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Chairperson;
Distinguished guests;
Ladies and Gentlemen

Thank you for the opportunity of addressing you today. SACOB is one of the most important employer organisations in our country. And it has been deeply involved, both through Business South Africa and in its own right, in our ongoing attempts to restructure labour policy and labour markets. I hope we can continue to rely on your co-operation in the years to come.

The Department of Labour and the new democratic government are committed to transforming the world of work in South Africa. In this regard four initiatives deserve special mention.

First, employment equity. Our aim is to eradicate discrimination in the workplace, to give greater opportunities to those who have suffered indignities in the past, and to make our workplaces look more like our country both in racial and gender terms. Racism and sexism at work, as in society, cannot be tolerated. We have issued a green paper on employment equity and received extensive public comment. We hope to begin drafting an employment equity bill soon.

At the outset our approach to this issue will be light-handed. We intend encouraging major companies to negotiate equity plans, place these on the record and then report regularly on progress made in meeting these plans. We do not intend to burden smaller companies with excessive reporting obligations. And we do not plan major policing operations.

But this does not mean we do not take employment equity seriously. And we will consider further measures if our moderate initial approach do not work. The fact is that not only is racism and sexism an injustice. It is also economically inefficient. The exclusion of large numbers of black people from access to opportunities means we are relying on a narrow, largely white male, pool of skills. The same holds for occupations which, in practice, largely appear to bar women from entry - such as the transport sector. This is unsustainable and unjust. We cannot be a winning nation until we have dealt with these ghosts which haunt our workplaces. Equity is not, as some seem to believe, a luxury for a developing country. It is a prerequisite for development. I will return to this point.

A second Labour Department initiative relates to Human Resource Development. We want to overhaul the system of work-related education and training, modernising our approach, increasing the level of national investment in people, and linking training to grading systems and to prospects for individual advancement. We will shortly be issuing a green paper to facilitate public debate on the issue.

I think there is wide agreement on the need for HRD reform. And the proposals we will be tabling should not come as a surprise since they have been developed after extensive consultation with all social partners.

A third initiative is that we, together with our social partners, are working on an Employment Standards Bill. Millions of South Africa's workers are not protected by law or by trade unions. Millions of workers live below the breadline. The Department of Labour is currently investigating complaints by workers in the clothing industry where wages as low as R1-11 cents per hour - in practice R49-95 per week - are not uncommon! And even worse conditions are still widespread among farm and domestic workers. A set of minimum standards, socially acceptable but realistic for a country at our level of development, is urgently needed; especially for those employees not effectively covered by collective agreements.

There are some who argue that minimum standards distort the market, and are a luxury for a developing country. But this view is neither viable, desirable nor practical in the South African context. I will return to this issue later, and to why we believe some minimum labour standards are needed.

The department's fourth major goal is to introduce a new labour relations law. As I have already announced, the new LRA will come into operation from 11th November.

The need for this new law is indisputable. The current law excludes farm and domestic workers as well as public servants. It tolerates the continued operation of overtly racist unions. It contains little reference to the workplace or to key players, such as shop stewards. Further, the old law had a poor record in dealing with disputes. Perhaps most importantly, the old law was imposed on unions and employers by the apartheid state.

From November 11 we will have one law for all employees. Farmworkers and domestic workers have bargaining rights for the first time. And public servants, teaches and others will fall within the same framework as other workers.

The new law gives unions substantial organisational rights. We want to see stronger and more stable unions. Under the new law all workers are free to join unions, and all unions are free to organise and use legitimate means to pursue their goals. The new law is based on consensus between government, business and labour. This was not easily achieved. But the fact that our social partners, with their different interests, were able to reach consensus on a new bargaining framework, is a tribute to the ability of South Africans to solve even the most intractable problems. This is also part of the formula needed to build a winning nation.

The new law revolutions dispute resolution. In future we expect to see most disputes resolved though mediation or arbitration.

