Labour Vanguard

Failed youth wage subsidy must go

Johannesburg - There are renewed calls for the controversial youth wage subsidy to be scrapped following the release of a study revealing that the legislation has had no significant effect on the country’s soaring youth unemployment rates.

The Young Communist League (YCL) said on Thursday that the findings supported its belief that the subsidy would not work in South Africa because many did not have the basic levels of education or skills.

Equal Education said last year’s matriculants faced bleak employment opportunities and that the policy was nothing more than a costly subsidy to business.

The subsidy, also known as the Employment Tax Incentive Act (ETI), was introduced a year ago to address youth unemployment. While it had support from some quarters in the ANC and DA, many warned that it would create a two-tier labour market system and result in older workers being displaced.

The subsidy is meant to be a tax incentive to encourage employers to hire young people. But labour brokers have been benefiting from the grant by boosting profits, without subsidising wages.

The study, conducted by the University of Cape Town’s Southern Africa Labour and Development Research Unit, said the effects of the incentive had been small in the first six months of its being introduced.

“We also find no evidence that the rate at which youth find or lose unemployment has changed since the ETI was introduced,” it states.

Researchers Vimal Ranchhod and Arden Finn said there could be several reasons for the lack of impact. It was early days and the subsidy would become more effective with time as companies started understanding the rules. Also, the way it was implemented may limit its effects.

Because it served as an incentive that was targeted at medium-sized and larger formal companies, its potential impact was limited because it was not aimed at the informal sector. Another possibility for its failure was that the incentive was too low to affect the hiring decisions of firms.

The researchers recommend that a study be conducted among companies to investigate their awareness and re- sponsiveness to the incentive.

The ETI is also criticised for being modest relative to the number of unemployed young people.

“Even if the ETI were to achieve its stated objective of creating 178 000 net new jobs over a three-year period, the youth unemployment levels would remain exceptionally high,” the document reads.

YCL spokesman Khaya Xaba said the law should be repealed and the government should instead focus on making education “fashionable”.

“The National Treasury succumbed to the pressure of the DA, and young people are now experiencing the consequences of the DA’s casuistic rhetoric on the youth wage subsidy. Cosatu was right and the DA was wrong on the youth wage subsidy,” he said.

“The government must terminate the failed youth wage subsidy and redirect the R5 billion over three years to fund more bursaries, scholarships and youth development programmes.”

Group Labour Editor

THURSDAY, 08 JANUARY 2015

The minimum wage for the contract cleaning sector has risen to R16.98 per hour in metropolitan and local council areas, the labour department said on Wednesday.

 "The new minimum wage will be binding with effect from January 6, 2015 to November 30, 2015," Labour Minister Mildred Oliphant's spokesman Mokgadi Pela indicated in a statement. The metropoles include the cities of Cape Town, Ekurhuleni, Johannesburg, Tshwane, and Nelson Mandela Bay, while the councils include Emfuleni, Merafong, Mogale City, Metsimaholo, Randfontein, Stellenbosch, and Westonaria. Pela indicated that the minimum rate in rural areas increased to R15.47 per hour, from R14.19 in 2013/14. He said in semi-urban areas rates would be prescribed by the KwaZulu-Natal Contractor  Cleaning Bargaining Council, but was unable to immediately say what that figure was.

 1.Did the worker break a rule or a standard of conduct ?

2.Was this rule or standard conduct fair and reasonable to the worker?

3.Was the worker aware of the rule or standard conduct ,or shouldthe worker have known?

4.Did the employer apply the rule or standard in a consistentmanner (examples of previous case in the workplace)

5.Was the dismissal the best kind of disciplinary action to takeor could the employer use another disciplinary method ,like final writtenwarning for example

 (If the answers of these question is no;then you can take up the case and argue unfair dismissal at CCMA 

 2.CONSTRUCTIVE  DISMISSALS

Section 186 (e) of the labour Relations Act (LRA)defines aConstruction Dismissal as when :

 An employee terminated a contract of employment with or withoutnotice because the Employer made continued employment intolerable for theemployee.

A distinguishing feature of a constructive dismissal is that theemployee ,rather than the employer terminates the contract of employment ,withor without notice ,normally by resigning .

The alleged forced resignation allows an employee to claim to havebeen dismissed .Any successful constructive dismissal claim will depend on thefollowing important issues :

Whether the employment contract was indeed brought to an end by the employee ,namely by resigning ;Whether the employer did indeed make the continued employment intolerable;Whether The employee had no reasonable alternative other than to resign. 

