Business Day column: A hugely important victory for South African labour

IT MIGHT have been the most expensive day in South African high court history. It might have been the most important day in South African labour history. It might have heralded a lifeline for SA’s 8-million destitute job-seekers, 1-million small businesses, thousands of big businesses and their workers seeking labour relations liberty, and an unknown number of potential unions representing nonunionised workers.

Above all, it might have been pivotal for all beleaguered South Africans whose stagnating economy has the world’s highest, enduring unemployment rates.

It was David versus Goliath, a small team of lawyers for the Free Market Foundation (FMF) against a phalanx of extravagant lawyers representing 50 opponents. It was, provisionally at least, a resounding victory for the FMF.

Or so it seemed. In truth, the FMF has no interest in the outcome. Unlike other parties, the FMF derives nothing from victory. On the contrary, it is the only party which, regardless of the outcome, incurs only costs. The real victor was SA.

The FMF’s constitutional challenge to a single word in the Labour Relations Act (LRA) finally came before a full bench of the High Court in Pretoria on Monday, following three years of delaying tactics by trade unions and bargaining councils. Under section 32 of the LRA, the minister "must" convert private contracts into laws governing nonparties if colluders tell her to do so, regardless of whether she regards it as a very bad idea.

The FMF wants "must" to be "may" so that she will think about the implications of what she does. Hysterical resistance to such an incontestably reasonable proposal exposes the degree of selfish interests that are promoted at public expense.

To the astonishment of all present, presiding judge John Murphy opened the proceedings by saying that the court’s provisional view was that there was no need for the amendment because there was an even better remedy. Its view was, he said, that bargaining council agreements and extensions are "administrative action", which must comply with the Promotion of Administrative Justice Act (which gives effect to section 33 of the Constitution). They must, therefore, be fair and reasonable, and not discriminate against nonparties.

The implications of a judgment to that effect would be so astounding that the FMF, and the people of SA, would get far more than was asked. It would mean that bargaining councils would have to promote general interests, as opposed to narrow selfish interests, and that agreements and extensions would be fully reviewable.

The judge’s comments suggest that the court has a simple choice: either "must" should be "may", or bargaining council agreements are administrative action. Either way, as advocate Martin Brassey SC put it, the FMF would be "snatching victory from the jaws of victory" and would "celebrate with French Champagne".

When bewildered lawyers opposing reform realised what was happening, they tried to get the court to backtrack by arguing that it should not allow full review. They argued that the narrow provisions of the LRA should override the general provisions of the Constitution.

The practical implications of one-size-fits-all law can be understood by considering the kind of agreement that might suit a large, urban conglomerate as opposed to a small, rural enterprise. The former might provide housing loans, clinics, pension schemes, medical care and training, which would be prohibitive for the latter.

No one knows how many people are unemployed and how many businesses leave or never enter a sector because of the mindless extension of selfish labour agreements. Opposition counsel argued that the right to seek exemptions protects victims of bargaining council agreements, which is obvious nonsense because it callously disregards destitute people in shanties and would-be entrepreneurs who either leave or never enter regulated sectors.

This case seems set to herald a new optimistic era in labour relations.

• Louw is executive director of the Free Market Foundation

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