REPORT TO THE 1997 SUMMIT
The Nedlac chambers: work in progress

Labour Market Chamber

Overview

The agenda of the Labour Market Chamber has encompassed issues at the centre of labourmarket policy in South Africa, and issues obviously central to the interests of business,labour and government.

In its first year the chamber successfully reached agreement on the LRA and much of thechamber's work in its second year was around the implementation of the Act. Another keyissue which was addressed by the chamber in 1996 was the green paper on employmentstandards which was tabled in Nedlac in February 1996. Other issues dealt with in the lastyear include amendments to the Insolvency Act and the Compensation for OccupationalInjuries and Diseases Act.

The chamber is currently working on the completion of codes of good practice onretrenchments and picketing, as well as on developing guidelines for the demarcation ofsectors for collective bargaining reasons. Other matters on the agenda are aspects of thelaw relating to HIV and Aids, and the extension of wage orders to the former TBVC states.

Issues which have just begun to be negotiated include the basic conditions ofemployment bill and the skills development strategy for South Africa.

Basic conditions of employment

A green paper on employment standards was tabled in Nedlac in February 1996. The greenpaper contained policy proposals for a new statute that would replace the Basic Conditionsof Employment Act and the Wage Act, and that would balance the need for fair employmentstandards and the need for employment creation.

The Labour Market Chamber mandated a negotiating committee to seek to reach consensuson the policy proposals for new employment standards. The negotiating committee commencedits work in May 1996 after business and labour had been afforded the opportunity todevelop responses to the policy proposals contained in the green paper.

Consultation, facilitated by the secretariat, continued throughout 1996 on the keypolicy areas. The process also included a series of bilateral consultations betweenbusiness and labour, business and government, and labour and government.

In February 1997 Nedlac was served notice, in terms of the LRA, by Cosatu of intendedprotest action in support of labour's position on employment standards.

Negotiations commenced in May 1997 on the basic conditions of employment bill, and itis expected that the bill will be tabled in Parliament during the second half of 1997.

Some of the key proposals made in the bill are:

• An immediate reduction in working hours from 46 hours per week to 45 hours per week.
• An increase in the overtime rate from time-and-a-third to time-and-a-half.
• An increase in maternity leave from three months to four months.
• Greater flexibility in the arrangement of working time.
• The variation of employment standards through collective bargaining and exemptions.
• An increase in annual leave from two weeks to three weeks per annum.

Employment and occupational equity

The Department of Labour released a green paper on employment and occupational equityin June 1996 as part of the Ministry of Labour's five-year programme. The policy frameworkon which employment equity legislation will be based is being developed by the Departmentof Labour after taking into account the many public submissions on the green paper. Thispolicy framework will be tabled and considered by the Labour Market Chamber in 1997.

Ongoing work around the LRA

1. Demarcation

Nedlac has certain responsibilities placed on it by the LRA in respect of the demarcation of sectors for bargaining purposes. A working group is developing a set of guidelines for making determinations about the demarcation of sectors.

2. Code of good practice on picketing

During the negotiation of the LRA it was agreed that a code of good practice on picketing should be drafted. A working group is drafting this code. The code will provide guidelines for employers and workers on how a picket should be conducted, where pickets should take place, the rights and obligations of picketers, and the negotiation of picketing-rules agreements.

3. Code of good practice on retrenchment

During the negotiation of the new LRA it was agreed that a code of good practice on retrenchments should be drafted and added to Schedule 8 of the Act which deals with dismissals for misconduct and incapacity. The chamber established a working group to develop this code. The code will provide guidelines on the procedural aspects of retrenchment, including the process of consultation with affected workers, when it should commence and which issues should be covered.

4. Labour Court

The chamber is considering the terms and period of appointment for Labour Court judges. Research has been conducted on the international experience with regard to the appointment of Labour Court judges and mechanisms for ensuring the independence of the court.

