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President of the Senate
Honourable Senators

The Department of Labour continues to consolidate and refine its efforts to fulfil the objectives as elaborated in the 1994-1998 Programme of Action, and this is reflected in the manner in which the present budget has been planned. This present budget, like the one before it, is aimed at enhancing the internal efficiency and capacity of the department to accomplish its goals of servicing the needs of the employed and the general labour force, facilitating the restructuring, growth and development of the economy, and promoting productive and viable employment opportunities.

In this regard, the department's activities have focused in part on the internal transformation of the department, and also, on developing policy initiatives aimed at changing the labour market environment by establishing new policies aimed at making the labour market more efficient in supporting and promoting growth, development and equity, by establishing a new regulatory environment compatible with the new imperatives in the economy and policy, and by creating new institutions to facilitate non-adversarial labour relations between employers and workers.

Thus, in comparison to last year's budget, this year's budget not only reflects overall changes to accommodate the initiatives began previously along the general lines indicated above, but also reflects changes within and between programmes to further fine tune the new thrust of the department.

Honourable Senators, our activities in relation to the labour market are very much related to the need to resolve the negative consequences of the legacy of Apartheid as it is reflected in the high levels and incidence of unemployment, under-employment and poverty especially among Black people who bore the brunt of those policies; to resolve the pervasive labour market discrimination on the basis of race, gender, age and disability; and to transform the economy in a manner that would facilitate growth, development and equity, and be globally competitive. It is in relation to the foregoing needs that we have felt the need to re-orient our department to be pro-active in servicing the broader needs of the economy and the society in line with the requirements of an "open and democratic society".

Our first concern has thus been the need to formulate a broad policy framework in line with the requirements of the RDP that would guide our future policy initiatives in various areas pertaining to the labour market in order to address the above concerns. Honourable Senators will recall that last year I announced that the President had appointed a Comprehensive Labour Market Commission. I am happy to announce that even though there has been some slight delay in meeting deadlines, the Commission is in the final stages of finalising its draft report which I am told has been characterised by a relatively high degree of consensus.

The Commission will be proposing a framework for labour market policy and has addressed the relationship between macroeconomic and labour market policies and trends. It has proceeded to recommend an industrial strategy as the basis for boosting the demand for labour and thus enhancing employment absorption and has pondered on various policy options pertaining to wage determination and productivity enhancement. Finally, the Commission has made proposals pertaining to a Social Plan, a Social Accord, the promotion of employment equity and the management of labour migration into South Africa. We are looking forward to the Commission's report with great anticipation in the hope that it will inform the Government System, on how best the department can accomplish its tasks in meeting its long term goals, apart from that, the report should generate a great deal of lively debate about the labour market and economic policy generally.

In my speech in support of last year's budget vote for the department, I announced our intention to revamp the labour relations laws by introducing a new Act that would facilitate the transformation of our labour relations from those marked by confrontation and persistent conflict to those characterised by co-operation. As you all know, the new Labour Relations Act is now a reality, arrived at as a consequence of painstaking negotiations among the social partners and debate here in Parliament. The Bill was placed on the Statute Books on 13 December 1995 as Act No 66 of 1995. In the course of events, it was also found necessary to introduce a Labour Relations Act Amendment Bill in 1996, (mainly technical) which is currently under discussion and negotiation at NEDLAC.

The Act is being implemented in a phased manner in order to allow for the establishment of the necessary institutions that would facilitate its implementation and proper functioning. In this respect, I am glad to inform Honourable Senators that progress has been made towards the establishment of the Commission for Conciliation, Mediation and Arbitration (CCMA). The CCMA Governing Body has been appointed and is composed of an independent Chairperson, three persons representing organised labour, three persons representing business and three persons representing the state. To assist the Governing Body in its establishment of the CCMA, is an Establishment Secretariat. Office premises around the country have been identified, candidates for the positions of Commissioners and Registrars are being interviewed. Information technology systems are being put in place and a case management system is being developed. A process is also underway for the establishment of the Labour Court and the Labour Appeal Court. The President, acting on the advice of NEDLAC and the Judicial Services Commission, appointed the Judge President and Deputy Judge President. A similar process for the appointments of Labour Court judges is already underway and premises for the court are also being finalised.

