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Chairperson and Comrades

I thank you for this opportunity to address you on a number of issues. Let me start with:-

Some Labour Market issues

Transformation of our labour market is one of the key challenges facing government. In this regard I want to address three areas:

Employment Equity
Training and Productivity
Labour market flexibility

Employment Equity

First, Employment Equity. Our workplaces reflect our apartheid inheritance. Black people are over-represented in the least-skilled positions and under-represented in the middle-layers and also in senior professional and managerial posts. This is an unacceptable situation. We are currently drafting legislation in an attempt to address discrimination at the workplace and ensure that companies develop (in conjunction with unions) realistic but decisive longer-term plans for training and recruitment. There must be no doubt about our aims. We intend to outlaw unfair discrimination in employment and build on the provisions already contained in the new LRA. And, we intend to see that in a reasonable number of years, the overall shape of our workforce should be broadly similar to the overall shape of our population.

In this regard I have two concerns to raise with organised labour. Firstly, we received very few comments on our Green Paper from organised labour, and none whatsoever from the democratic union movement including CWIU and COSATU! We are therefore drafting a new law without the benefit of your insights. Secondly, I get the impression that organised labour is committed to tackling racial inequality but is not, at least not adequately, addressing the issue of gender inequality.

When it comes to gender representative the union movement is lagging far behind Parliament, Cabinet, government and even business. It is now time for the union movement to address this in action without making excuses or simply passing resolutions. And have you really taken steps to address inequalities in the workplace? How easy is it for women to get into jobs at Sasol? Or to be trained as artisans? How long is it going to continue that women are restricted to the low-wage jobs in the sector? Of course the ball is primarily in management's court. But are you supporting initiatives for change? Are you explaining the need for change to your members? Or are you sitting back and blaming management?

Training and Productivity

The second issue I want to address is training and productivity. Government is committed to dramatically increasing the quantity and quality of training both in and for the workplace. The Education Department is addressing the long-term overhaul of our primary, secondary and tertiary education system. Our young people need to receive greatly improved basic education. And our country needs a better-trained, educated and skilled population if we are to develop as a nation. Apartheid education stunted our people and our economy. When Verwoerd said black people should be trained only as 'hewers of wood and drawers of water' he inflicted a damage on our society that set us back decades and will take us decades to reverse.

The Department of Labour is tasked with overhauling the training system associated with the workplace. We will shortly issue a comprehensive strategy paper on National Skills Development. The contents of it are hardly secret. They have been developed after extensive consultation with unions and employer organisations. In short, we want employers to spend more money on training. We want those already in employment to be trained and re-trained. We want a more skilled and literate workforce. We want training systems to be linked to simplified grading systems. We want our workforce to be educated and able to adapt to the rapidly-changing economic requirements which national and global conditions impose.

Central to our objective is the need to boost productivity in our country. The more we produce the more we have to go around. The higher our output the more room there is for increased employment, increased consumption and better pay. We see investment in training and machinery leading to increased output. And we welcome initiatives at many workplaces where basic minimum conditions are improved through productivity agreements between management and workers. These agreements should increase both pay and profitability. They should also, but do not always, increase the levels of employment.

An Efficient Labour Market

The third labour market issue I want to address is that of efficiency of the labour market. There is much nonsense spoken in this area. Is our labour market too rigid? Does it need to be de-regulated, as some maintain?

Let us start with some hard facts:

Job creation is our central challenge. Estimates of unemployment in our country range from 22 to 33 percent. This is unacceptable. We must get more people working. We, and I include the union movement here, must avoid hurting job creation at all costs.
In some sectors wage levels and labour unrest do discourage job creation. There is no running away from this. Wage levels which are unrelated to productivity and the structure of that sector may lead to fewer jobs. And labour unrest may lead employers to favour machinery rather than people - which s one the major reasons for improving our dispute resolution system.
The ILO has concluded that "in some respects" our labour market is "too flexible". But, this coin has two sides. In other respects it is not efficient enough. For example, a company which currently works only day-shift can improve its output and employ more people if it moves to a two-shift or three-shift operation. And it can do so without having to invest in new machinery. But currently the Department of Labour must approve every request to introduce shift-work, even where a union has agreed. This is an example of unnecessary inefficiencies imposed upon the labour market.

Our approach is that where there are unnecessary rigidities in our labour market and our economy they must be removed. But this should not be done in ways which undermine labour security and union rights in particular. We do not support the view which calls for de-regulation. Indeed, as the ILO suggests, in some areas there is a need for more regulation. For example, it is important to bring all employees (including farm and domestic workers) into a basic regulatory net.

Government's approach has been correctly described as 'regulated flexibility' or as 'labour security with flexibility'.