The new law favours the evolution of a system of sectoral collective bargaining. The department intends to promote the establishment of bargaining councils and national sectoral bargaining. But we also intend to ensure that such structures do not undermined national economic goals of growth, employment and redistribution.

Perhaps most importantly the new law is written in plain language and makes procedures easier to pursue. This should reduce the need for both employers and unions to engage labour lawyers and consultants, frequently at great expense. It should empower those at the coalface of industrial relations to resolve their own problems. It should give small businesses greater simplicity and certainty regarding labour relations.

In short, this is the most dramatic overhaul of labour law since workplace relations were first regulated in 1924. Then, union rights were granted grudgingly and essentially only to white workers. Following the Wiehahn commission, these rights were extended to black workers, but with little else changes. The new law, the Labour Relations Act of 1995, can rightly claim to have been written from scratch. It is based on a fresh look at actual practices. It attempts to construct a new framework for regulating collective bargaining between organised labour and organised employers. And it does so in ways appropriate to our new democracy and in recognition of the key role played by working people in bringing that democracy about.

In this a law which favours organised labour? To some extent it is, and there is not need to apologise for this. We felt there was a manifest need to level the playing field, to give all workers the rights which many have already won. But it is not a one-sided law. We have recognised the need for negotiated balance in the industrial relations environment. And hope fully the law reflects this.

Let me repeat here two comments I made when announcing the November 11th implementation date of the LRA. First, while I see the CCMA operating autonomously, our expectation is that it will reduce significantly the number of unresolved labour disputes. Naturally, industrial conflict will not end. But we expect the substantial resources we are directing towards the CCMA to result in better labour relations, less industrial conflict, and reduced costs to the economy. But labour and business must co-operate here. The CCMA's decisions should be respected although they will not always be to everyone's satisfaction.

Second, the new LRA enjoins the Department's staff to take account for both bargaining stability and economic development when deciding whether to recommend that I extend bargaining council agreements. I will be asking Departmental staff to take more consideration of the employment and economic implications when recommending extensions. The need to promote bargaining stability will, of course, remain a factor. But I also want to know whether such agreements are sensitive to national economic goals.

Smaller employers often praise the department for the certainty which sectoral agreements provide. But they also complain about the complexity of many agreements. The Departments is committed to expanding sectoral bargaining and promoting bargaining councils. And we want to see all employers within a single, basic regulatory framework. But the quid pro quo for this is, as we are already indicating to bargaining councils, that councils must simplify their agreements, and make provision for the different capabilities of smaller employers. Many councils which are insufficiently representative should also not expect agreements to be extended as easily as they have been in the past.

Our new law has been accused of increasing union and worker rights. To this charge we plead guilty. We have made it easier for workers to join unions and for unions to organise. And we have given labour rights, for the first time, to millions of South Africans. Strong unions are not only a sign of healthy democracy. They are also a precondition for industrial stability. We have a demanding workforce aware of its rights and vocal about its grievances. Let us acknowledge this fact openly as the new LRA does. A well-treated workforce can become a national asset. It need not be, as is sometimes assumed, an albatross around the neck of a developing country.

Indeed, it is an explicit aim of the Department, the Government and the new labour relations law to promote better economic outcomes - to encourage rising levels of productivity and training, and to achieve bargaining outcomes which balance the need for improved living standards for those in employment with greater opportunities for those seeking employment.

Which brings me to the question of labour standards, equity and flexibility. On these issues we have to draw on our own experiences and national realities and avoid resorting to formulaic solutions developed in very different environments.

First, equity and development. The Government's recently announced macro-economic strategy is entitled "Growth, employment and redistribution". As is title suggests, redistribution is not an afterthought. The extremes of inequality which exist in our country are an obstacle to us becoming a winning nation. Redistribution is as much a precondition for success as is economic growth.

If we look at the situation in the Asian Tigers is clearly a correlation between equity and growth. Pay differentials for those in employment are substantially narrower than what we have here. And World Bank statistics on income distribution are also revealing. The richest 10% in South Africa account for 47% of income. In South Korea and Indonesia the richest 10% account for 28% of income; in Singapore 34% and in Malaysia 38%.

