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Chairperson,
Distinguished visitors and guests;
Ladies and Gentlemen

It is particularly pleasing to be opening an international conference on productivity in South Africa. Productivity enhancement is central to our Reconstruction and Development Programme; it is an essential under-riding objective of this government. We are also acutely aware that in the context of increasingly globalised capital, product and even labour markets, our productivity performance is only as good as our nearest competitor. We have much to learn from the rest of the world and so we reserve our warmest welcome to those international scholars and experts at this conference who have come to share their insights and experiences with us.

South Africa faces many serious hurdles along the road to improved productivity performance. Workplace organisation in all too many of our factories and mines is hierarchical and rigid; unproductive layers of management and supervision proliferate; earning differentials between management and workers are notoriously large; industrial relations are adversarial and dominated by distributional battles; our workforce is under trained, under skilled and under motivated. This is our bitter legacy. International consultants tell us that our workplaces, our corporations, have to become "lean and mean". Well I reply to them that apartheid has left us with the worst of all worlds - workplace that are "fat and mean".

And yet for all that, there are strong grounds for optimism. For one thing, the incidence of industrial action has declined significantly since the 1994 elections. Interestingly, most industrial action in the recent past has been in the public sector amongst non-unionised or recently unionised workers, rather than in those areas where long standing union organisations predominates. This reinforces our view that in the right environment, strong unions are a force for stability and discipline, rather than the converse.

Moreover, we have many examples in South Africa of highly productive, world class workplaces. And these do not all rely on South Africa's natural resource bounty. They are to be found competing globally in the clothing industry, in metal products, in the production of heavy capital equipment, in food processing and many other sectors.

These examples tell us that we can do it; we can injure discipline into our workplace relations; and our firms can realistically strive to be world class performers. The challenge is to infuse the laggards, those that have relied for their profitability upon the economic rents dished out by the old regime, with the level of dynamism achieved by our standard bearers.

You will, in your deliberations, no doubt respect what I have always understood to be the first principle underlying efforts at productivity enhancement. Productivity, I have always understood, expresses much more than the internal efficiency of enterprises. I is a complex phenomenon with deep social roots. Although we have much to learn from the rest of the world we cannot simply transplant a set of techniques developed in one society into a vastly different environment. We must develop our own approach within our own particular environment.

Government has a major role to play in setting that context and I want, at the outset, to convey to you the essential features of the environment that this government will provide.

Faced with problems of a similar nature to our own, some governments have opted to introduce policies and programmes that have sought to strengthen the hand of management relative to that of labour. This general description accurately characterises the Thatcherite and Reaganite approaches. The role played by these governments in the British miner's strike and the US traffic controller's strike typifies this approach, later to be consolidated by legislation that weakened the basis for collective bargaining.

This is not our approach. We are committed to a more co-operative approach with clearly defined rights and obligations for both workers and employers enshrined in collective bargaining agreements and legislation. We are committed to dialogue - between government, business and labour - as the most effective regulatory mechanism. I should emphasise that while this approach has been adopted because of its compatibility with the norms and values of the government, I am also convinced that this approach will facilitate sustainable ... productivity enhancement far more effectively that one that emphasises one side of the work divide at the expense of the other. Our reading of international best practice is that it requires the active and willing participation of all of the firms employees and this is best secured via co-operative arrangements. I think that it was Napoleon who once said that "you can do anything with bayonets except sit on them". In industrial relations you must inevitably sit. Those who have chosen bayonets as an instrument of industrial relations will eventually experience the pain of sitting on them.

Within this broad context then what are the major pillars of a productivity enhancing strategy?

Let met say at the outset that productivity has multiple roots and causes. Accordingly policies and programmes to enhance productivity are by no means confined to the labour market and the industrial relations systems alone. Our technology policies and programmes, our industrial policies and our education system are but three other key determinants of productivity. I would like to see a situation where government self-consciously evaluated each of its policy interventions and programmes against their contribution to the nations productivity. But for the moment I will confine my remarks to those programmes and policies within the direct orbit of the labour ministry and its related institutions.

My approach to productivity enhancement rests on four essential pillars. These are:

A labour relations system rooted in collective bargaining, dispute resolution and shop floor dialogue;

the flexible application of minimum standards;

a commitment to share the fruits of productivity increase; and

a commitment to training.

