1998 Annual Report

The Nedlac Chamber

LABOUR MARKET CHAMBER

Terms of reference

The Labour Market Chamber seeks to reach consensus and make agreements for placing before the Executive Council on all matters pertaining to the world of work and the associated institutions of delivery.

Overview

The work programme of the Labour Market Chamber has encompassed issues at the centre of labour market policy in South Africa, and the often controversial issues that are at the heart of relations between business, labour and government.

The chamber has spent much of the last three years negotiating the reform of the country's labour laws. The first two years were spent largely on the Labour Relations Act,and the chamber continues to work on matters related to this Act. The chamber also considered the Basic Conditions of Employment Act, but failed to reach consensus on some fundamental issues. Currently, negotiations are drawing to a close on the skills development bill and the employment equity bill.

Two codes of good practice have been finalised, and the chamber is currently working ona further three such codes. Other matters that the chamber has considered include the functioning of the Wage Board, the phasing out of the old Industrial Court, and the demarcation of sectors, which remains an important agenda item.

Further work around the Labour Relations Act

The Labour Relations Act, 1995, which was the product of negotiations in this chamber,came into effect on 11 November 1996. Work on various aspects of the Act continued to feature on the work programme of the Labour Market Chamber in 1997, including the finalisation of codes of good practice and the consideration of demarcation applications.

Demarcation

Nedlac has certain responsibilities placed on it by the Labour Relations Act in respectof the demarcation of sectors for collective-bargaining purposes. Nedlac must consider applications to register bargaining and statutory councils in respect of which an application is made, and demarcate the appropriate sector and area in respect of which the council should be registered.

Criteria for demarcation

Criteria to guide the consideration of demarcation applications and a set of principles and criteria are being developed. Currently, these are being considered in detail by the chamber.

Procedure

A procedure for considering demarcation applications has been agreed: a standing committee will be appointed to examine such applications and make a recommendation to the chamber. The standing committee will be empowered to liaise directly with the parties to an application, as well as with any objectors to an application, in making its recommendation.

Applications

By 31 March 1998, Nedlac had considered six demarcation applications in terms of theAct.

  1. Application for the variation of scope of the national bargaining council for the textile-manufacturing industry.
  2. Application for the variation of scope of registration of the bargaining council for the sugar-manufacturing industry.
  3. Application for the registration of the bargaining council for the clothing industry in northern Natal.
  4. Application for the registration of the South African manufactured-fibres bargaining council.
  5. Application for the variation of scope of the national bargaining council for the road transport industry (goods).
  6. Application for the variation of scope of the clothing industry bargaining council (Western Cape).

Code of good practice on dealing with sexual harassment

Recognising the seriousness of sexual harassment in the workplace, a chamber working group has been developing a code of good practice on dealing with cases of sexual harassment for consideration by the Labour Market Chamber.

The objective of this code is to eliminate sexual harassment in the workplace through provisions that promote the development and implementation of policies and procedures todeal with the problem and prevent its recurrence. The code provides a definition of sexual harassment and offers detailed guidelines on what an appropriate procedure will comprise.

Implementation of the Basic Conditions of Employment Act

Now that the Basic Conditions of Employment Act has been passed by Parliament,attention has turned to the work that needs to be done in preparation for its implementation.

Certain provisions of the Act-for example, those that provide for the establishment of the employment conditions commission-will be promulgated by the middle of 1998. The rest of the Act is expected to come into effect later in 1998.

Investigation into the possible impact on small business

To address the many concerns voiced about the possible impact of the Act on smallbusiness, the Minister of Labour has initiated an investigation into the matter.

The investigation is being conducted by the Ntsika Enterprise Promotion Agency. Aministerial task team has been appointed to consider Ntsika's report and make recommendations to the Minister of Labour on possible amendments to the Act and on ways in which the Act's implementation could be managed to assist small businesses.

Business and labour have nominated representatives to serve on the ministerial task team.

Employment conditions commission

The Basic Conditions of Employment Act makes provision for the establishment of the employment conditions commission to replace the Wage Board. The commission will advise the Minister of Labour on sectoral determinations that establish basic conditions of employment, including minimum wages, for employees in unorganised sectors.