Onus of proving rest the above important issues is with theemployee and not the employer (like unfair dismissal –section 189e LRA )

 EMPLOYER ACTIONS –FOR CONSTRUCTIVE DISMISSAL CLAIMS TO BE  SUCCESSFUL

Unilateral changes to terms and conditions of employment ,abuse,assault ,forced transfer ,Sexual harassment,Failure to payment to remuneration.False allegations of misconduct or non-performance ,An offer of inferior employment coupled with the threats that the employee will be dismissed if he/she doesn’t accept it ;An employee’s decision to resign rather than to accept unlawful deductions from his salary;Employer’s conduct renders it impossible for the employee to work 

The range of employer actions that could give rise to asuccessfully constructive dismissal claim is endless .

SUSPENSIONS

The most common form of employee suspension takes place when anEmployer suspends an employee as aprecautionary measure prior to and until the employee attends a disciplinaryhearing enquiry ,details of which have been included in a notice to theemployee to attend a disciplinary enquiry .“

….an unfair labour practice means any unfair act or omission thatarises between an employer and an employee involving the unfair suspension ofan employee or any other disciplinary ction short of dismissal in respect of anemployee”     

WORKPLACE FORUMS

A Workplace Forum is a committee of employees elected to representall employees in the workplace .This committee meets regularly  with employees to discuss and try to reachagreement on issues which affect them.

SETTING UP A WORKPLACE FORUM

Workplace Forum can only be set up in a workplace where there are more the 100 workers Only one union  which has majority members in the workplace can apply for set up a workplace forumTo set up Workplace forum the Union must apply for to the CCMA .The commissioner will assist the Union and the management to set u a Workplace Forum and The commissioner will help the parties draw up a constition for the workplace forum .After the constitution has been agreed the commissioner will set up the first election  

HELP FROM OUTSIDE

The workplace Forum can bring outside experts to help them on any matter .This expert must be given any relevant information the workplace forum  is entitled to.

RETRENCHMENTS

Dismissals for operational reasons

Employers must consult the workers/unions

Employers and the union must attempt to reach agreement

The Employers must give information

THE mining and farming town ofFochville, in the south of Gauteng, signifies a tale of two cities.

A drive and a first glance intoFochville, near Carletonville, paints a picture of affluence judging by thesize of some of the tiled-roof and face-brick properties. However, hidden atthe back of the town is the township of Kokosi, where present and former mineworkers and their families live.

In the dusty, untarred roads ofKokosi, goats and cattle roam, typical of any rural environment in SA. Thevillage is peppered with informal and formal housing. Puddles of dirty andstagnant water due to lack of drainage systems, make some of the roads unusablefor sedans.

A few kilometres away from Kokosisits some of SA’s biggest gold mines which produce billions of rands inearnings generated partly from the sweat of mine workers. Judging by theconditions under which some of these former mine workers live there is a needto speedily address the issue of unclaimed retirement benefits belonging toformer mine workers.

The conditions also highlight theneed for the Treasury to speed up its retirement reform agenda, which is aimedat encouraging employees to save and provide adequately for retirement.

Some former mine workers are stillwaiting for their full retirement benefits to be paid, some from as far back asthe 1970s. Some have now put their faith in Xulu Attorneys, headed by BarnabasXulu, to recover some of what they say are unpaid retirement benefits.

There is R15bn in unclaimed pensionbenefits, according to the Financial Services Board and about a third of thisis believed to belong to mining pension funds.

Last month Mr Xulu visited some ofthe former mine workers who are still waiting for their retirement benefits, tohear their grievances.

More than 60 former mine workers andrelatives of deceased mine workers filled a classroom to talk about theirproblems.

A number of issues includingretirement pay-outs, health claims and unemployment benefits were raised. MrXulu was further advised to sue government for compensation for the healthailments that some of the labourers sustained from the mines. Some of theformer mine workers, who are below the age of 60, demanded unemploymentbenefits.

On the issue of retirement benefits,Prince Mandlana, a former mine worker who comes from Elliotdale in the EasternCape, says he started working in SA’s mining sector in 1978 in Rustenberg until1987.

He says he still has not been paidhis provident fund and does not have a monthly income.

Mr Mandlana says that in Rustenberghe worked for New State Mines, then owned by Johannesburg ConsolidatedInvestments (JCI).

"It was under apartheid when Istopped working. You were not told how to get your money," Mr Mandlanasays, adding they were not told which provident funds they contributed towards.

He took a break from mining butlater came back in 1998 where he says he worked at AngloGold Ashanti’s MponengMine, previously known as Western Deep Level. He says he worked there until2009. When he stopped working he earned R3,600 a month.

