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LABOUR MARKET TRENDS

Presentation to the Portfolio Committee

03 September 2002

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APARTHEID LEGACY

FACTORS WITH A NEGATIVE IMPACT ON JOBS

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a) Macro economic instability e.g.

Debt burden

Inflation

Poor balance of payment etc.

Volatile interest rate

Bad fiscal policy

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b) Poor industrial performance Economic isolation with constrained economic growthInefficient protectionismWeak competition lawsHostile environment for black owned enterprisesInsufficient investment in infrastructure (in black areas)

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c) Labour market Structural unemployment Racial and gender discrimination Income inequalities Low skills base Decline in primary sector

(consequential retrenchments)

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d) Education and Training Effects “Bantu Education” (producing)

cheap labour Weak vocational and technical

education system

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POST 1994

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a) Macro economic stability

b) Stimulating economic growth Geographic interventions to boost

investment, production and development through SDIs

Sector specific interventions eg Motor Industry Development Programme

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Steady but sustained growth

Marginal increase in investment

Low levels of savings

Good productivity / salary ratio

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EMPLOYMENT TRENDS

Stats SA: 29.6% unemployment (2001)

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Characteristics of the Unemployed - [A total of 4 525 000 countrywide as at Sep 2001]

71.9% are aged between 15-34 years;

51.7% are female;

Af = 86.8%, C=7.9%, I=2.4% & W=2.8%;

64.6% reside in urban areas;

45.8% have worked before;

66.5% of the spent 1yr looking for work.

93.3% not gone beyond Grade 12.

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Major problems in the Labour MarketThe high rates of unemployment and under-employment;

the low rates at which productive employment is being created in the economy;

the existence of widespread poverty among low wage earners, the underemployed and the unemployed;

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the extreme level of inequality, primarily on the basis of race and gender;

the low levels of education, skills and investment in training;

the legacy of adversarial labour relations in the formal economy;

the inadequate protection for some low-wage earners such as farm and domestic workers.

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Labour market policy objectives

Create an enabling environment for the attainment of economic growth, social development, and increased efficiency, productivity and employment

Promote stable and sound labour relations;

Enhance the development of skills;

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Eliminate discrimination and inequalities in the labour market; and

Improve working conditions and social security benefits.

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Approach to Labour Market Policy

The need to regulate the labour market in order to resolve inherited rigidities and inflexibility;

The need to promote labour market and overall economic efficiency;

The need to support and enhance employment creation;

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The need to promote worker security, safety, and through maintenance of socially acceptable and mandatory and minimum conditions and standards of employment;The need to promote participatory and co-operative industrial and labour market relations in the context of an institutionalised and regulated framework; andThe need to promote equity and skills in the labour market.

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This approach aims to forge a middle route between the extremes advocated by those in favour of unqualified labour market flexibility or deregulation of the labour market, and those advocating a more rigorous regulation of the labour market.

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Strategic ApproachThe promotion of labour-market

efficiency within a regulated framework that allows for variability with respect to wage determination, work processes, and the utilization of labour in a manner that is compatible with security;

The promotion of ‘voice regulation’ through participatory labour-market institutions, co-operative labour relations and collective bargaining;

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The implementation of a preventative strategy that will reduce the burden on administrative monitoring, inspection and enforcement and that will empower social partners to pro-actively participate in the execution of the strategy;

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FIFTEEN POINT PROGRAMME OF THE MINISTRY OF LABOUR

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Fifteen point programme

First, there is the need to strike an appropriate balance between security and flexibility in the labour market.

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Second, employment creation is the biggest challenge facing government. The Department’s particular contribution to this challenge rests with the formulation of effective and active labour market policies as well as to provide a supporting and enabling environment for jobs to be created.

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Third, we shall ensure the effective and efficient implementation of the resolutions of the Presidential Job Summit in order to accelerate job creation and tackle the scourge of high unemployment.

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Fourth, the skills deficit is one of the major handicaps to the development of our economy and is a discouraging factor to potential foreign investors.

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Fifth, in light of the persistent way that racial and gender inequalities exist in the workplace and contribute to the inefficient utilisation of our human resources, the Department passed the Employment Equity Act in 1998.

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Sixth, the state carries the responsibility of protecting vulnerable workers to ensure that they have the same basic rights and are afforded their dignity. The Basic Conditions of Employment Act is the principal instrument through which such protections are extended.

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Seventh, there will be a need to introduce legislative reforms that are intended to improve the safety net to cushion those affected by the country’s structural unemployment.

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Eighth, to adequately deal with the negative consequences of occupational accidents and ill health on individuals, enterprises and the state, we will accelerate measures aimed at reducing accidents and improving the health and safety of workers.

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Ninth, evidence suggests that the interventions introduced through the Labour Relations Act of 1995 have contributed positively to promoting stable labour relations. The Department will ensure that these gains are built upon and consolidated in order to continue with the downward trend in industrial conflict.

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Tenth, the Department shall build on the initiatives already undertaken to promote productivity.

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Eleventh, the transformation of various statutory bodies and the establishment of NEDLAC have brought clear gains in policy development and policy making. The challenge is to build on this culture of dialogue and nurture the opportunities for deepened social partnership.

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Twelfth, the Department will continue its efforts to ensure that our country is fully integrated in the international system.

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Thirteenth, the Department will improve its capacity to monitor the impact of government policy in regard to economic growth, employment and development.

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Fourteenth, the major institutional restructuring we have undertaken will have to be extended and consolidated in order to ensure that the Department of Labour is aligned to address the above mentioned challenges and carry out the new and expanded mandate that emanates from the changed policy environment.

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Fifteenth, while the thrust of our policies will remain the same, certain areas will receive attention for possible legislative amendments to improve the effective functioning of the labour market and reduce what may be perceived to be obstacles to employment creation.

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DEPARTMENTAL DEPARTMENTAL STRATEGIC STRATEGIC

PLANPLAN

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Seven Strategic Objectives

Ongoing review of labour market policies

Improve applicationSensitivity to employment creativity Sensitivity to employment creativityGood governance in the labour market (CCMA, Labour Court)Improve collective bargaining environment

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Skills Development

Skills to boost growth, investment, job creation and development

Implementation of skills development strategy

Effective functioning of SETAs

Preparation of sector skills plans

Development of HRD strategy

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3. Employment Equity

Eradicate unfair discrimination

Promote workplace equity

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4. Protection of vulnerable workers

Improving employment conditions of vulnerable workers

Eradication of child labour

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5. Social safety net 5.1 Unemployment Insurance Fund

New UIF legislation

Improve administration and IT system

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5.2 Compensation Fund

Improve operations

Speedier claim processing

Policy review

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6. Occupational Health and Safety

Promote reduction of accidents, fatalities and diseases

Prioritize high risk sectors

Harmonization of OHS competencies

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Promotion of stable labour relations

Efficient registration of labour organizations

Effective functioning of Bargaining Councils

Promotion of dispute prevention and resolution mechanisms

NB: shift from policy to implementationNB: shift from policy to implementation

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Internal transformation

Information Technology plan

Promotion of service excellence

Human resource plan

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