Address by Minister of Labour, Honourable Membathisi Mdladlana

 19-20 March 2009

“Economic and political challenges facing workers and trade unions in 2009”

Programme Director,

President, General Secretary and your Executive Committee

Worker leaders and shop stewards

Comrades

Ladies and gentlemen;

Let me express my sincere appreciation for inviting me to this important conference.  Your collective bargaining conference comes at a crucial time when the debate about decent work, increased job losses, poverty alleviation and employment creation has intensified and the workers agenda has once again taken centre-stage.  

We are living in a world of incredible change. 24 years ago the word “globilization” had not been so commonly used. The Berlin wall was still in place. It was during those years that the neoliberal arrogance was displayed in promoting economic fundamentalism.

We are told globilisation cannot be changed. They say we must adapt to globalization, we must expose this lie. It is simply not true. Policies have shaped globalization and policies can be changed. If the model that we see of globilisation does not change, it will not survive.

A globalised economy that does not deliver decent work to all will fail. People in the streets of our country want “work”. Work to meet the need of their families in safety and health, educate their children, offer them income security after retirement, they want work in which they are treated decently and their basic rights are respected. On writer once said: “you cannot build and automobile economy on bicycle wages.” Well in my view, you cannot build a strong economy ignoring workers’ rights. That is why the ANC Government succeeded in building and maintaining a strong economy. The ANC is in alliance with COSATU, SACP and SANCO and other democratic movement structures. That therefore makes us strong, as we are owned by the social partners through NEDLAC – mobilizing the power of tripartism. NO other political party will ever do this.

For over 97 years the ANC has led the struggle to bring about a South Africa that belongs to all our people, black and white. From the beginning, we held together the unity of the African people in their struggle for freedom and dignity. We moved on to embrace the unity of all South Africans, irrespective of their race, culture or religion. It is this unity that is a source of our strength.

On April 27, 1994, we opened a new chapter in the history of our struggle, to build a common citizenship and equal rights for all South Africans. The ANC has always stood for basic democratic principles that include:

•           A constitution that guarantees human rights for all

•           The mobilization of our people to actively take part in decision making processes that affect their lives

•           Equality and freedom from discrimination on racial, gender or any other ground

•           Worker rights, collective bargaining, freedom of association and freedom of religion.

We are very proud of our past and very confident of the future. We are the only party in this country that is proud of its past and confident of the future. We changed no names. We did no changes on logo. We need no new branding. The ANC lives and the ANC leads.

The ANC does not fear winning elections convincingly. The ANC want a two third majority. The ANC want a strong state and a state that can intervene. A strong ANC and a strong state.

As I indicated in the beginning, the global economic crisis has befallen us. This is now posing a very serious threat to our revolution, to our achievement. It is threatening our hard earned gains in relation to jobs and wage security

 The global credit crisis now threatens to roll back the gains of the ANC led government. This is becoming increasingly evident with intensified job losses, particularly in the mining and manufacturing industries, which have triggered a seemingly irreversible slowdown in economic activity in the country’s major sectors. Reports affirm that tens of thousands of jobs are being lost in a number of sectors – mining, manufacturing and the retail sector.  Many motor dealerships are being liquidated, with adverse effects for workers in the motor, components and metal engineering industries.  And I am sure that the sectors in which CEPPAWU organizes are also feeling the negative effects of the downturn.

All we can safely say at the moment is that it is not inevitable that South Africa will move into economic crisis.  A very important factor will be the extent of job losses – the more jobs are lost, the more we lose productive capacity, the more demand weakens and the more workers suffer.  This will worsen our chances of avoiding the crisis and it will make it more difficult to recover at a later stage.  So, stemming the rising tide of retrenchments is critical for us all.  What will also be critical will be high-quality and courageous leadership from government, business and labour – and there will not be much room for mistakes.

The social partners that comprise the Presidential Economic Joint Working Group, organised Labour, Business and Government, have been meeting since December 2008 to consider how South Africa should respond to the more difficult economic conditions that we now face.  Since January, the social partners have met in a forum convened by NEDLAC, in partnership with the Presidency, and including the NEDLAC Community constituency to agree on a collective response to the challenges that face us. 

We now have a united response that is set out in a statement called the Framework for South Africa’s Response to the International Economic Crisis.  This framework contains a number of joint commitments that address the following areas:

•           Investment in public infrastructure;

•           Macroeconomic policy;

•           Industrial and trade policy;

•           Employment measures, and;

•           Social measures.

During this month, we are engaging in structured interaction with organized labour and business to look at concrete, short-term responses that can help us to avoid the crisis, but that can also strengthen our economy and position it to take full advantage of the upturn in economic activity when this comes.  As the joint statement by the social partner’s states:

“We need social solidarity between all South Africans to ensure that the crisis does not damage the fabric of our society.  Those with greater means have a responsibility to those without such means.  Our collective responsibility is to work together to withstand the crisis and ensure that the poor and most vulnerable are protected as far as possible from its impact.  We must also ensure that the economy is ready to take advantage of the next upturn and that the benefits of such growth are shared by all our people.” 

However I need to caution against following the American response because they are not putting conditions as a result those banks that were bailed out used the money to pay bonuses while retrenching the workforce.  Secondly the American option in inwardly looking.