Aspects of the law relating to HIV/Aids

The Labour Market Chamber is considering recommendations on aspects of the law relatingto Aids developed by a project committee of the South African Law Commission. Theserecommendations include legislation to regulate pre-employment testing for HIV/Aids.

Skills development strategy

The Department of Labour has released a green paper on a skills development strategyfor economic and employment growth in South Africa. The green paper proposes a newvocational training policy for South Africa. A draft bill is to be tabled in Nedlac inJune 1997. The financing and governance aspects, in particular, will be negotiated by asubcommittee of the chamber. Extensive research on training expenditure in South Africawas conducted under the auspices of a tripartite counterpart group using funds from theJapanese Grant Fund. This research, in addition to earlier work on the internationalexperience, has provided a useful background for the negotiating committee.

Wage Board and wage orders

The Labour Market Chamber has been receiving ongoing reports about the status of therestructured Wage Board. The chamber has supported a recommendation from the Wage Board toextend Wage Determination 471 for the clothing industry to the former TBVC states andself-governing territories.

In terms of section 51 of the old LRA, employers and unions in a sector where there wasno industrial council could agree on wages and conditions of employment which could beextended to the rest of the sector by the Minister of Labour. A number of section 51 wageorders have been extended by the new LRA. Two such wage orders for the security industryand the contract cleaning industry will be considered by the Labour Market Chamber. Thechamber will recommend whether or not these wage orders should be extended to the formerTBVC states and self-governing territories.

Development Chamber

Overview

In the Development Chamber's first year, the task of constituting the communityconstituency was completed and a work programme for the chamber was developed.

Considerable progress has been achieved in 1996 in taking forward that work programme.The chamber has concluded several agreements, including one on guidelines for theestablishment of local development structures and a framework agreement on job creation inpublic works and the construction industry.

The chamber has identified crime and violence as a key challenge to development inSouth Africa, and has become actively involved in promoting and coordinating efforts byconstituencies to mobilise against crime. A successful conference was held in November1996 on this issue. The Development Chamber has also been engaged in a process of helpingto relaunch the Masakhane campaign and is currently organising workshops at provinciallevel leading up to a national summit early in the second half of the year.

Current issues on the chamber's agenda include housing, a review of water laws, and thedevelopment of a memorandum of understanding on service tariffs.

In 1997 the chamber will also consider infrastructure delivery and the municipalinfrastructure investment programme, rural development strategies, a submission on thegreen paper on disability, the NGO bill and the restructuring of the construction industrypolicy process.

Masakhane campaign

The Masakhane campaign was launched in February 1995 with the specific aim of:

• Accelerating the delivery of basic services and housing.
• Stimulating economic development in both urban and rural areas.
• Promoting the resumption of rent, service charge and bond payments.
• Creating conditions for large-scale investments in housing and services infrastructure, and local economic development.
• Promoting the creation of conditions conducive to effective and sustainable local governance.

A high-level workshop held at Nedlac in August 1996 explored the problems faced in theimplementation of the campaign, and proposed a revised definition of the campaign and away forward for revitalising the campaign. Based on the workshop's recommendations, aseries of provincial workshops in each of the nine provinces has been embarked upon.

The aim of the provincial workshops is the development of strategies for revitalisingthe campaign and, more specifically, to identify provincial and national initiatives aimedat achieving the campaign objectives, the development of action plans, and to establishMasakhane provincial stakeholders' forums to coordinate activities and ensure meaningfulparticipation by all constituencies.

By the end of April 1997, workshops had taken place in four provinces. The workshopsare being followed by regional and subregional follow-up workshops to implement theprogramme agreed upon at the provincial workshops, and to intensify the process oflocalising of the campaign.

On completion of the workshops, a broad and inclusive national Masakhane summit will beheld.

Government's proposal that the Masakhane campaign be located in Nedlac under theDevelopment Chamber is currently being considered in the chamber.