Mr President, Honourable Senators,

Considerable attention has been focused on the labour market and labour market policy in the recent past. There is deep and widespread concern at the high levels of unemployment and at the poor rate of job creation that accompanied the recent economic upswing. Government identifies deeply with this concern, it is after all, those without employment, amongst others, who elected us into office and it is in us that their hopes for a better life reside. We have pledged to create more employment.

But we have also pledged to create better employment. It is often forgotten that poverty afflicts not only those without employment - too many people are employed in the formal labour market in conditions of abject poverty, too many formal sector jobs are dangerous and unhealthy. We cannot, to be sure, build a sustainable democracy with a significant portion of the population without employment; but nor can we build democracy or sustainable economic progress on the backs of sweated, unproductive labour. We are obliged to pursue simultaneously the goals of creating more and better employment.

In short, there are a multiplicity of indices of labour market performance. These include unemployment and labour productivity - those most focused upon in the current debate - but they include other equally important measures: the extent of discrimination and inequality in employment; wage levels and differentials; the extent of industrial action; levels of industrial health and safety. No policy maker has the luxury of a single objective.

Certainly, the institutions, regulations and conduct of labour market and labour relations policy have a major impact on the performance of the labour market. In recent months something of a storm has erupted around labour market and industrial relations policy and practice. Some within the employer ranks bemoan the alleged inflexibility within the labour relations system and identify a bias towards the unions; the unions have responded by demanding greater regulatory protection. That both sides have chosen to make their views known in the most strident and aggressive terms imaginable has not helped us to arrive at a resolution of these contending viewpoints.

I profess a degree of surprise at this squabble. It is important to remember that the Labour Relations Act, Act No 66 of 1995, the centrepiece of our labour relations system, was agreed after protracted negotiation between the social partners. In a strong sense, I find this the most surprising and disturbing aspect of the whole matter. The social partners want to be engaged in the policy making process; government is more than happy about this process, partly because it accords with our democratic character, and also because we believe that decisions are more durable when the parties affected by them are involved in their construction. This is particularly important in periods of rapid structural change and transformation from one order to the next.

But the preconditions for the success of this approach to policy making are, firstly, the will and ability of the partners to honour agreements made. And, secondly, a manifest acceptance of dialogue and serious negotiations as the principal mechanism for resolving differences. These preconditions for social partnership do not mean that a party is never permitted to re-assess and re-evaluate its position, nor do they mean that a party is never allowed to resort to the exercise of its power. But they do presuppose a commitment to honour both the substance of agreements and the process necessary to change them. Business and labour should note this: in the recent past, both have evidenced, to put it kindly, a degree of confusion regarding the essential elements of social partnership.

The alternative to social partnership is of course to do what some among the social partners are calling for: simply for the government to make all the decisions. This, for all the reasons outlined above, would be a second best solution. But if forced to, it may be unavoidable to do, for we are charged with the responsibility to govern this country in the interest of all our people. And we cannot afford the luxury of endless toing and frowing whilst the country demands urgent change and transformation. The time for paying lip service to social partnership is over, and I would like to take this opportunity to call upon, in particular, business and labour to engage in the NEDLAC processes with the necessary seriousness which this institution demands.

Mr President
Honourable Senators,

You may wonder as to what has possessed me today as I reflect on social partnership and also on NEDLAC and the difficulties we face. Let me illustrate further what is going on.

Firstly, for the Department of Labour to implement the Labour Relations Act of 1995, we require a high level of co-operation and seriousness of purpose from business and labour. We require of them to nominate their representatives to sit in the various structures created by the said legislation. The process to get nominations have been tedious and time consuming to the extent that implementation gets delayed.

