FMF media release - Labour law challenge

“Just let me work” – the voice of the unemployed

Media Announcement

FMF challenges restrictive labour laws in Constitutional Court

Johannesburg 5 March 2013. Release: immediate

Today, the Free Market Foundation (FMF) filed a constitutional challenge to South Africa’s Labour Relations Act 1995 in the Gauteng North High Court against respondents: the Minister of Labour; the Minister of Justice and Constitutional Development and Bargaining Councils listed below (1). The basis of the challenge is the constitutionality, negative effects and unintended consequences of the legislation which permits the extension of bargaining council agreements to non-parties. Our challenge is not against the bargaining council system. It is against the system of extension of agreements concluded by private players, to non-parties (LRA S32), which is a function that constitutionally rests with the State.

FMF principle concerns are:

1.                  That private parties set wages and conditions of employment and these are being extended to competitors and other groups that are not in the bargaining process at all. Under the LRA, these private parties can, under certain circumstances, compel the Minister to publish and extend these agreements to parties who were not in any way involved in these agreements. 

2.                   It is in the interest of these private parties, who negotiate the terms, to extent their agreement to non-parties as it eliminates competition.

3.                   Comprehensive economic research indicates that this has a severe impact, not only on current and future jobs, but also entrepreneurs who are then discouraged from starting up enterprises within these sectors. 

Professor Neil Rankin said. “There is a clear causal relationship, supported by rigorous empirical analysis, between bargaining councils and lower levels of employment in sectors and regions where these councils operate. The largest negative impact of bargaining councils is on employment in smaller firms and entrepreneurs: employment and entrepreneurship is lower where bargaining councils operate.”

FMF Chairman Herman Mashaba explained his passionate commitment to the future of South Africa and the rights of poor people to find dignity and purpose through work and earning an income rather than being compelled to poverty and humiliation which long term unemployment means. “This labour law about giving people the freedom to decide for themselves what kind jobs they want to do, what amount of pay they are prepared to work for, and what conditions they are prepared to work under. It is about their freedom to make their own decisions about their own lives. It is the sole right of unemployed people to decide what jobs they consider to be better than no job at decide what job is a “decent” job. No one has the right to take away that decision-making power from desperate people. It is evil to do so”.

He continued. “In 1980 I rebelled against the apartheid system with all its laws that denied us the freedom to make our own decisions about our own lives; a system that stopped people from achieving their true potential. Now, 33 years later, I find myself again fighting for freedom, this time for millions of unemployed people in our country. In our democratic South Africa again I have to object to laws that I find unjust. Today we use our constitutional and human rights to correct the wrongs in our country and it is a free market organisation with a Chairman who is a declared capitalist that is fighting for the rights of our poorest and most vulnerable people.”

The FMF believe that in the absence of the strict labour laws, many of the 7 million unemployed who want to work can find a job and young people who need to get a foot on that first rung of the ladder can start to climb.

Also the other side of the problem is the environment that households and small businesses, in particular black business, have to operate in.  The environment is complicated and the requirements expensive to implement thus discouraging entrepreneurs and consequently employment.    Consequently people stop employing labour, start buying machines, or simply just import. South Africa fails dismally in business and job creation and  some labour laws play a significant role in that failure. Entrepreneurship and new jobs are both casualties.       

Some businesses find the collective bargaining process works in their favour by reducing time and effort spent in individual negotiations. This challenge does NOT seek to remove this right: any business can chose to adopt the outcomes of an agreement. However those who chose not to be party to this would be free to find a solution which works best for their circumstances without being compelled by the law.

Mashaba said that the labour unions should be in favour of any measures that increase the number of working people because it gives them the opportunity to sign up more members.    He concluded by saying a court challenge had not been an easy decisionbut it is very necessary for the future of our beautiful country.

Notes to Editors

1.                   The third to fiftieth respondents are bargaining councils registered as such under s 29 of the LRA

2.                   Legal Counsel: Jonathan Goldberg;  Kirchmanns Inc

3.                   Expert opinion: Prof. Neil Rankin; Department of Economics; Stellenbosch University


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