In terms of the Act, labour and business nominated representatives to serve on the employment conditions commission.

In addition, the Minister of Labour must, after consultation with Nedlac, appoint three persons to the employment conditions commission, who are knowledgeable about the labourmarket and conditions of employment, including the conditions of employment of vulnerable and unorganised workers.

Basic Conditions of Employment Act codes of good practice

Government has drafted two Basic Conditions of Employment Act codes of good practice.

A code dealing with the arrangement of working time provides information and guidelines to employers and workers on the arrangement of working time and specifically its impact onthe health and safety of workers. The code deals extensively with shift work.

The second code provides guidance on the protection of the health of employees during pregnancy and after the birth of a child. The code lists various chemical and other hazards to pregnant workers and the steps that can be taken to control these risks.

The draft codes are currently being considered by the Labour Market Chamber.

Skills development

Skills development is a critical issue for South Africa and was given priority status by Nedlac's Executive Council in February 1997. In anticipation of the tabling of a greenpaper and proposed legislation on skills development, a chamber subcommittee was appointedto negotiate the financing and governance aspects, in particular, of a skills development strategy. The community constituency should participate in the negotiation process.

The Department of Labour presented its green paper on a skills development strategy foreconomic and employment growth in South Africa to the Labour Market Chamber in April 1997.

A skills development bill was presented to the Nedlac parties in September 1997. Thebill seeks to provide a strategy for skills development that is demand-driven and is basedon a partnership between the public sector and the private sector.

The bill also provides for:

  • Learnerships: these are training programmes that combine theoretical learning and structured work experience and culminate in a qualification registered with the National Qualifications Framework.
  • The financing of skills development through a levy-grant scheme.
  • The establishment of a research and strategic planning unit, employment services, and a national skills authority that will replace the current National Training Board.

Negotiations on the bill commenced in October 1997. Discussions focused on the specificdetails of the financing system and governance structures. A revised bill has been tabled in Nedlac and it is anticipated that negotiations on the bill will be concluded in time to enable the bill to be tabled in Parliament this year.

Employment equity bill

A green paper called "Employment and occupational equity" was published bythe Department of Labour in July 1996 for public comment. On the basis of submissions andinteraction with relevant stakeholders an employment equity bill was drafted and tabled inNedlac in January 1998.

The bill aims to achieve a diverse workforce that is broadly representative of theSouth African population through the elimination of unfair discrimination in employmentand through ensuring the implementation of employment equity to redress the effects ofunfair discrimination in the past. The bill requires companies to develop and implementemployment equity plans to achieve these objectives.

The Labour Market Chamber established a negotiating committee to consider the bill andagreed that the community constituency should participate in the committee. The BlackManagement Forum, an important stakeholder in this matter, was invited to participate inthe negotiations in a non-voting capacity.

Negotiations on the bill commenced in early March 1998 and centred on:

  • Whether all companies should be required to develop and implement employment equity plans, and the thresholds for excluding small businesses.
  • How wage differentials can be addressed.
  • Penalties for non-compliance with the provisions of the Act.
  • The reporting requirements by companies.
  • The definitions of affirmative action and employment equity.

At the time of writing, the final report was due to be tabled to the ManagementCommittee.

DEVELOPMENT CHAMBER

Terms of reference

The Development Chamber seeks to reach consensus and make agreements for placing beforethe Executive Council on all matters pertaining to development, both urban and rural;implementation strategies; financing of development programmes; campaigns to mobilise thenation behind the reconstruction and development programme; and the associatedinstitutions of delivery.

Overview

Considerable progress has been achieved by the Development Chamber in defining andtaking forward its work programme. The chamber's work has been categorised into fourareas: housing, physical infrastructure, social and institutional infrastructure, and theMasakhane campaign and related matters.

Several significant agreements have been concluded by the chamber in the past year onservice tariffs and the reforming of South Africa's water laws. The chamber played a vitalrole in enhancing the Masakhane campaign in 1997.

One issue of critical importance to all parties that the chamber is currentlyaddressing is housing. Other current agenda items include the restructuring of theconstruction industry, revamping community-based public works programmes, and a survey ofinfrastructure delivery.

The chamber held its first policy session in January 1998 with the ministers ofHousing, Welfare and Public Works in attendance.