"I also contributed to aprovident fund at Deep Level. I got it. But I’m not sure if it was enough.Where I did not get money is at Rustenberg. At Deep Level I was not happy withthe provident fund. I was given R100,000." Mr Mandlana says no advice wasgiven to him on the possibilities of preserving the money he got. He does nothave an income from his retirement.

For former mine worker Godfrey Moetithe situation seems to be much more dire. He started working in 1982 at theElandsrand Mine near Carletonville, now known as Kusasalethu.

Mr Moeti, who now has to rely ontemporary jobs, says he only got R2,000 when he lost his job in 1996. He saidthe money was from the Unemployment Insurance Fund.

He claims to have never received acent from his provident fund contributions after working for more than 10 yearsin the mines.

Mr Moeti stays in an RDP houseandhas a well-organised file with records of his employment. In one of the plasticfile pages is a piece of paper which shows he worked for AngloGold.

Relating his story on how tough itwas in the mines, Mr Moeti says: "My salary (in 1996) was R1,300 a month.When I started in the 1980s I was earning R113 a month. First I worked on thesurface mine. Someone advised me to go and work underground, he said there wasa lot of money. But I was scared. I finally went. It was tough. I can’t evendescribe it. It’s very dark there. You can’t stand underground … your back isalways bent."

He does not know which providentfund he contributed to.

For Ezekiel Ralepile Khunou thingshave been far better, but he says he is still waiting for his provident fund tobe paid. He started working at AngloGold’s Elandsrand Mine in 1983 and workedin the mines until December 2012.

He believes his outstandingprovident fund could be better invested elsewhere for the benefit of hisgrandchildren.

ILO: Countries investing in high quality jobs can make economic leaps The ILO’s flagship report on the world of work shows, for the first time, that quality jobs can drive sustained growth in emerging and developing countries.

News | 27 May 2014

GENEVA (ILO News) – Countries that invested the most in quality jobs from the early 2000s grew nearly one percentage point faster every year since 2007 than other developing and emerging economies, says a new ILO report. This helped cushion the impact of the global crisis which erupted in 2008.

The World of Work 2014: Developing with Jobs  report, which provides an in-depth analysis for 140 developing and emerging nations, shows for the first time that investing in quality jobs, reducing vulnerable employment and tackling working poverty leads to higher economic growth.

It also finds investment in high quality jobs tends be associated with lower income inequalities.

“Development doesn’t happen through such things as exports, open trade and foreign direct investment on their own,” said Guy Ryder, Director-General of the ILO. “Social protection, respect for core labour standards and policies that promote formal employment are also crucial for creating quality jobs that raise living standards, increase domestic consumption and drive overall growth. Decent work opportunities for women and men help trigger development and reduce poverty.”

Countries as cases in point The report cites Senegal as one country where growth increased as a result of focusing on quality jobs. The country increased its share of wage and salaried workers from around 12 per cent in 1991 to 26 per cent in 2013. The share of the working poor decreased by 34 percentage points over the same period, while productivity increased by an average of 0.5 per cent per year.

Peru is another country where the share of wage and salaried workers increased by an estimated 15 percentage points, from 34 per cent in 1991 to 49 per cent in 2013. In the same period, productivity grew by an average of 1.8 per cent per year, and the share of working poor decreased by 23 percentage points.

In Vietnam, the share of wage and salaried workers rose 22 percentage points, accompanied by a dramatic decrease in the working poor to one-third of the 1991 level by 2013, and productivity grew rapidly.

“Improving the quality of jobs is also essential to tackle underemployment of both youth and adults, which is a major economic problem in many emerging economies and developing countries,” said Raymond Torres, Director of the ILO Research Department. “In view of the evidence, it is essential to make decent work a central goal in the post-2015 development agenda. Over the next decade, developing countries will need to create around 40 million new jobs every year in order to keep up with the growing working age population.”

Key role for social protection The report stresses the importance of combining well designed social protection with a strategy to increase the productivity of agriculture and invest income from oil and other natural resources into the rest of the economy. It means governance measures to provide an enabling environment that can facilitate the creation and expansion of businesses. This includes simplifying administrative procedures, as Uruguay has done with a “single tax” social protection scheme for the self-employed, leading the way to formal entrepreneurship.

Decent work opportunities for women and men help trigger development and reduce poverty."

Guy Ryder “We noted that there are two very different phenomena going on at the same time,” said Moazam Mahmood, Deputy Director of ILO’s Research Department and lead author of the report. “Many developing countries, notably in Latin America and Asia, are making efforts to tackle inequalities and improve job quality as well as social protection. By contrast, a number of advanced economies, notably in Europe, seem to be going in the opposite direction.”