Service tariffs

Following the recognition that a uniform national tariff policy is required to guideprovincial and local authorities in setting service tariffs, government tabled a proposedtariff policy in the Development Chamber.

A task team comprising delegates from business, labour, community, national governmentand the National Electricity Regulator is working to develop a memorandum of understandingon service tariffs.

Housing policy and rental stock

A special session on housing policy was held in 1996 at which the ministerial task teamon housing presented its second interim report to the chamber. Thereafter, the chamberagreed that it should focus on investigating particular aspects of housing policy with aview to developing a plan for delivery on those aspects rather than trying to cover theentire spectrum of housing policy.

The Nedlac secretariat has prepared a briefing paper on the state of housing deliveryas a basis for further investigation or negotiation.

It has been agreed that the parties should seek a constructive dialogue which assiststhe delivery of housing. The chamber has developed terms of reference for its futurediscussions on housing.

Water law review

A draft water services bill has been tabled for discussion in Nedlac. A subcommitteewill be considering the bill, together with a white paper on water regulation and a waterresources bill when they are tabled.

Trade and Industry Chamber

Overview

The chamber seeks to develop policies that will result in:

• Improved trade performance.
• Increased competitiveness and enhanced productivity.
• Increased worker participation in decision-making within enterprises.
• The addressing of the social dimensions of restructuring.

To address these objectives, the chamber has developed a very comprehensive agenda,with discussions in most areas being far advanced.

The work of the chamber has been enhanced by two policy sessions involving the Ministerof Trade and Industry. These sessions have allowed for the emergence of a conceptualapproach to trade and industrial policy in South Africa, which enjoys a fair degree ofconsensus among the major stakeholders.

Much of the work that started in 1995 continued throughout 1996, including work onmarket access and trade relations, technical support for the European Union (EU)negotiators, discussions around a social plan and work on supply-side measures and clusterstudies. The chamber has received briefings on the restructuring of the South AfricanRevenue Services and on tariff reform.

Agreements reached include the social clause, the national small business bill, and taxincentives for investment promotion. Important work on productivity and the challengesposed by global competition occurred as part of phase one of the Workplace Challenge,which will remain on the chamber's agenda in 1997.

A new issue for the chamber in the months ahead is that of competition policy.

Trade policy

1. EU trade negotiations

The chamber provides a forum-the technical sectoral liaison committee-through which government trade negotiators consult with, discuss strategy and share information and resources with business and labour on trade negotiations with the EU.

The chamber set up the technical sectoral liaison committee to analyse quantitative trade data, compiled by the Industrial Development Corporation (IDC), to determine which products could be included in a free trade arrangement with the EU. Business also undertook an independent analysis of tariff lines to determine sensitive sectors. In addition, business and labour assist with qualitative information on market access opportunities in Europe, rules of origin and non-tariff barriers to trade in the EU.

The work done in Nedlac was complemented by a study undertaken by Swaziland on the impact of a free trade agreement with the EU on the SADC and, in particular, on the South African Customs Union (Sacu), whose members, apart from South Africa, depend significantly on customs revenue from Sacu. The parliamentary standing committee on trade and industry held public hearings on trade relations with the EU.

South Africa has proposed a trade and development agreement with the EU, based on the following principles:

• Market access for South Africa in the EU.
• Asymmetry with respect to the timing of tariff reductions.
• Sharing the costs of structural adjustment in Sacu and the SADC.
• Harmonisation with the SADC trade protocol.
• Harmonisation of financial support and investment.
• Qualified accession to Lome.
• The non-linkage of agreements on Lome with a free trade agreement.

The technical sectoral liaison committee's terms of reference have been expanded to include the SADC, trade negotiations with Zimbabwe and the Indian Ocean Rim initiative.

