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‘Stability in labour relations a priority’

Situation has improved during 2015, government says.

PRETORIA – Government says it has prioritised stability in labour relations. 

In its Medium-Term Budget Policy Statement (MTBPS) Finance Minister Nhlanhla Nene has identified labour relations, electricity supply and policy certainty as three key challenges that have to be addressed in the medium-term.

While electricity supply constraints have been a major headache for business over the last year as Eskom struggled to keep the lights on, commentators have also repeatedly voiced their concern about South Africa’s inflexible labour regime and warned that long and protracted strikes would scare off potential investors. Moreover, policy uncertainty has fuelled an environment where many corporates have been sitting on large piles of cash, reluctant to invest.

In 2014, industrial action in the platinum industry lasted for roughly five months, while labour-related strikes reduced economic growth by at least 0.6 percentage points.

“The Commission for Conciliation, Mediation and Arbitration is taking an active role in settling disputes, and has cut the duration of arbitration proceedings by more than 75% since 2003. A National Economic Development and Labour Council task team is working to address the disruption of the economy caused by large, protracted strikes, and discussing a minimum wage. In September 2015, parties to the mining framework agreement declared their intention to limit job losses,” the MTBPS states.

According to the MTBPS, labour relations have improved during 2015.

A total of 176 000 workdays were lost due to strikes in the first half of the year compared to 7.5 million during the same period in 2014.

“Strikes have been relatively short-lived, primarily affecting individual firms rather than entire subsectors,” it states.

However, the figures are skewed due to the effect of the protracted strike in the platinum industry in 2014 and bear in mind that above-inflationary adjustments were needed in some areas (for example in the public sector) to avoid industrial action.

Yet, unemployment remains a concern.

Tough trading conditions and low confidence levels have resulted in limited hiring during 2015. Data from Statistics South Africa, suggest that most of the 338 000 jobs created in the first half of the year were in the informal sector. The formal sector lost 76 000 jobs, with tough conditions especially in the manufacturing and construction sectors.

“Employment is not expanding rapidly enough to absorb the estimated 659 000 new entrants into the job market in the first half of 2015. As at June 2015, there were an estimated 2.43 million discouraged work seekers,” the MTBPS states.

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