New issues that will be receiving the chamber's attention later in 1998 are the whitepaper on disability, land reform and rural development.

Housing

A special Development Chamber session on housing in mid-1996 identified various areasof housing policy for consideration by Nedlac. In taking forward its work on this issue,Nedlac has enjoyed regular interaction with the Minister of Housing, including a specialsession on housing delivery at the Executive Council meeting in August 1997.

In May 1997, the chamber adopted the following terms of reference for its discussionson housing:

The targets of unit output.

The timeframe for such delivery.

The financing mechanism.

Social housing.

Housing parastatal.

Information base.

Quality of housing.

A senior-level housing committee, including representatives of the Department ofHousing, was established by the chamber to develop concrete proposals for addressing theissues included in the terms of reference.

All parties shared a concern that workers cannot access credit to improve the size andquality of houses that they buy and are reliant solely upon the government subsidy. Thehousing committee is developing a scheme, in a bid to remedy this problem, that seeks toimprove access to credit and enhance the current subsidy scheme.

Physical infrastructure

Revamping community-based public works programmes

A framework agreement on job creation in public works programmes and the constructionindustry, with special reference to community-based public works programmes, was concludedin February 1997.

The chamber is considering the revamping of public works programmes based on thelessons outlined in the framework agreement and evaluations of such programmes by theCommunity Agency for Social Enquiry and the International Labour Organisation (ILO), andthe NEF job creation project experience. The chamber will be looking at specific areasthat require attention from stakeholders, including wage rates, management agencies andthe participation of local communities.

The chamber has interacted with the Minister of Public Works on this issue.

Transformation of the construction industry

The transformation of the construction industry is an important issue that impacts onthe development of small, micro and medium-sized enterprises (SMMEs) and black economicempowerment, as well as housing delivery.

The chamber will be considering the green paper on the transformation of theconstruction industry. The chamber received a presentation on this issue by the Departmentof Public Works in March 1998.

Infrastructure delivery survey

There was an agreement at the national Masakhane campaign workshop that a database oninfrastructure delivery should be developed. The database would serve to register andmonitor processes of delivery to assist policy-makers to develop strategies to acceleratedelivery.

A survey of infrastructure delivery will be conducted as a first step in establishingthe database. The survey will have a quantitative aspect as well as qualitative aspects.The survey will also examine constraints on delivery and the possibilities for enhanceddelivery.

The Development Chamber is considering proposals for conducting the survey, which isexpected to be completed by September 1998.

Social and institutional infrastructure

Monitoring the implementation of the National Development Agency

Following agreement on the terms of reference by the Nedlac Executive Council in 1995,an advisory committee was appointed by Cabinet to investigate and advise government on themeans for providing future support to civil society. The establishment of a nationaldevelopment agency was proposed and was supported in principle by Nedlac. Since then theDevelopment Chamber has received reports on progress with establishing the NationalDevelopment Agency.

Social security

At the Development Chamber's first policy session in January 1998, the Minister ofWelfare outlined the policy and programme developments in the social security system inSouth Africa. The Minister indicated that the issue of social security was one that shouldbe taken up by the Development Chamber. The chamber is considering the best way to proceedon this important issue.

Crime and violence

In November 1996, Nedlac and the Secretariat for Safety and Security jointly convened asenior national conference of stakeholders to forge effective partnerships to fight crimeat local level.

Following the conference, action plans for mobilising their members against crime andviolence were developed by Business Against Crime, Cosatu, Sanco, Sports Against Crime andthe South African Council of Churches.

The chamber working group on crime and violence continued to meet in 1997 and agreed toa focus-week campaign aimed at concentrating existing and emerging anti-crime programmesin one week of action to demonstrate the growing strength of local programmes againstcrime and violence on a province-by-province basis.

A focus-week campaign was held in Gauteng in November 1997. Activities during this weekincluded a men's march organised by the South African Non-Governmental OrganisationCoalition to protest violence against women and child abuse, and the International Day ofNo Violence Against Women.

PUBLIC FINANCE AND MONETARY POLICY CHAMBER

Terms of reference

The Public Finance and Monetary Policy Chamber seeks to reach consensus and makeagreements for placing before the Executive Council on all matters pertaining to theframework within which the financial, fiscal, monetary and exchange-rate policies areformulated; the coordination of fiscal and monetary policy and related elements ofmacroeconomic policy; and the associated institutions of delivery.

