Labour input to the NEDLAC Annual Summit by Zwelinzima Vavi, COSATU General Secretary

09 September 2006

Honourable Deputy President
Minister of Labour and other honourable Ministers here present,
Leaders of COSATU, Fedusa and NACTU
Leaders of organised business
Leaders of the community constituency
Friends and comrades
Another year has passed since last we gathered here to receive a report on NEDLAC's work. And what a year it has been in South Africa!
We meet today against the backdrop of big challenges but also of many achievements.
There is a renewed urgency about tackling the challenges of development and growth. Government has unveiled its strategy, ASGISA, as a means of mobilizing energy and focus on certain of the Growth and Development Summit goals.

A centre-piece of the new approach is an emphasis on shared growth. We as a society can no longer afford to have millions unemployed and millions more working for starvation wages, while the economy grows close to 5% and the CEOs of big companies make tens of millions a year. It is simply not sustainable to this dual growth pattern persist 12 years after the establishment of democracy.

Labour has in the past year intensified its Jobs and Poverty Campaign. This campaign seeks to bring home to all the social partners the urgency of addressing the twin crises of unemployment and deprivation facing so many South Africans. After all, despite the overall economic growth of the past few years, unemployment remains at close to 40%. Half of all workers earn less than R2500 a year, and almost three quarters of households get by on less than 1500 a month.

The Jobs and Poverty campaign must be a centrepiece that draws business, government, labour and community into new partnerships: partnerships to challenge massive unemployment and deep poverty in the society.

A particular concern for labour has been the need to restructure the economy toward employment creation. We need to work urgently to take forward elements of our own Growth and Development Strategy in this regard, in particular much more massive public employment strategies that can give young and rural people a chance to contribute to society. We need to ask why we have not managed to kickstart the co-ops movement, and whether we can use the financial sector charter process to support employment creation more effectively.

Part of a strategy for job-creating growth must also be a bolder approach to trade negotiations. Trade issues dominated much of the past twelve months, from the WTO talks in Hong Kong and Geneva, to the crisis caused in some sectors of the local economy by the surge in imports.
Labour welcomes the stand taken by the South African government against a NAMA formula, GATS offers and agricultural agreements that would undermine our own production and long-term growth prospects. We cannot afford to give away important tools for encouraging new industries and meeting the needs of our people just to satisfy foreign companies.

A particular concern for labour has become the massive imbalances in our trade with China - imbalances fuelled largely by the continued overvaluation of the rand. Last year, South Africa had a trade deficit with China of some R23 billion. That is clearly unsustainable. We are in real danger of becoming an exporter of raw materials for other countries' factories and in the process de-industrialising South Africa.
We are therefore very supportive of the recent announcement of a trade agreement between South Africa and China that will limit the imports of clothing and textiles into the South African market. Between 2003 and the end of last year, clothing imports grew by 480%. In the wake of this massive surge of imports into the local market, 67 000 clothing, textile and footwear jobs were lost. The agreement will give the industry some breathing space.

We compliment the Minister of Trade and Industry and his team for putting together the agreement and call on government not to be swayed by alarmist claims and lobbying by retailers. These retailers have made enormous profits over the past four years, as imports have swelled and workers have lost their jobs. They have improved their mark-ups on the back of sweated labour in China with disastrous consequences for South Africa.

Now we face the challenge of using the next few years to rebuild the clothing industry and ensure that when the quotas end, we are able to compete. That will only be possible, however, if ASGI-SA's call for a more competitive exchange rate is taken forward rigorously. It is an illusion to think we can develop as an industrial nation with an exchange rate that lets any other country under-cut our own production. The Governor of the Reserve Bank should ensure that the management of monetary policy does not choke off the growth impetus that a competitively-valued currency can bring.
There were a number of useful engagements at Nedlac in the past year. Engagement in the chambers has brought a number of important agreements, including progress on broad-based BEE, consumer protection policy, trade negotiations, labour laws, pension fund reform, and a host of other issues.

A recent Executive Council session had an excellent discussion of education policy, and an earlier one made progress on skills development for job creation. We are also encouraged by the response of the Department of Health at the meeting held a few days ago on involving Nedlac in the discussions on the Health Charter and look forward to concluding the discussions shortly.
We are pleased to report to you that Organised Labour's Job Creation Trust has, as part of the GDS commitments, now created over 37 000, 80% of which are permanent. This is a contribution that is unmatched by any labour movement anywhere else in the world. It has enabled employed workers to contribute directly to bringing employment to the jobless.

Deputy President, while Nedlac has continued to achieve much, there are grounds for concern in some areas.
Firstly, we are concerned about the impasse that has developed on the Superior Courts Bill.

When the Labour Relations Act was concluded by consensus between business, labour and government, it had provisions for the establishment of a specialist court on labour matters. It provided for NEDLAC involvement, with the Judicial Services Commission, in appointment of labour court judges. It provided for a national jurisdiction for the court so that any judgement would be applicable throughout the Republic of South Africa.

The Superior Courts Bill challenges each of those principles. Regrettably, it renege completely from a formal agreement that was reached by a Task Team made up of then Chief Justice Arthur Chaskalson, as well as the Judge President of the Supreme Court of Appeal, the head of the Labour Appeal Court, the Departments of Justice and Labour and Nedlac.

The Superior Courts Bill seeks to do away with the specialist labour courts, cut NEDLAC's role out in appointment of judges, using the spurious argument of constitutionality and provincialise the role of the Labour Court by folding it into the provincial divisions of the High Court. The consequence of this is stark: in a national strike involving say workers at Shoprite Checkers, in future if the Superior Courts Bill was to be implemented, different divisions of the High Court could come out with different judgments on the same set of facts in exactly the same strike, leading to absolute chaos in industrial relations.

Business and labour are united on the necessity to retain a specialist labour court, maintain NEDLAC's strong role in the process and have national jurisdiction. The three labour federations have taken a decision to take strong action if this matter is not resolved and whilst the business community have not yet offered to march with us, I suspect that there is considerable sympathy on this issue from business.

We appeal to the Deputy President to unlock this logjam.

On the labour market, the problems of low wages, casualisation and use of labour brokers is growing. Just as the Commissioner of SARS has to be eternally vigilant at attempts to evade tax and structure arrangements to deliberately subvert the Minister of Finance's intentions, the same happens on the labour market. What is required is more effective implementation capacity and provisions to ensure we promote a labour market founded on human dignity and skills acquisition.

The challenge of HIV/Aids continues to haunt us all. The time has come to have a single, mature and clear national consensus on HIV/Aids and to avoid mixed messages. To help achieve this, we propose that Nedlac resumes the negotiations to develop a Prevention and Treatment Plan which will spell out the joint commitments that we all need to make to address one of the greatest challenges of our times. We welcome the role given to the Deputy President in coordinating a national response to HIV, and will work with government to continue an effective rollout of ARVs.

There is a strong case for Proudly South African to receive public funding for its public interest mandate. We look forward to the campaign moving from the brand-building of the past few years to changing consumer behaviour at the shopping till. We will be strong partners to PSA in this exciting new phase of its work. The opportunity of 2010 is one that PSA should grab with both hands.

In this context, we remain concerned that the broad-based BEE codes do not do enough to support local procurement. We have not seen the final codes, and can only hope that they will indeed reflect the progress made at NEDLAC in this regard.

I conclude dear colleagues, comrades and leaders, with a call for the conclusion of an agreement on investment that addresses the 5% set-aside of funds for promoting job creation and social infrastructure.

Thank you all for listening.