Our approach:

accepts the need for measures which contribute towards achieving greater labour market efficiency within the context of a core framework of minimum conditions of employment;
stresses those aspects or factors which encourage the greater and more productive use of labour rather than those aspects which undermine worker security;
favours bargained and co-operative solutions to setting labour market conditions.

The question of negotiations is crucial. Only by negotiating and finding an agreed way of enhancing both labour market efficiency and security within the labour market can we reap the economic advantages.

There are three basic rules of thumb regarding employment growth and labour market restructuring in South Africa today. First, general macroeconomics factors are more important than labour market changes. The Department of Labour is not the primary Ministry of Jobs, although it has an important role to play. This point should be remembered as a background to everything I have said today. Second, in our view the approach of 'labour security with flexibility' is the most sustainable and stable one. It is not a 'fudge' nor an avoidance of the need for labour market restructuring, nor a shabby compromise between the left and the right. Rather it is the only route of fundamental change in a context where nation-building and stability are central to the transition period. Third, calls for 'flexibility' should always be unpacked as they conceal more than they reveal. It is important to specify the details in relation to each such call.

The existing degree of inflexibility in the labour market is generally overestimated. But there are undoubtedly areas where labour market inflexibility needs to be tackled and areas where labour security needs to be enhanced. Some examples include:

an excessive focus on procedural aspects rather than 'fairness' when considering dismissal for misconduct. This has been accompanied by an archaic and ineffective mechanism for resolving such disputes through the old Industrial Court. The result is that many cases of genuine underperformance have gone unchallenged and there has been excessive legalism in resolving unfair dismissal cases. The new LRA tries to get the balance here right in ways which are better for both employers and workers.
a labour law dispensation which gives inadequate protection for all employees. Farmworkers, security guards and domestic workers are examples where legal protections are inadequate. There are still numerous cases of non-payment and underpayment of such employees. In the passenger transport sector, for example, pressures on drivers to work excessive hours undoubtedly contribute to the country's high accident rate.
certain wage-setting mechanisms which do not take adequate account of the differing realities facing certain regions, sectors and small or new businesses. Where a 'one size fits all' wage-setting approach is adopted it promotes rigidities and may harm employment creation.
a dispute resolution system which (at least prior to 11 November 1996) did little to resolve disputes and discourage adversarialism. Under the old dispensation well under 30% of disputes were resolved and this led either to industrial action or protracted court cases. Under the new system (the CCMA) this has started to change and conciliation settlement rates have already risen to close to 80%.
restrictions on firms working on a continuous basis reduce both employment levels and achieving the maximum productive returns on investment. Regulations regarding trading hours (e.g. liquor laws), shiftwork, and the structure of working hours are all relevant here.
excessive overtime is a common feature in South African manufacturing - indeed the extent of regularly worked overtime is, according to the ILO, among the highest in the world. Not only are there negative social and health effects (which the state must often pay for), but the current regulatory framework (requiring payment of only time-and-a third of the normal rate) does little to help. A new approach would reduce normal and overtime hours and get more people working rather than getting existing employees working more.
employment conditions set by bargaining councils are often archaic, complex, and protective of labour security in a narrow and old fashioned way. There are also aspects of the way they regulate which may discourage small business and require excessive paperwork.

Some issues for the chemical industry

Let me add a few brief comments relating to your industry. The Department welcomes the steps taken to establish a bargaining council in the chemical industry. We are committed to promoting industry-level bargaining. We look forward to receiving the application to register the council.

We have two concerns to raise. First, it is important that your council agreements accommodate differences between and within sectors. A ' one size fits all' approach is neither realistic nor job-friendly. The central chamber should be sensitive to these differences. Uniformity in some conditions, such as benefit funds, may be appropriate. But other conditions must acknowledge the real differences between sectors and regions, and must not put small and new firms out of business.

A second concern is demarcation. A more strategic approach is needed to the concerns raised by some employers regarding their participation in the proposed council. More effort must be made, with both employers and your sister unions, regarding the boundaries between the metal and chemical industries. Ultimately, a bargaining council needs NEDLAC approval to get itself registered. If NEDLAC cannot resolve the demarcation issue then it is the Minister's job to do so. I will not look sympathetically at an application where there has not been sufficient effort to resolve the problem. In plain language you need to engage constructively with some of the legitimate concerns raised by both NUMSA and the PMA.

In conclusion I would like to thank you for inviting me here this evening. I wish you every success in your conference. Government supports the need for a strong and independent union movement. We see you as partners in a shared objective - to democratise and develop our country, and put apartheid and racism where they belong - in the dustbin of history.

<EOD>