2. SADC trade protocol

The SADC trade protocol, signed by SADC member states in August 1996, outlines a process through which a free trade arrangement would be reached in the southern African region within eight years. SADC countries currently trade in a limited number of products, and economic growth and development is a precondition for sustainable trade in the region. The SADC trade protocol provides the strategic and policy framework to raise the level of industrial development and make the region as a whole competitive in the global economy. The protocol sets out a programme for analysing the potential for development in sectors and in subregions within the SADC. Tariff regimes are also being analysed, and the IDC is consolidating information on tariff regimes in SADC countries and analysing the impact of liberalisation on national economies. The SADC trade protocol provides the framework and process for a sector-by-sector analysis, qualitative industrial and agricultural analysis, and tariff phase-down.

The chamber continues to participate in structured discussions on the trade protocol. Business and labour are participating in determining South Africa's tariff offer to the SADC.

3. Indian Ocean Rim

The chamber receives ongoing reports on developments with respect to the Indian Ocean Rim initiative, and it is developing a strategic approach for South African involvement in the initiative.

4. Promoting exports

The chamber continues to be interested in export promotion and receives regular reports from the Department of Trade and Industry on the implementation of the export marketing and investment scheme. The Department of Trade and Industry has set aside approximately R60 million to fund the scheme.

5. Research on trade and employment

The chamber has commissioned research on the effects of trade liberalisation on employment. It has decided that the research should provide data on the effects of trade liberalisation on employment levels at a macroeconomic level, as well as the effects on specific sectors and specific regions. A task team has been appointed by the chamber to formulate a research brief.

Industrial policy

1. Supply-side measures

Industrial policy in South Africa has seen a shift away from demand-side interventions, such as tariffs and subsidies, which raised the price of produced goods, to supply-side measures designed to lower unit costs and move towards higher value-added production.

Industrial policy in South Africa has seen a shift away from demand-side interventions, such as tariffs and subsidies, which raised the price of produced goods, to supply-side measures designed to lower unit costs and move towards higher value-added production.

Strategy with respect to supply-side measures has been comprehensively discussed, and several of these measures are now in place. These include a competitiveness fund for SMMEs, the tax holiday scheme, the small/medium manufacturing development programme, the technology and human resources for industry programme and the support programme for industrial innovation. The Department of Trade and Industry has published a booklet detailing the full range of incentive schemes available.

Progress with formulating, setting up and implementing supply-side measures has been reported regularly to Nedlac. Government is scheduled to table an evaluation of supply-side measures and a policy paper on industrial strategy in the Trade and Industry Chamber in August 1997. The chamber will consider this and report to the Executive Council.

2. Cluster initiatives

While the initial focus of the JGF (see research report below) was on cross-cutting studies, attention shifted during 1996 to sectoral/cluster studies. These studies, some of which are being conducted by the Department of Trade and Industry and the IDC, are looking at improving competitiveness by fostering sectoral/cluster coherence. The JGF is conducting 10 such studies, while the Department of Trade and Industry and the IDC are also conducting studies.

The focus has been on those sectors which are particularly vulnerable and those which have the potential to be highly competitive in the global economy.

To date the JGF has produced comprehensive reports on the ceramics, electronics and footwear clusters, and work will now commence on the second phase of the process for each of these areas. In the second phase it is intended to make the findings of the studies available at enterprise level.

4. Social plan

A social plan task team is developing an approach for managing the effects of large-scale retrenchments. The social plan approach aims to avoid job losses and employment decline wherever possible. Where large job losses are unavoidable, the social plan approach will seek to actively manage retrenchments and to ameliorate their effects on individuals and local economies.

The issues under consideration include planning for employment security, retrenchment services provided by the Department of Labour, training and support for regions facing large retrenchments.

Internal trade

1. Competition policy

Government will be tabling a discussion paper on competition policy in Nedlac in June 1997. It is expected that a three-month period will be needed to debate the broad policy principles that need to be incorporated into legislation. Concurrent to the Nedlac negotiations on the policy framework, a legal drafting team will examine the technical aspects of competition policy. The agreement will feed into and guide the drafting of legislation. Government has indicated that it intends tabling legislation in Parliament in early 1998.

