Innes,+B+Day,+Singling+out+the+young+will+backfire

Business Day, 19 May 2005
=**Singling out the young will backfire**=

Duncan Innes, CEO of The Innes Labour Brief
THE recent African National Congress (ANC) proposals to deregulate sections of the labour market raise a number of important issues for debate with regard to a dual labour market for SA. It is important to place them in context.

First, this is not the first time the ANC has raised these issues. As far back as 1999, President Thabo Mbeki publicly expressed his concern at the “unintended consequences” labour laws were having on business growth and job creation. This set in motion a process of negotiation between government, organised labour and business that was intended to introduce more flexibility to the labour market. However, when confronted by organised labour’s strong opposition, government withdrew, leaving business and unions to reach accommodation themselves.

Second, although the ANC’s discussion paper calls for the creation of a dual labour market, it is important to recognise that we already have one. While the vast majority of employees are protected by and benefit from labour laws, the growing army falling outside the legal definition of “employee” has no such protection or benefits.

In making its proposal that young employees should have fewer legal rights than their older counterparts (making it easier for an employer to hire and fire them), the discussion paper is in effect proposing a further differentiation in the labour market.

This will lead to a three-tier labour market in SA: older employees who are fully protected by the labour laws; younger employees who have less protection; and “atypical” employees who already have virtually no protection. While I do believe that a strong case can be made for greater labour market flexibility, I am far from convinced that targeting young employees for less legal protection is the way to go.

In the first place, removing certain legal rights from young employees may be discriminatory and lay government and business wide open to constitutional and legal challenges. Second, for an employer to have to apply one set of labour laws to older employees and a lesser set to younger employees in the same workplace can only become a major source of disputes between the employer and the two sets of employees, which will hamper performance and productivity. Third, such a change would lead many employers to seek to replace older employees with younger ones, increasing the burden on unemployment and social security funds. When Finance Minister Trevor Manuel first raised the issue of freeing business from “overly burdensome labour market controls” in this year’s budget speech, he placed it in the context of removing “the barriers to small business development”. In my view, if the ANC is looking to introduce greater labour market flexibility, it makes more sense to focus on small-business employees rather than on younger employees across all businesses. This is because it is primarily small business that needs an easing of labour regulations if it is to grow and create jobs.

Although, as the Congress of South African Trade Unions (Cosatu) has suggested, targeting those employed by small employers may be unconstitutional, there is a precedent for this in various labour laws, such as the Employment Equity Act.

Furthermore, by providing fewer rights for employees of small businesses, the problem of employing people with two sets of rights within the same workplace is averted.

Whichever route government and the ANC eventually decide upon, one thing that is certain is that Cosatu will fight them every inch of the way. Given that, employers may want to check with government whether it has the stomach for a fight or whether it will bale out when the going gets tough, leaving employers to face the music. End


 * From: http://www.businessday.co.za/articles/opinion.aspx?ID=BD4A46434**