Global employment trends update The 2014 edition of the World of Work discusses the importance of job quality amid somewhat positive global employment developments. Reflecting a smaller increase than previous projections, global unemployment stood at just under 200 million in 2013 and is expected to rise by 3.2 million in 2014. By 2019, given current trends and policies, unemployment will reach 213 million. Global joblessness is projected to remain broadly at the current level of 6 per cent until 2017.

The highest unemployment rates, in North Africa and the Middle East, are expected to remain at 12.3 and 11.1 per cent in 2014. The largest increase in 2014 is estimated for Central and South-Eastern Europe and former Soviet bloc countries, where unemployment will reach 8.3 per cent in 2014.

Over the next five years, 90 per cent of jobs will be created in emerging and developing countries. This is expected to have a significant impact on migration flows (See box below).

“Migration patterns look set to change as emerging and developing countries make further progress in improving the quality of jobs,“ said Mahmood. “Already, South-South migration is on the rise while workers are also leaving advanced economies, particularly some hard-hit European countries, for work opportunities in developing countries.”

The ILO Director-General will present his report on migration to the International Labour Conference , which starts on 28 May in Geneva. The ILO is currently chair of the Global Migration Group .

Migration matters The report finds that, in 2013, 231.5 million people were living in a country other than the one in which they were born. The total number of migrants has risen by 57 million since 2000. Nineteen per cent of this increase occurred within the past three years.

Developed economies and the European Union (EU) continued to be the main destinations, with 51 per cent of all migrants living in this region. However, since the start of the global financial crisis, there is growing South-South migration. There is also extensive reporting of educated youth from crisis-hit developed countries who emigrated to emerging economies in recent years.

In order to maximize the development impact of migration the report recommends these broad policy measures:

promote economic integration of migrants to allow for increased legal migration,implement initiatives to combat xenophobia, discrimination and abuse,introduce measures to improve pre-departure information for migrants, andimprove job quality in all countries, so as to ensure more orderly migration flows.

minimum wage hearings held off to January

PUBLIC hearings on a national minimum wage are expected to resume in January, with an intention to hold them in all provinces possibly before the state of the nation address in February.

Parliament’s portfolio committee on labour has expressed satisfaction with the rate of progress of the hearings. But it has postponed a hearing that was scheduled to take place on Friday in Free State province.

Parliament had its final sitting of the year on Thursday and the hearings will not continue while it is in recess. But the portfolio committee will press for conclusion of the hearings in all nine provinces by early next year.

Parliament’s process complements the one Deputy President Cyril Ramaphosa is leading in the National Economic Development and Labour Council (Nedlac). He announced earlier this month that he would lead a committee of Nedlac constituents that would report back on the technical modalities of a national minimum wage by July next year.

"Both processes will inform whatever decision (Parliament’s portfolio committee on labour) arrives at," the committee’s chairwoman, Lumka Yengeni, said in a statement this week.

Throughout the week MPs conducted hearings in North West. Views of mine workers were canvassed and the submissions received included one that called for a national minimum wage of between R8,500 and R9,500 a month in the mining sector.

The North West hearings followed those in Gauteng and Western Cape earlier this month. These primarily sought to establish the views of domestic and farm workers — the two categories in which wages may have to fall below any nationally set minimum wage and rely on the existing system of sectoral determinations.

The public hearings on the minimum wage follow several submissions made to Parliament by interest groups on the issue. Among those are bodies in the agricultural sector, which have warned that a minimum wage could worsen an existing trend of mechanisation.

The Congress of South African Trade Unions in North West said on Thursday it had submitted that vulnerable workers — including domestic and farm workers, and those in expanded public works programmes — be paid between R5,500 and R7,000.

We can’t grow SA with poverty wages, write Gilad Isaacs and Ben Fine

In 1993, Princeton researchers David Card and Alan Krueger turned conventional wisdom on its head. Their now famous study showed that increasing the minimum wage in New Jersey, US, did not have negative employment effects on that state’s fast food industry.

The debate over the future of South Africa’s new national minimum wage legislation, which is heating up, would be strengthened by a consideration of the research conducted over the past two decades. Much of this runs, surprisingly, in the opposite direction to “common sense”.

The main “common sense” argument is that by imposing minimum wages, one artificially raises the price of labour away from its “market-clearing” level and higher unemployment results.

The most comprehensive review of the impact of minimum wages in South Africa – which since 1999 have been implemented in 11 different sectors of the economy – was conducted by researchers from the University of Cape Town and Cornell University in New York on five sectors: retail and wholesale, domestic workers, forestry, taxi workers and private security. The study found no negative impact on employment resulting from the minimum wage.