Overview

Concerns about the quality of dialogue in this chamber have recently been taken up at achamber policy session attended by the Minister of Finance. Although the chamber is thevehicle set up for debating macroeconomic issues, such debate has not been taking place.The chamber is examining its role and work programme as a priority issue.

The chamber's focus over the past three years has been on the Budget and the Budgetprocess. The chamber has not sought a formal agreement on the Budget; rather, the processof interaction has provided government with an opportunity to hear the views of businessand labour.

In 1997, government introduced a multiyear approach to budgeting with the medium-termexpenditure framework, which outlines government spending for the next three years. Thechamber developed a submission in response to the framework, which focuses on expenditureon health care and education. The chamber's work in this regard is being taken up with theministries of Health and Education.

Recently, the chamber developed a new framework for its future work programme. At leasttwo chamber sessions will be held on government revenue considerations, basic fiscalpolicy issues and monetary policy. The sessions will be used to inform thinking on theissues and to identify specific focus areas for further detailed work by the chamber.

The medium-term expenditure framework

Discussion document on health and education

Following a chamber policy session in April 1997, the chamber established a Budgetworking group to develop a consensus submission on the expenditure side of the Budget aspresented in the medium-term expenditure framework.

The Budget working group focused on primary health care and primary and secondaryeducation as priority issues. The working group concentrated on how to enhance theefficiency, effectiveness and equity of government spending on health and education in themedium-term. This included:

Assessing outputs and service delivery.

Describing backlogs and needs.

Considering financing and delivery strategies.

The chamber convened two special sessions on the two priority issues with the intentionof accessing information on the status of delivery in these two areas. In addition,research was completed that provided a province-by-province assessment of delivery,backlogs and future projected needs in respect of physical infrastructure, humanresources, institutional resources and management systems.

Workshops were convened in each province in August 1998, and the views reflected wereincorporated into the chamber's discussion document.

Submissions from business and labour on delivery in education were also incorporatedinto the document.

While this document did not reflect a full consensus between the parties, it has beenagreed to use it as a basis for further engagement with the departments of Education andHealth.

Issues raised in the document regarding education include:

A proposal to undertake research on two issues: pupil migration and reducing the repetition of school years.

Addressing equity in delivery through studying the effects of voluntary severance packages and addressing backlogs in infrastructure.

Achieving greater efficiency through human resource development, the development of system indicators, and improving educational management.

The education task team will be meeting with the Minister of Education to discuss itsrecommendations.

The following issues were identified with respect to health delivery:

  • The interface between the private and public sectors.
  • Tax dispensation.
  • Addressing infrastructure backlogs.
  • Regulatory framework.
  • The health task team will meet with the Department of Health to discuss its recommendations.

Savings

The chamber has undertaken research on savings. The objective of the research is todevelop a comprehensive report that will inform the development of strategies to promotethe level of savings by households. An examination of experience, both international andlocal, of mechanisms to increase savings, retirement funds, informal savings mechanisms,and the role of government, is being conducted. This will be considered together with aSouth African Reserve Bank report on the macroeconomic environment in respect of savings.

Investment in infrastructure

The chamber agreed to study investment in socio-economic infrastructure with a view toinforming constituencies about progress in delivery, including backlogs and projectedfuture needs, and to contribute towards the formulation of strategies to enhance delivery.

A comprehensive research report was compiled covering schools, clinics, running waterand sanitation, electrification and telephones.

The report was the focus of a commission at the national Masakhane campaign workshop,and one of the resolutions of the workshop was that a database on infrastructure deliveryshould be developed. The issue is now being taken forward by the Development Chamber.

Taxation

Reforming the tax system has been a standing item on the chamber's agenda. The chamberhas received briefings from the Katz commission on taxation on each of its interimreports. The last briefings took place in May 1997 on the fourth and fifth interim reportsof the commission. The chamber agreed that parties would respond independently to thereports. A summary document on the work of the Katz commission of inquiry into certainaspects of the tax structure of South Africa is expected in October 1998.