2. Public sector procurement

A subcommittee was established to consider the matter of public sector procurement policy. An initial meeting of this subcommittee was held in 1996. The committee is to commence discussions on government's green paper on procurement policy.

3. Customs and excise

The restructuring of the Inland Revenue Service, customs and excise, and the Department of Administration into the South African Revenue Service is an issue which is of ongoing importance for the chamber. Reports on progress made by the South African Revenue Service are tabled and considered by the chamber.

Public Finance and Monetary Policy Chamber

Overview

During 1995, the chamber's attention was largely focused on the discussions withrespect to the 1996-97 Budget. The parties did not seek a formal agreement on the Budget,and the process of interaction in Nedlac provided government with an opportunity to hearthe views and responses of labour and business to Budget-related measures being consideredby government. A similar process took place around the 1997-98 Budget during the lastyear.

1996 was dominated by discussions on the 1997-98 Budget, as well as the Budget processgenerally. A workshop on the depreciation of the rand also took place under the auspicesof the chamber. The objective of the workshop was to gain insight into the currencydepreciation and to look at ways of minimising the costs and maximising the benefits ofthe depreciation of the rand.

Forthcoming priority issues that have been identified by the chamber are investigationsinto savings and investment in basic infrastructure, and the holistic reform of the taxsystem.

Given the specialised and complex nature of the issues on its agenda, the chamber hasalso decided to embark on a capacity-building programme which will help equip participantsto address the issues on the chamber's agenda and allow for more informed decision-making.

The Budget process

As stated elsewhere, for the forthcoming year the chamber has agreed to enhance itsimpact on the budget process by making a submission into the medium-term expenditureframework of the Budget, and to consider the reform of the taxation system on a holisticbasis.

Savings

The chamber is undertaking research into savings. The objective of the research will beto develop a comprehensive report which will inform the policy-making process. The studywill provide an analysis of the macroeconomic environment as it pertains to savings, andan analysis of trends in savings by households. A further aim of the research is to assistwith the development of strategies to promote the level of savings by households. Thestudy will include an examination of the international experience of mechanisms toincrease savings, pensions and retirement funds, informal savings mechanisms, and the roleof government. A project group has been appointed by the chamber to oversee and manage theresearch project.

Investment

Investment in socio-economic infrastructure is considered a priority on the workprogramme of the chamber and research on this will be commissioned. The aim of theresearch is to assist the chamber to identify and recommend strategies for acceleratedinvestment in socio-economic infrastructure.

The research process is managed by a project committee appointed by the chamber.Related initiatives will be taken into consideration so as to avoid duplication of work.

Taxation

1. Budgetary inputs

As reported earlier, during 1996 a tax task group operated under the auspices of the chamber and developed a report which was submitted to the Executive Council and to the Minister of Finance. Such inputs will again be made during 1997.

2. Support for tax amnesty and tax morality

One of the tax-related issues addressed by the chamber was that of the tax amnesty and tax morality. Following the extension of the tax amnesty period by government, the chamber expressed support for the extension of the tax amnesty period.

The chamber is to publish an educational booklet on tax-related issues which will assist in explaining to people how the tax system works.

3. Holistic reform of the tax system

Apart from the annual input from business and labour on individual tax items, the chamber has prioritised an examination of the tax system as a whole for its 1997 work programme. The chamber will on an ongoing basis be debating and evaluating the reports of the Katz Commission as they are released.

The public sector transformation forum

A proposal from government that the public sector transformation forum be located inNedlac has been accepted in principle by Nedlac's Management Committee. The establishmentof the forum is required in terms of the white paper on the transformation of the publicservice. Its primary function will be to allow all key stakeholders to be consulted and tomake recommendations on policy issues related to public service transformation. Thedetails of the forum's composition and how it will function are currently being finalised.