In three out of the five sectors, workers emerged materially better off. In other studies on the agricultural sector, it was found that institution of a minimum wage did negatively impact employment.

Case studies similar to those of Card and Krueger – particularly those studies contrasting labour markets experiencing a minimum wage increase with a carefully chosen comparison – tend to find that minimum wage increases have little or no effect on employment levels.

The same holds for a number of meta-analyses – studies that draw conclusions out of a survey of the literature by combining results from a range of studies. The respected 2009 meta-analysis by Hristos Doucouliagos and TD Stanley incorporating 64 minimum wage studies that covered 1 474 individual estimates showed no support for adverse effects.

Notwithstanding the variable impact on employment, minimum wages have overwhelmingly been found to decrease poverty and inequality.

How can the evidence on labour markets contradict the supposedly “common sense” theoretical premise that, like the market for fish, an increase in price will mean lower demand?

Neoclassical economic theory thinks of labour markets as akin to other markets, governed by the iron laws of supply and demand, in which, if left undistorted, a price will be reached at which everything in the market will be sold. In the same vein, so the theory goes, no involuntary unemployment other than that caused by excessively high wages should exist.

But labour markets are not like other markets and these laws do not determine the wage level, and the wage level is neither the only, nor the key, factor regulating employment levels.

Unemployment is present even when wages are low. In South Africa, large-scale unemployment began in the 1970s and, by 1994, was already at 30%.

Regarding wage-setting, employers may not simply accept the hypothetical “market price” of labour, but are sometimes – because of structural power imbalances – able to force wages below this. In this instance, wages may actually be below what it costs the worker to live and the state must pick up the bill or the worker ends up hungry, sick or homeless.

On the other hand, because wages must, to some extent, support the worker (at standards set by social norms) there’s a floor beneath which wages will not fall despite high unemployment indicating “excess” labour supply.

Wages are themselves an outcome of the type of investment and jobs created, and shaped by class, conflict, power and other social factors. Wage levels may be one consideration in levels of investment, but the evidence indicates there is no unidirectional causation between wage, investment and employment.

The traditional low-wage growth path in South Africa is exhausted as both an economic and political strategy. In the context of mediocre growth and rising inequality over the past two decades, workers are demonstrating that they are ever less willing to tolerate poverty wages.

Wages must be set to target productivity and efficiency – evidence suggests that due to insecurity, labour discontent and the inability to live a healthy lifestyle, low wages do not necessarily achieve this.

There are good reasons wage increases could expand, not reduce, both employment and growth. For instance, boosting household income can increase demand in the economy, spurring growth and employment in other industries.

These positive effects are not guaranteed. Rather, they point to the necessity of taking a broader view of how the economy – and labour markets within it – functions as a whole.

The national minimum wage is a step towards an alternative growth path. But it must be accompanied by other initiatives, such as industrial policy that sees South Africa create jobs in sectors that can sustain moderately higher wages, and grow sectors that can benefit from, and contribute to, increased domestic demand.

We should view with scepticism any claims that there is a simplistic mechanical link between wages and levels of employment. The stakes are too high for such distortions to fly in the face of logic, evidence and need.

Isaacs is a PhD student in economics at the University of London. Fine is professor of economics at the University of London

According to City Press, the labour broking industry is pleased with new research that seems to tag it as a cornerstone of the economy and a means of relief to the poor.

The research in question was presented by University of Cape Town economics professor Haroon Bhorat at an event organised by labour broker lobby group - the Confederation of Associations in the Private Employment Sector (CAPES.)

Bhorat estimates:

970,000 brokered employees worked in SA in the first quarter of this year, up from 810,000 in 2011.

In 1995, there were just 199,000 brokered employees.

The broking headcount has grown at 8.7% on average each year since 1995.

Overall employment only grew by 2.5% a year, so about 14% of the 5.6 million additional jobs since 1995 have been brokered jobs.

CAPES claims the TES (Temporary Employment Service) industry has created more jobs in SA than any other sector since 1995.

TES is however strongly criticised. One of the main arguments against labour broking is that it doesn’t in fact create jobs as it only mediates between the worker and the employer – who would still need to hire the worker, regardless of the broker’s intervention. Bhorat concedes that it would be impossible to calculate how many of the close on one million brokered employees would be employed in the absence of the labour brokers.

The argument doesn’t end there though, as brokered workers generally get paid less than permanent staff; the brokers insist that the absence of TES industry would reduce demand for labour.

In general:

The wage “penalty” for brokered workers is around 35% across all sectors

This penalty sits at 17% in the manufacturing sector

48% of brokered workers have no pension

36% of permanent employees have no pension

84% of brokered workers have no health insurance

60% of formal sector workers have no health insurance