Stemming SA’s rising unemployment tide

Hugo Pienaar, Director of the Employment practice at Cliffe Dekker Hofmeyr

Government, business and labour should urgently look to progressive international labour laws to stop the rising tide of unemployment, says renowned labour expert.

“South Africa’s rising unemployment rate is evidence that the country’s current labour model is inadequate to address joblessness and stem the shedding of jobs in the local market,” says Hugo Pienaar, Director of the Employment practice at Cliffe Dekker Hofmeyr.

According to the most recent figures released by Stats SA, the unemployment rate South Africa’s official unemployment rate jumped to 29% in the second quarter of the year, the highest jobless rate in 11 years.

“Given the overt failure of our current labour market scheme, our country is duty-bound to revisit its internal policies and take inspiration from the successes of other industrialised or semi-industrialised nations’ efforts in addressing their rising unemployment rates.”

Pienaar says it is important to understand what role the “Dunlop Triangle” – consisting of government, business and labour – could potentially play in creating much-needed jobs and stimulating an ailing economy

“It would be a futile exercise for either labour or business to blame each other for the rise in South Africa’s unemployment rate. A more productive approach would be for all parties to find a middle ground where there is no exploitation of labour, on the one hand, and no alienation of investment on the other,” he says.

Pienaar says an international model that serves as a useful example is that of Ireland, where government, business and labour formed a Social Accord during the 1990s, which yielded positive results for job creation.

Lessons can also be learned from Germany where government imposed labour market reforms between 2003 and 2004 to quell rising unemployment rates.

“These were aimed at increasing labour market flexibility, improving the matching of unemployed workers and job vacancies, and, even, the lowering of unemployment benefits. Germany reaped the benefits of these reforms after introducing them during the financial crisis,” he says.

However, Pienaar warns that it would be a mistake to simply copy international labour markets or trends and replicate them in South Africa, as each country has its own unique labour market climate and challenges.

“It is, however, useful that the parties in the ‘Dunlop Triangle’ are mindful of the workings of the international labour markets. They must accept that current practices and policies are not achieving the desired results,” he notes.

Therefore, Pienaar says, the three parties must consider several factors:

Government

“World trends have shown that the growth in the creation of employment does not necessarily lie in the formal sector. Employment-friendly legislation is, therefore, important. Flexible legislation may entail no-fault termination for the first six months. This type of legislation has previously been considered, but abandoned,” Pienaar says

Government should also address the lawlessness of strikes. “This is a particularly fundamental challenge for business. It would not be unreasonable to expect the government to ensure that the police enforces the law without employers having to incur huge expenses in approaching courts for strike interdicts.

“It has become a sad reality that employers settle wage negotiations because of violence, rather than on pure economic principles.”

Pienaar also says load shedding must be categorically stopped and that it would also be beneficial to implement tax-free zones for limited periods of times, as in the UAE.

Business

“It would be desirable to witness an end to the investment strike and one would also like to see some commitment from business to stop or minimise retrenchments. The employer should ideally provide for multi skilling and provide mechanisms for productivity bargaining,” he says.

Another consideration, he says, would be wage freezes for executives and even pay cuts and bonus reduction for top earners.

Labour

“Although trade unions would not formally carry the constituency of the unemployed population, their role impacts directly, as their demands determine access to the job market.

“One needs to democratise the workplace and introduce ballots before employees embark on strikes. This will enable more informed decisions on the part of the strikers, empowering them to better understand the consequences of the strike, which could include the potential loss of income,” Pienaar argues.

He says that significant flexibility will be required of employees and specific job descriptions should be abandoned.

“This is by no means an exhaustive list of factors that the ‘Dunlop Triangle’ must consider. However, the parties would do well to study these initial points.

“I suggest that the parties enter into some form of social accord, which will be based on the lessons learned from other countries. It is important to note, however, that it is crucial for there to be mutual trust and integrity between all parties for the proposed model to be successful in South Africa,” Pienaar concludes.

 

 



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