Mar 04, 2011
Stringent SA labour laws not main barrier to international investmentBack
Expertise|Africa|Resources|Smartman Consultants|System|Africa|Brazil|China|India|Russia|South Africa|Customary International Law|Labour Law Consulting|Labour Law Regulation|Temporary Employment Services|Power|Tobie Nel
© Reuse this
“Society is driven by demand. Ultimately, if unemployment is high, labour law regulation will be high. However, from an economics point of view, I don’t believe that this will influence investment in South Africa, because investors prefer to consider the availability of resources in the country, as well the profit they will be able to make. Therefore, I don’t think there is substantial evidence to suggest that our overregulated labour laws are scaring investors away,” Nel argues.
However, he notes that the argument about whether stringent labour laws are directly a result of disinvest- ment in the economy has been ongoing.
“Not everyone agrees with this, how- ever, as the South African economy has been growing steadily for a number of years, if one does not consider the recent recession. I have found that corporations and governments primarily look at the opportunities that exist, rather than the problems,” Nel explains.
By way of example, he cites South Africa’s recent invitation to join the Brics coalition of Brazil, Russia, India and China.
“Many consider South Africa too small to be a member of Brics; however, China is looking at South Africa as the gateway to the African continent, and this is a prime example that stringent labour laws by no means influence solid investment and development strategies,” he adds.
However, he questions how efficiently these labour laws are being managed.
He says that section 232 of the South African Constitution stipulates that customary international law is law in the Republic, unless it is inconsistent with the Constitution or an Act of parliament.
“Being a member of the ILO, South Africa participates in international policies. For example, the South African government is aiming to create decent work for all, which is consistent with the stand of the ILO. This is also the underlying objective of the proposed amendment bill, but when one looks at how government went ahead and initiated the proposal, I find it hard to understand why government seemingly didn’t acknowledge certain key institutions, bodies, or persons that are key to this process,” Nel says.
He adds that the South African Society for Labour Law expressed concern that government did not discuss the proposal with the National Economic Development and Labour Council prior to its publication, and questions whether input from the Judge President of the labour court or Commission for Conciliation, Mediation and Arbitration (CCMA) National Directorate was obtained.
He adds that the “effective ban” of labour brokers is also an area of concern.
“Even though the proposed bill does not outright ban temporary employment services (TES), it does remove the incentive for employers to use labour brokers. Generally, there is agreement that managing labour laws to prohibit the use of TES could result in more unemployment,” he says.
Further, he states that it is the prevalence of crime, corruption and political tension in South Africa, that scares investors away, rather than the country’s labour laws.
“Despite investors being somewhat wary of investing in business in South Africa because the legislative framework allows strikes and protests (within boundaries), this is not what ultimately prevents them from investing,” he says.
However, he says that South Africa continually deploys sound macroeconomic policies that seem to be drawing investors, despite the country’s stringent labour laws.
He says that, despite investors being wary of South Africa’s high crime rate and its political complexity, the economy continues to recover from the downturn. However, companies that were forced to retrench employees are not yet in a position to hire staff again.
He believes that the country’s high unemployment rate can be reduced through increased foreign investment.
“Unemployment is primarily connected to the economic state of a country. We need investments from overseas companies in all local sectors to grow our economy and create more job opportunities,” he says.
He suggests that, despite the new amendment bills, which propose increased regulation of South Africa’s labour legis-lation, government should focus on making labour laws less stringent.
Nel believes that less stringent laws will give investors and employers the ability to start businesses with more freedom, as companies will not be regulated by an abundance of laws. He says that this will make investors and employers less wary of employing more people, thus creating more job opportunities.
Know Your Rights
Further, he says that employers should also make use of labour law consultants when faced with labour and employment disputes to ensure they get the correct advice and information on how to successfully handle a dispute.
“If employers attempt to resolve an employment dispute without adequate knowledge or assistance, they could take the wrong approach, which seldom leads to reaching a mutual agreement with the employee and resolving the problem,” explains Nel.
On the other hand, Nel suggests that employees must also become acquainted with the labour laws and that they should seek the assistance and expertise of unions in the case of employment disputes to ensure that their interests are thoroughly protected.
He notes, too, that there are several technical aspects of administration that pose challenges to both employers and employees.
He adds that the referral of unwarranted disputes to the CCMA adds further frustra- tion, as some cases are merely a result of employees without the relevant knowledge lodging complaints without legal grounds to support the complaint.
Meanwhile, Nel says that the Labour Relations Amendment Bill aims to assign more power to the CCMA, which will enable it to effectively assist employees.
“The amendments will authorise the CCMA to assist parties to serve notices and documents in respect of conciliation and arbitration proceedings. Currently, these are the responsibility of the applicable parties,” Nel explains.
If properly managed by the CCMA, it could prove to be a successful system,” he concludes.
Edited by: Shannon de Ryhove© Reuse this Comment Guidelines
Other Labour and Employment Law News
The wider powers and additional functions that the Labour Relations Amendment Bill (LRAB) 2012 proposes to allocate to the Commission for Conciliation, Mediation and Arbitration (CCMA) will place significant pressure on the CCMA, as the scope of disputes that it...
The legislature has recognised that employers are trying to use fixed-term contracts and labour brokers to avoid the responsibility of being an employer. Therefore, the currently proposed amendments to the Labour Relations Act of 1995 (LRA) contain several...
Updated 21 minutes ago In support of Gauteng Premier David Makhura’s vision of a “radical transformation” of the provincial public sector, Gauteng MEC for Finance Barbara Creecy announced on Thursday that Provincial Treasury and the provincial Department of Transport (DoT) have...
Updated 45 minutes ago South Africa's UASA union said on Thursday it had accepted a wage increase offer of between 7 and 10 percent, raising hopes of an end to a three-week strike by more than 200, 00 steel and engineering workers. "The members have already accepted the financial...
Updated 2 hours 10 minutes ago SABMiller, the world's second-biggest brewer, reported higher first-quarter sales volumes on Thursday, helped by a return to growth in lager sales in Africa. The London-listed company behind beers such as Miller, Grolsch and Peroni said revenue rose 6 % in the three...
Recent Research Reports
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
Real Economy Insight: Steel 2014 (PDF Report)
This four-page brief covers key developments in the steel industry over the past 12 months. It provides an overview of the global and South African steel and stainless steel markets, South Africa’s major steel producers and events that have shaped these markets.
This Week's Magazine
Local aerospace company Denel Aerostructures (DAe), part of the State-owned Denel Group, has won a fourth contract to manufacture parts for the Airbus A400M military air transport and air-to-air refuelling aircraft. The new contract, which was won in an international...
Although CEO Mark McChlery and chief marketing officer Bob Skinstad likened themselves to children in a playground when taking on the task of “reengineering and repositioning” the Seartec brand, the “young, dynamic and enthusiastic guys” were like proud...
An increasing number of buyers, in both the new and used car markets, are opting for finance structures that lower their monthly repayments, says asset financing company WesBank. These include the use of large balloon payments (also known as residuals), as well as...
Tertiary education institutions can use search engine giant Google’s Chromebook to provide secure mobile end-point devices for students on which they can share documents, work collaboratively on documents and access education materials and applications being used...
Local ceiling and partition company Abbeycon has beaten global competition at the Saint-Gobain Gypsum International Trophy competition, which was held last month in Berlin, Germany.
Next ArticleDismissal of an incarcerated employee