Let met comment briefly on each of these in turn:

We have put in place the legislative and institutional framework of a labour relations system that will encourage collective bargaining, that will facilitate the peaceful resolution of disputes, and that will encourage - though not compel - the establishment of rationally composed, industry-wide collective bargaining arrangements. This makes for stability in collective bargaining and relative predictability in the outcomes. Whether it sets actual rates or simply minima, with actuals to be determined at more decentralised levels is for the parties themselves to decide.

The collective bargaining system is undergirded by a dispute resolution system that removes lengthy bureaucratic obstacles to legal industrial action that strongly encourages the use of legal procedures and channels of dispute resolution: and that ensures that these legal procedures bring the parties into intensive contact with a major new institution - the Commission for Conciliation, Mediation and Arbitration - that will facilitate the peaceful resolution of disputes.

The new LRA is also sensitive to the need to draw an institutional distinction - though not necessarily a Chinese wall - between adversarial, distributive bargaining and co-operative interactions directed at enhancing productivity. The LRA seeks to achieve this through the new Workplace Forums, bodies on which all employees will be represented and whose focus is, essentially, on those workplace elements that undergird productivity enhancement - for example, work or organisation, the introduction of new technology, the removal of discrimination.

The second pillar in my productivity enhancing schema, is the promotion of flexibility in the application of minimum standards. Let me be absolutely clear here: I do not use the term "flexibility" as a euphemism for the elimination of minimum standards. It is my firmly held view that appropriate minimum standards are essential, both from the standpoint of our social norms and values, and from the standpoint of sustained productivity improvements. But I am also aware that rigid application of minimum standards may retard productivity enhancement. Hence the discussion of minimum standards initiated by my Ministry - a discussion that will culminate in a new employment standards statute - essentially seeks to place a parametric framework on minimum standards that, within broadly defined limits, may be flexibly interpreted in order to suit the operational requirements of different sectors and workplaces. This is international best practice in the application of minimum standards and will lead to legislation that will hold us in good stead well into the 21st century.

Thirdly, we need to ensure that, if our productivity gains are to be sustained, the fruits of these gains are equitably distributed. This is clearly important at the level of the individual firm where workers and owners must both benefit from the productivity gain - workers must benefit in order to encourage their continued commitment to productivity enhancement; and the productivity gain must be reflected in the increased profitability that underpins further investment.

But appropriate sharing of productivity gains is not only of micro-economic significance. It is also of vital macro-economic significance. If productivity growth is to be compatible with the national priority of job creation, then it must lead to increased markets and increased investment. In short consumers, investors and workers must all experience the benefits of productivity growth. The government's macro-economic strategy has placed the idea of an economy-wide agreement on the table; the Labour Market Commission has made wide-ranging proposals for a Growth and Employment Accord as a mechanism for gain sharing at the macro-economic level. These proposals are still being studied. However, regardless of the mechanism chosen, effective gainsharing at the firm and national economy level is an essential element of any successful economic strategy.

Fourthly, we need to enhance the skills of our workforce. This is a large topic and will not be elaborated here. Suffice to say that it is the subject of intense discussion in my department, the content of which will imminently be made public. I would here make only two points in relation to our approach to skills development:

Apartheid has bequeathed an enormous skills deficit that will not be overcome in a day. I am however confident that major, unrecognised and un-rewarded skills reside in our experienced industrial workforce and an essential element of our approach will be to leverage these nascent skills. This is, I believe, strongly complemented by our general industrial relations approach; and

although government is making a major commitment of resources and energy to skills enhancement, the private sector is going to have to put its money where its mouth is. We are reaping the bitter fruit of a cheap labour strategy, powerfully evidenced by the unusually low contribution that South African employers make to training. This will have to change and we will have to change and we will put in place the sticks and carrots necessary to encourage greater private sector commitment to training.

These then are the four pillars of our approach to productivity enhancement. There is, I believe, a powerful role for a public funded statutory body like the NPI in this vital task.

We are presently engaging with the NPI in discussions that will lead to the transformation of this institution. This will be a thoroughgoing evaluation that will ultimately impact on programmes, staffing and the very nature of the NPI's relationship to government and the social partners. I am looking forward to a searching, collaborative effort to transform the NPI that will leave us all better off. I trust that the deliberations of this conference will contribute to that process.

I wish you a successful conference.

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