduce the argument that hiring and firing costs are relative high compared to international comparisons. This, it is argued by the World Bank's Cost of Doing Business in South Africa which implies that this has led to more rigidity of the labour market because, it says, it is very difficult to dismiss workers when employers need to do this.

COSATU must continue to reject this assertion on a number of grounds:

Firstly, the World Bank uses the measure of restrictions for hiring and firing of part-time and temporary workers. However, this measure includes in the hiring cost the overall cost of social protection, such as UIF and health costs, which are generally not enjoyed by part-time and temporary workers.

Secondly, the survey is primarily based on perceptions of employers, influenced by anecdotal evidence and thus cannot be taken as a relatively accurate measurement.

Thirdly, while ironically amendments negotiated to the LRA in 2002 allowed for significant reduction in the time taken to dismiss these workers also included a number of significant changes, such as the introduction of the con-arb process for probationary workers. Interestingly, employers have not opted for this speedier process of con-arb, opting for a lengthy conciliation and then arbitration processes at the CCMA or Bargaining Councils.

There have been NO other changes in law which increase the rigidity involved in the hiring and firing of part-time, contract or other atypical employment. In fact recent data indicate a growth in the last 3 -4 years of atypical forms of employment.

Fourthly, it is not given that less rigidity increases aggregate employment levels. It has in fact encouraged greater use of casualised and part-time work. Recent labour force survey data points to employment growth in sectors such as retail, construction, private security and call centres, which are traditionally characterised as having high levels of atypical employment.

Lastly, the assertion that the rigidity index is largely influenced by CCMA processes is incorrect and short sighted. CCMA case management information indicates a significant improvement in the turnaround time for all process at the Commission.

Rather the ability to speedily deal with dismissal matters may lie outside the 'scope' of the CCMA. For example, there has been a significant increase in the review of arbitration awards. Review applications have primarily been based on the ruling made by the Commissioner and not the narrow review test spelled out in the LRA.

In addition, there is complete disregard by employers to enforcing arbitration awards won by workers. Failure to implement awards opens a significantly costly legal process to workers.

While improving the protection and rights for atypical workers is critical, this must go hand-in-hand with improving the overall rights and protections to all workers.

COSATU, at its 9th congress, passed a number of important resolutions in this regard. These measures include:

1. Addressing the growing casualisation and labour broking through changes to the law, as well as statutory codes, to ensure full protection of workers and the growth of secure, decent work.
2. Combatting the abuse of labour brokers and contracts including where permanent work is structured through fixed-term contracts, and in this context, to ensure

a. That companies are not able to use fixed-term contracts to avoid granting rights to workers
b. That the exact terms of liability on the contractor and main employer is fixed and clearly defined so that workers can access the rights they are due in labour laws and collective agreements
c. Transfer of contracts of employment where a commercial contract is transferred from one business to another, but the underlying work continues
d. Procedures and protections available in the LRA are available to contract workers

3. The introduction of measures that prohibit the growth and extension of labour brokers through stringent registration requirements, greater penalties for non-compliance, improved enforcement to improve skills, employment equity and health and safety for those workers employed under labour brokers.

We continue to call for greater extension of sector bargaining, including the improvement of collective bargaining rights that would:

1. Ensure Bargaining Councils are set up in more sectors to ensure that larger numbers of workers are covered.
2. Make changes to Section 32 of the LRA to ensure a lower threshold of representivity applicable to

a bargaining council to be used by the Minister for purposes of extending collective agreements concluded in bargaining councils. This should not change existing criteria for admission to bargaining councils.

3. Ensure that Bargaining Councils receive a full subsidy from the Department of Labour for all dispute resolution services that they provide .

Legislative compliance and enforcement continues to haunt many workers. These rights continue to be mere "paper" law.

COSATU wants to ensure

1.. That all public and private tenders clearly require that all tenders fully comply with all their labour standards requirements, including labour legislation and collective bargaining agreements, and that the tender prices be set at a rate that allows companies to meet their labour standard obligations. This promotes the principle of promoting decent work in commercial contracts.
2.. The following effect to the following amendments to the Basic Conditions of Employment Act:

a. Provision for a special sectoral determination aimed at addressing the plight of workers in atypical jobs since they are the most vulnerable;
b. Amending Section 54 to compel the Employment Conditions Commission (ECC) to set itself the objective of combating high levels of atypical employment when advising the Minister on Sectoral Determinations;
c. The working week should be reduced to 40 hours without any loss of income or benefits;

i. Increase family responsibility leave
ii. Increase the sick leave provided to workers with Aids or a terminal illness.

3. Review existing legislation and Codes to meet key concerns, including:

i. The Employment Equity Act to address the wage gap;
ii. Skills Development Act to ensure greater access by ordinary workers, especially black people and women. In this context consideration should be given to the ANC proposal on reviewing the number of existing SETAs

4. Lastly, we continue to campaign for greater security of employment, including strengthening the fight against retrenchments and unfair dismissals, including through:

i. Amending the LRA to grant workers in enterprises employing fewer that 50 workers the right to strike against retrenchment
ii. Ensuring that the desire to expand profits is not regarded as a operational requirement for purpose of retrenchment
iii. Campaigning for severance pay to be increased to 4 weeks per year of service

Many of the issues I have raised will certainly be covered in the debates over the next few days. It is important that we continue to engage in making the labour markets work not only for business but ensuring greater protection and benefits for workers.