This is a global crisis therefore the rich countries must look beyond their boundaries – they caused the crisis. There is an expression which says: “If America sneezes the whole world catches cold” but what happens when America has pneumonia, I ask. That is why here at home we prefer the route of adopting a comprehensive strategy as a response to the crisis. We believe in social dialogue. Social dialogue is crucial to balance conflicting interest especially at this stage.

Why are managers of these companies not informing and consulting their workers before they take drastic decisions? Workers are more than willing to contribute and in making decision about their lives. All possible measures should be considered except terminations or retrenchments. Counter productive measures must be avoided.

Executives of these companies must re – align their pay, dividend policies. They must adapt their bonuses or reward system to the current system. (of course this has other unintended consequences)

Training and re – skilling should also be considered as well as social security

Collective bargaining in 2009

As you develop your strategies for the collective bargaining round this year, you will have to consider very carefully the special circumstances that face us – it will be business unusual for you as well as for us in government.

The problem that worker leaders should be grappling with is how the economic downturn is affecting workplaces and how it is affecting our communities. There will be differences between companies in different sectors and communities will also be affected in different ways depending on where they are located and where the livelihood of workers in those communities comes from.

Many employers have made it known that they cannot cope.  We have heard this cry in the motor industry which is one of the bigger employers in the country.  The same is going to happen with many other employers, big and small.  But as employers plead poverty, it will be important for you to look carefully at where there are genuine problems of sustaining businesses and where the pressures are not so great.   Demands during this year’s round of bargaining should be shaped, as far as possible, by a shared understanding of the challenges that face the companies where you find yourselves.  You will also need to prepare yourselves for discussions about mechanisms that can address cost pressures where these are a problem for companies.

The same challenge of developing a shared understanding of the economic situation will be experienced at centralised bargaining forums. At council level, the parties will need to consider the economic situation facing companies that fall within the scope of the council and not only the large companies, but especially smaller companies that may be more vulnerable. We are already hearing that employers within some bargaining councils are failing to comply with their obligation to pay contributions to levies and to social benefit funds that are administered by bargaining councils.  This is not acceptable and unionised workers and shop stewards should ensure that their employers continue to pay the required levies and social benefit fund contributions to bargaining councils as required.  

As government, we are urging companies to do everything in their power to avoid retrenchments as a result of the economic situation.   Instead of starting with retrenchments, companies should explore all possible alternatives, such as constraining bonuses for the executive.  Where you can, I would urge you to work with your employers to use the downturn as an opportunity to invest in training and re - skilling and to modernise productive capacity in anticipation of the opportunities that will emerge after the global economic recovery.

 The CCMA which is our dispute resolution body is already very busy facilitating discussions between employers and trade unions that are exploring alternatives to retrenchments in terms of section 189A of the Labour Relations Act.  And the number of dismissal disputes has also increased the work load of the CCMA.  You will need to be vigilant.  Where downscaling or retrenchments do arise, proper legal procedures and processes must be implemented.  In this regard, employers have to, inter alia, comply with:

•           Section 189 of the LRA;

•           The Code of Good Practice on Dismissal Based on Operational Requirements, and;

•           The relevant sections of bargaining council collective agreements.

A recession does also offer opportunities for trade unions, however. There will be many workers looking to join unions to access the protection and benefits that trade unions provide.  In some sectors, there are thus likely to be opportunities for expanding membership and I hope that CEPPAWU will take advantage of this wherever possible.  We need strong unions now more than ever and we need to strengthen our collective bargaining system, including our bargaining councils.

Elections 2009- why it is important for workers to vote  

Having highlighted some challenges for collective bargaining, especially the problem of the economic downturn, I want to stress how important it will be for workers to vote and vote correctly (for the ANC) on 22 April 2009. Vote for a government experienced enough to tackle the issues head on.  Every worker’s vote is important.

The ANC led government will be able to withstand the economic situation and ensure that we return to a period of growth because it has managed to create jobs at a faster rate and provided more economic opportunities than was the case prior to 1994.

Sound management of the economy and better use of national resources has seen the economy grow every year since 1994. Investment has increased as a share of Gross Domestic Product from 15% in 2002 to 22% in 2008.

In recent years the economy has for the first time been creating jobs faster than the rate at which new people have entered the job market. On average half a million new jobs have been added to the economy every year since 2004, reducing unemployment from 31% in 2003 to 23% in 2007.

The Expanded Public Works Programme has created a million work opportunities a year ahead of its target and we expect that the EPWP will create 2 million jobs for poor and unemployed people during its second phase.

ANC government policies such as black economic empowerment and affirmative action have contributed to the growth of South Africa's black middle class by 2.6 million in 2007 and small business support has been streamlined and expanded.

These are just some examples of how we have benefitted workers and their families.   You will also know that our election manifesto makes the creation of decent work opportunities and sustainable livelihoods the primary focus of our economic policies going forward.  And we will be coming back into office after April with a clear agenda to regulate contract work, subcontracting and outsourcing and to address the problem of labour broking.

As an ANC led government we are committed to decisively defend the South African economy in the present climate and to take measures to advance our own developmental agenda, to avert or minimize job losses, protect vulnerable sectors and cushion the poor from the downturn.

We will need your support – not only in the election – but as key social partners in addressing the challenges we face.  So, strategize carefully for this years round of collective bargaining and remember the saying of an old worker leader who once told me:

““Success will be measured not by the amount of egg yolk on the ground, but by the number of eggs that survive to hatch.”

I thank you.