TRADE AND INDUSTRY CHAMBER

Terms of reference

The Trade and Industry Chamber seeks to reach consensus and make agreements for placingbefore the Executive Council on all matters pertaining to the economic and socialdimensions of trade; industrial, mining, agricultural and services policies; and theassociated institutions of delivery.

Overview

The chamber has developed a comprehensive work programme which has been advancedthrough regular policy sessions with the Minister of Trade and Industry. The many issuesthe chamber deals with can be grouped in the following way: trade issues, competitivenessand productivity, investment, the regulatory environment for business, the socialdimensions and restructuring of workplaces, and small business promotion.

Several subcommittees exist under the chamber and these meet frequently between chambermeetings to take forward the work programme.

Briefings on specific programmes of the Department of Trade and Industry are a regularfeature of chamber meetings, and the chamber also actively monitors progress with theestablishment of relevant institutions, like Investment South Africa and the South AfricanRevenue Services (SARS).

A considerable amount of work has been completed on the social plan, the WorkplaceChallenge, and the European Union (EU) trade negotiations. Important issues currentlybeing addressed include two controversial matters: competition policy and industrialdevelopment zones.

Japanese Grant Fund

Over the past three years the Industrial Development Corporation has administered theJGF for research into competitiveness under the supervision of a Nedlac subcommittee. TheJGF is drawing to a close and is being replaced by a fund for research into industrialdevelopment, growth and equity.

Three cluster studies were completed by the JGF during the 12 months under review onthe following clusters: ceramics, electronics and footwear. A study on benchmarking forlabour-intensive development has also recently been completed.

The JGF studies currently underway are a cluster study in the plastics andpetrochemicals sector and a study of the wool and mohair cluster. A cross-cutting study onthe role government should play in promoting technology is also underway.

Cluster studies of those sectors that are particularly vulnerable or have the potentialto be highly competitive in the global economy have also been undertaken by the Departmentof Trade and Industry and the Industrial Development Corporation. The aim of these studiesis to look at improving competitiveness by promoting greater sectoral/cluster coherence.

The Trade and Industry Chamber established a subcommittee-the cluster coordinatingcommittee-to coordinate these various cluster initiatives.

Social plan

One of the ramifications of globalisation and trade liberalisation is the restructuringand decline of uncompetitive industries, usually accompanied by massive job losses. Asocial plan task team has finalised a framework approach to managing large-scaleretrenchments through avoiding job losses and ameliorating the negative impact of these onindividuals, communities and local economies. The task team is currently working out thespecific details of an agreement on the social plan.

The framework specifically provides for the establishment of future forums in companiesto promote ongoing discussions about the future of the company and industry so as toidentify problems as soon as possible and find alternatives to retrenchments. Alsoprovided for is a technical support facility for such forums, and a range of supportservices for retrenched workers offered by the Department of Labour. Support for localeconomic development and SMMEs will also be provided for in the final agreement.

Industrial development zones

Industrial development zones (IDZs) have been successfully used in many countries tostimulate employment growth in export manufacturing by providing a combination of advancedinfrastructure, easy access to transport routes and ports, duty-free zones, investmentincentives and other supply-side measures to "crowd in" investment. IDZs arebeing planned for several areas in South Africa, including Port Elizabeth and East London.

The Department of Trade and Industry has tabled a concept document on IDZs, includingrecommendations on the regulatory framework for IDZs and appropriate incentive structures.This concept document will be discussed at a workshop in early May 1998.

Reviewing the regulatory environment

Competition policy

Government tabled its much-awaited proposed guidelines for competition policy in Nedlaclate in 1997.

The aim of the new competition policy is to balance the pursuit of competitiveness andefficiency with the need to ensure access by many more people, previously denied an equalopportunity, to the economy. In particular, government has proposed a new competition lawthat will be directed at restrictive practices and the abuse of dominance under thedirection of a reformed and strengthened competition authority.

The Trade and Industry Chamber appointed a negotiating team to consider the policydocument. Negotiations commenced in early March 1998. Much of the negotiations to datehave focused on defining restrictive practice and abuse of dominance.

This policy process is located within a broader review of the regulatory andlegislative environment in which business functions, including corporate governance andthe Harmful Business Practices Act. Nedlac will also interact with this process.

