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S.A labour agreements herald opportunities for inclusive growth

PUBLISHED: Thu, 09 Feb 2017 15:45:27 GMT

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  • Nedlac negotiations result in an agreement that marks a profound improvement in tone of labour relations in SA
  • Agreement addresses wage inequality, labour stability and economic transformation

Business Unity South Africa (BUSA) and the Black Business Council (BBC) have welcomed the announcement of a ground breaking package of labour market interventions agreed to by business, labour, government and community representatives. This will provide the foundation for a profound and much needed shift in the tone of labour relations in South Africa.

As part of the package of agreements, the social partners at Nedlac have agreed to a National Minumum Wage (NMW) and a suite of measures which will promote greater stability in labour relations.

“This is an extraordinary achievement for South Africa. Together we have found a formulation that moves the country and the labour market in the right direction. The parties have reaffirmed the right to fair labour practices and the important role of the private sector, as well as that of the State in creating the necessary conditions to drive productivity led, inclusive growth and employment,” says Tanya Cohen, CEO of BUSA.

“We commend the dedication of the Deputy President, government, organised labour and community for the role that each played in the negotiations. It has been an extensive process. Despite differences of opinion and constituencies, everyone kept the end goal of inclusive growth, employment and a reasonable minimum wage front and centre.While COSATU have yet to sign, they indicated that they want to take the extra step of consulting their CEC before signing.”

The Agreement recognises that employees should be paid a fair minimum wage for productive work; that strikes should be peaceful and functional; that all stakeholders have a leadership role to play in bringing stability to the labour market and that productive employment is essential for inclusive growth.

“The outcome will put us on a more sustainable labour relations footing as a country.  It takes into account the role and needs of business, both small and large, across all sectors of the economy.  The Accord is likely to be welcomed by ratings agencies, as it addresses one of their key concerns, being labour market stability,” says Cohen.

National Minimum Wage (NMW)

One of the key provisions of the Agreement is the introduction of a NMW of R20 per hour, which will come into effect on 1 May 2018.  The NMW is introduced with the option of exemptions based on affordability and will be phased in for the first year, with domestic workers at 75% and agricultural workers at 90%. There is specific agreement that exemption processes will be streamlined and efficient, and particularly designed to enable smaller businesses to apply for exemptions without undue process burdens. A NMW Commission, will be established, which will determine annual escalations on an evidence basis. Adjustment criteria will include consideration of employment levels, GDP and productivity amongst other factors.

Cohen says: “The NMW is an important step in the right direction towards a living wage, and sends a message that all the social partners, including business, are committed to creating a fair, inclusive and progressive economy.”

Labour relations and stability

“The Agreement commits all social partners to protecting the full range of constitutional rights that apply during industrial action, in particular the right to life and protection from personal harm, protection of property and the right to trade. There is a commitment to take all steps to prevent violence and intimidation during strike action and to act quickly to deal with any such incidents.” Stated Elias Monage, BBC convenor at Nedlac.

The Accord also introduces a Code of Good Practice on Collective Bargaining, Industrial Action and Picketing to guide parties on good practice, to build capacity and shift the tone of labour relations to ensure that, where required, industrial action is peaceful.

It also includes amendments to the Labour Relations Act that embed the concept of secret balloting before strikes and advisory arbitration in the event that there is prolonged or violent strike action.

There is also a commitment to monitor and review the effectiveness of the Code and LRA amendments in Nedlac to determine whether they are achieving the desired effect. 

“The Accord marks a fundamental shift in the relationship between employers and employees.  It recognises the important role of labour market stability and fair wages for productive work, both of which are necessary pre-conditions for inclusive growth and employment,” concludes Monage.


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