The ordinary worker is not interested in comparative labour costs and productivity between South Africa and Thailand or Mexico, however important such comparisons may objectively be. She is more interested in what she earns compared the manager; how she lives compared to him; and what car her manager arrives to work in. And she does not need to be told she is one of the privileged employed when her pay-packet also supports unemployed members of her household. And all these perceptions are magnified when the differentials still already follow racial lines. The depths of inequality internal to our society are a daily reminder of injustice and an obstacle to building a winning nation.

Extreme inequalities fee social instability, and a sense of grievance. They prevent our society from knitting together into a single fabric. They hamper our attempts to build a nation. And we need to build a nation with a common purpose and shared values before we can call ourselves a winning nation. Obviously South Africa's inequalities cannot be remedied overnight. But the fact remains that tackling equity issues are a precondition, not a luxury, in our determination to become a winning nation.

The issue of labour standards comes in here. There is a line of argument that runs something like this. Minimum wages discourage job creation, and a badly-paid job is better than no job. Further, rigid labour standards make it harder for the entrepreneur to operate and wrap him in red tape and inflexible practices. And finally, it is said, as a developing country we cannot afford minimum standards.

There is some truth in all these observations, but only some. And there are also other ways of looking at the problem. Could it be that very low pay encourages poor productivity ... which in turn reinforces low pay? And is it acceptable that almost 40% of our workforce earn below the breadline ... currently estimated at slightly less than R1000 per month? And why is it that in commercial agriculture, where there are no minimum standards, very few unions and where poverty wages are widespread, that employment levels have been declining steeply for almost twenty years? In short, there is not a simple trade-off between minimum standards and jobs.

Job creation is major challenge for us all. But it is incorrect to lay the blame of the problem at the door of labour policy or minimum standards. Even critics of labour standards accept that there should be some limits to employing child labour or to forcing people to work without pay - two practices which regrettably still exist in our country.

The Department of Labour accepts the need for minimum labour standards, partly to prevent socially unacceptable practices and partly to deal with some of the extremes of poverty in the workplace. But even as we do so we recognise:
that we cannot legislate poverty away;
that minimum standards must target the most vulnerable;
that we must avoid measures which damage job creation; and also
avoid complex, enforceable regulations.

In short we accept that some minimum standards may damage job creation but that others need not. For example, raising the premium rate for overtime work, as we are currently considering, should have a net positive effect on employment. It should encourage employers to get more people working rather than get existing people to work more. It should tackle the fact that average working hours in South Africa are among the longest in the world. Will the effect be positive in every case? No, there are undoubtedly exceptions. But, overall, we aim for a positive outcome in both employment and labour standards terms.

We believe there is a need for minimum labour standards but we are sensitive to the need to harmonise these with other social and economic goals. Let met give another example. The mindless deregulation of the taxi industry in the 1980s, when combined with social turbulence and political unrest has created a situation which the new government is battling to sort out. There is clearly a need to re-regulate. As part of this process the Labour Department has been asked to look at the conditions of taxi drivers. Most do not own the taxis they operate. They work excessive hours and we usually paid only a commission. Add to this the competition over routes and you have the consequences we all know. Deaths and killings, terrible road accidents, violence between various associations, commuters unable to travel safely or comfortably, and so on.

Those who argue against minimum standards should also say how they plan to arrive at their alternative South Africa. How much conflict will it involve? How much repression? And at what price?

To make South Africa a winning nation we cannot push issue of redistribution onto the backburner. And we cannot ignore the fact that we have inherited a fragmented and volatile society. We have to build structures for bargaining and institutions for dispute resolution. We have to regulate where necessary to enhance social stability. We have to promote flexibility, but within a regulated environment. This is the Government's and the Department's approach. And it is a realistic one for a country trying to recover from centuries of injustice.

I thank you.

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