Small business regulatory review

The Department of Trade and Industry has established a national small businessregulatory review team to look into the possible impact of all relevant legislation andregulations on small business. The review process has been integrated with a processwithin the Department of Labour to review labour legislation and labour market policy. Thechamber has been invited to nominate people to serve on the review team. A report isexpected to be completed by the end of 1998.

Procurement policy

The reform of public sector procurement policy in a way that promotes black economicempowerment, labour standards and the development of small enterprises has been the focusof policy initiatives by the Department of State Expenditure.

During 1997, Nedlac interacted with the green paper on public sector procurement reformin South Africa through making submissions on the green paper and holding a workshop toreview the public submissions received by government. Government has undertaken to tablethe white paper in Nedlac for negotiation when it has been finalised.

Customs and excise

Customs and excise is an issue of ongoing importance for the Trade and IndustryChamber. The chamber receives regular reports on progress made by the SARS with itsrestructuring and in combating customs fraud.

Nedlac expressed its concern for ongoing customs and value-added tax fraud by issuing apress statement in July 1997 that called for greater coordination between the SARS, theSouth African Police Services and the Department of Justice in investigating andprosecuting customs fraud. Nedlac also urged the SARS to implement the 13-point plan forthe restructuring of customs and excise that was agreed by the NEF.

To take this forward the chamber held further meetings with the SARS and has agreed tomeet with the Minister of Justice to discuss the prosecution of customs fraud cases.

The issue remains an important part of the chamber's work programme. The SARS hasagreed to make use of the Trade and Industry Chamber as a consultative forum to provide itwith guidance on areas where it is experiencing difficulty, such as what to do with seizedgoods. The SARS has also agreed to provide the chamber with progress reports on theimplementation of the NEF's 13-point plan.

Trade

The Trade and Industry Chamber provides a forum-the technical sectoral liaisoncommittee (Teselico)-through which government trade negotiators consult with, discussstrategy and share information and resources with business and labour on tradenegotiations. South Africa's strategy in these trade negotiations is to improve access forSouth African products in key markets like the EU.

Teselico analyses quantitative trade data to determine tariff reductions and whichproducts require special protocols for phasing down tariffs, as well as rules of originand non-tariff barriers to trade.

EU negotiations

Teselico's main area of work in 1997 was the trade negotiations with the EU. In July,Teselico finalised a comprehensive working document to be used by government as a basisfor preparing South Africa's trade offer to the EU. The working document addressed tariffphase-down periods for different categories of products; identified proposed sensitiveproducts that required special product protocols with longer tariff phase-down periods,such as clothing, footwear and motor components; and identified a list of non-tariffbarriers to trade with the EU.

More recently, Teselico has been analysing the EU's trade offer to South Africa as wellas providing detailed input on rules of origin. Also being discussed is the inclusion of asocial clause in a trade agreement with the EU and other non-trade matters.

The process is expected to be completed by June 1998.

Southern African Development Community

The Southern African Development Community (SADC) trade protocol outlines a processthrough which a free-trade agreement would be reached in the southern African regionwithin eight years. Teselico will be providing the same kind of detailed input togovernment's trade negotiators as it did for the EU trade negotiations, and is currentlyinvolved in developing South Africa's offer to the SADC. Specifically, Teselico willidentify categories of products on which tariffs can immediately be reduced to zero, onwhich tariffs can be reduced over a five-year period, and sensitive products that willrequire special treatment in product protocols.

In addition, Teselico will consider related customs and excise issues, the socialclause and the impact of tariff reductions on employment. It will also appraise offersfrom other SADC member countries. The process around the SADC trade negotiations isexpected to be completed by August 1998.

Indian Ocean Rim

Teselico's terms of reference also includes the Indian Ocean Rim initiative. Thisinitiative started three years ago and is aimed at a free-trade agreement within theIndian Ocean Rim within 15 years. As yet, Teselico has not undertaken any detailed work inthis area. The Trade and Industry Chamber will continue to receive reports on progress inthis initiative.

 

NEDLAC - BUILDING BRIDGES THAT HOLD THE NATION TOGETHER
www.nedlac.org.za | Tel: +27 11 328 4200 | Contact webmaster | Sitemap