Secondly, there is a tendency amongst our social partners to want to have their cake and eat it. In the setting up of the CCMA, for example, we have to decide, through the CCMA Governing Body, the structures and remuneration of the staff of this important institution without which the legislation cannot work. We have spent many hours trying to get one of the social partners on board on the remuneration issue. They do not want to make a decision because they want to stand outside the decision and shout at everybody else who was party to the decision. That cannot be correct. And time is being lost as they make up their minds on a simple issue such as the remuneration of the CCMA staff!

I am indicating all of this to show how difficult it is to build social partnership. But, we remain committed to ensuring the success of NEDLAC and the project of social partnership which we have started. We have, for example, initiated a process referred to as the NEDLAC leadership system, through which the leadership of business, labour, government and community organisations meet to discuss issues effecting NEDLAC. But this cannot be a substitute for a serious and purposeful approach by all affected within the formal structures of NEDLAC.

But what of the substance of the various gripes concerning the so-called labour market rigidities? Major legislation passed and proposed by this department is precisely intended to introduce a greater degree of flexibility into the labour market. We have referred to this as "regulated flexibility". The South African character of our efforts should be noted. We are neither Germany nor Indonesia; neither Sweden nor Malawi. Within the particular norms and values of our society and the particular character and requirements of our economy we must design policy that ensures a labour market that is able to respond to rapidly changing markets and technologies, to global product and capital markets.

I have already, on several occasions, outlined to this house, how measures initiated by my Ministry support these objectives. Provisions of the new LRA and new institutions created by it, are precisely designed to ensure greater flexibility. Proposals in the Green Paper on Employment Standards are defined by the objective of ensuring greater flexibility. But I must underline that the mechanisms for settling on the precise regulation appropriate to any given circumstance are mechanisms of negotiation and compromise between the parties directly affected. The social partners set the framework and it is a flexible framework; the bargaining parties determine the specific outcomes.

We are all too aware that there are many outside of this social partnership framework; we are aware of the dangers of cosy compromises among powerful players. Ensuring ease of entry into the labour market must be an important test of the conduct and interpretation of policy. This is a principal objective of government, and if our social partners choose to interpret this differently and if their bargaining demonstrates a commitment to narrow self interest at the expense of the wider social interest, they will experience resolute opposition from government, the guardians of this wider social interest. But we do not envisage this, it is clearly in everybody's interest that jobs are created rapidly. It will enhance social stability; it will increase the size of our domestic market; it will reduce the number of dependants supported by those in employment and reduce poverty.

Equally, however, we are convinced that, our social partners are interested in promoting sustainable employment. It is not our intention to strip all elements of security and protection out of our labour market in the name of employment creation. This is a path beset with conflict and there is little evidence of its employment creating potential. South Africa is simply not a country that needs to compete at the lowest end of the technological ladder or at the lowest end of the international division of labour. We have the capacity to create employment in market segments that allow for stable, secure and reasonably remunerated employment and this is strongly supported by our labour relations legislation.

These issues are complex and cannot be set in stone. Flexibility in the application of policy, must be accompanied by flexibility in policy making. As I indicated above, we are awaiting within the next month, the report of the Labour Market Commission. I have no doubt that this will throw up new challenges. Government will be challenged as will labour and business. I am confident that we have the ability to meet these challenges and that this ability resides largely in our commitment to social partnership. However, I have to underline that all the tripartite institutions in the world will not substitute for trust between the social partners. And in recent weeks has been at a lower ebb than our challenges require. Let us work at restoring this, and at drawing on our unique experiences and institutions to facilitate this restoration.

Honourable Senators, let me briefly proceed to comment on the financial implications of our programme of activities as reflected in the current budget proposal. First, it may be noted that the budget has been reduced by some 22% in comparison to the previous year. This is basically as a consequence of the fact that R250 million was no longer needed as the financial position of the Unemployment Insurance Fund had improved. For the same reason this amount was not utilised in the 1995/96-financial year.

Second, and more generally, we have attempted to effect reallocations between programmes and within programmes in accordance with our programme priorities as guided by our five year strategic plan.

I thank you.

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