Relaxation of Labour Laws on SMME's?: A moral reflection from the point of view of the "Save Jobs Coalition" and "Save Rex Trueform Campaign"

Address to the Annual General Meeting of the Western Cape Branch of the South African Society for Labour Law

Introduction

I thank members of the South African Society for Labour Law, Western Cape Chapter, who have shown confidence in my ability to address you on the topic "Relaxation of Labour Laws on SMEE's." From the outset I wish to point out that I am neither an expert in labour law nor am I qualified to speak with authority in the field of economics and/or SMME's. I trust, however, that where recently the SACC as a faith based organisation has grappled with the issue of job losses and has supported organised labour in its struggles for the dignity of the working classes as well as in attempts at poverty eradication, that my reflection on the question from a moral point of view bears fruit on this discussion.

Following an NEC meeting of the SACC in February this year, the General Secretary, Molefe Tsele, wrote to COSATU Secretary General, Mzwelinzima Vavi, to request the latter consider the formation of a Coalition to Save Jobs. This decision came in the wake of reports that over the past ten years South Africa has been haemorrhaging jobs in the clothing and textile industry at some 16 547 in 2004 and some 75 000 between 1996 and 2004. Furthermore, this action proposed within the context of the Global Week of Action for Trade Justice, highlighting the global focus on trade regulations and laws by the World Trade Organisation that prejudice the richer and wealthier nations over poorer and indebted nations, such as those in Sub-Saharan Africa. I raise this at the outset because I believe that questions such as the one we are addressing have been and are posed by the very trade organisations (such as IMF and WTO) to create a global race to the bottom by capital for the creation of the cheapest products and cheapest labour. Our question then is not so much a concern because the President has promised a review of labour laws that may restrict small business as much as it can be identified as a product unfair international trade regulations and, subsequently, an ongoing lobby by business on government to promote profit friendly regulations in industry at all costs. Job losses and cannot be exclusively reduced to the nature of South Africa's a labour laws.

The SACC has thrown its weight behind the Coalition because it recognises the multiplier effect of hardship that a single job loss causes - in the case of the clothing and textile industry and Rex Trueform, it is members of the family, other dependents and the community (e.g. shopkeeper, etc.) - an estimated five persons - who take a direct knock from the loss of a single job. The loss of a job, then adds to the moral burden of stress and hopelessness that is evident in drug taking, alcoholism and further dysfunctional families and communities. A typical example of such dysfunction is Atlantis where, the once - intended apartheid industrial hub has degenerated into a ghost town because the refocused industrial organisation of the Western Cape in the post apartheid era.

In each of these, examples, business is thriving - elsewhere the ragtrade comprising, inter alia, Edcon, Mr. Prices etc, have shown a profit of R 8,3 billion over the past two years while the same sector shows a downward trend in sustaining the livelihood of its workers. In similar vein, the motor trade and other industries that operated in Atlantis, are flourishing elsewhere as in SA. The issue here is twofold. Firstly, the retailer purchase of cheap overseas stock (e.g. from China and India) at the expense of local production allows for huge sector profits but the subsequent loss of South African productivity. The loss of jobs in Atlantis, with people trained for a current non-existent regional commodity, gives focus to the mobility of capital in search of profit while at the same time able to discard human and social capital as utilities.

Now the relationship between the law and morality is a vexing issue and I well remember Archbishop Emeritus, Desmond Tutu, admonishing that politics is too important a matter to be left to politicians. I wish to add that in a democracy issues of the law and economics are far to important in the life of our nation to be left to lawyers and economists respectively. Since our reflection tonight is essentially on law and the economy I shall address it in terms acceptable to those who deal with law, economy and moral logic. I shall address the question from the angle of values and principles extracted from our Constitution on which we ought to be able to agree. And, in order to do that I draw on Bob Goudzwaard and Harry de Lange's Beyond poverty and affluence: toward an economy of care, which calls on the world to consider the renewal of economy particularly in addressing poverty, the environment and labour crises. I have already asserted that the crisis at Rex Trueform, the haemorrhaging of jobs in SA, the accusation of labour rigidity, and the question of relaxation of labour laws for SMME's in SA are generated at the heart of international trade interests such as those of the WTO and IMF. That is not the only problem. Our question must also be dealt with as a problem of international concern within the context of South Africa's decade long journey into democracy and integration into the global economy.

There is not sufficient scope to deal with such a broad study that must be left for another time. I will, however, posit five principles or commandments for an economy of care and compassion that citizens and labour law practitioners in a civilised 21st century might wish to realise. I will also speak generally of the fruits of such an economy as well as principles that might be able to hold these together. And then, I will leave you, skilled in law and legal formulation to agree and/or disagree on how to the relation of labour law to the ideal might or might not come to fruition. It is unfortunate that the tradition from which I hail, the Christian tradition, is too often equated with a saying by its founder "to those who have more will be given and to those who do not show growth, the little they have will be taken away." But there is another parable. It is about a gardener who witnesses a fruit tree failing to bear fruit. I argue that the international "economic growth" model is like this tree. The gardeners consult. One says: "let's chop it down and plant another." The wise gardener says "Let's not be too hasty here. Let us dig around the roots, let us examine what is wrong, let us apply compost and give it another chance. Let us come back in a year's time and examine it. If by then it bears fruit, well and good. If by then it doesn't let's start over..." In the same way I propose to put some compost on the issue and let's together see how we can find a lasting and amicable solution to a problem that faces us as South Africans.

Principle 1 - Market economy is in need of renewal/transformation

At the heart of the trade system of the world is an issue that law and morality equally love and hate: injustice. The injustice of the neo-liberal market is the privatisation of things public and the commercialisation of things private. Transfer of payments lie almost exclusively in the hands of affluent countries. Not only is their currencies given special consideration by the IMF but their SDR's (Special Drawing Rights) contribute to the growth of international monetary supply. They have used their rights to promote their own interests and they have not managed the world market economy responsibly. One of the results of this mismanagement is the availability of money supplies to the affluent nations directly buying and selling goods and services. Unbridled capital fuels the ever-growing advantage of the richer nations over the poorer and developing nations. The Jubilee 2000 Campaign is in need of refuelling. The two-thirds world has paid its debts to the richer nations and continues to do so on the back of ever increasing service charges to the World Bank and IMF. Our first principle in calling for market renewal/transformation is a call to re-evaluate the debt owed by richer nations to poorer nations (currently European nation are putting that at 0.7% of their GDP). Not only would this bring relief to indebted nations such as SSA but also teach wealthier nations to restrain their discharge of capital and bring a sense of balance to the market.

Principle 2: Re-evaluating wage and salaried increases.

The Small Business Project published a study of the impact of regulation on small enterprise on the website in November 2004. It concluded that labour laws and tax impose excessive costs on the entrepreneur and its product. In fact it estimates that such costs run into R78 billion per annum. A part of the problem of this study is that it appears not understand SA labour law. Indeed the document lists the "Industrial Relations Act" as a major stumbling block to small enterprises, and doesn't mention the Labour Relations Act at all. It depends on an estimation of time used by employers to comply with labour laws without checking the accuracy of such a survey. This is like asking someone to estimate how long one's business spends in bank queues, exaggerating the estimate and then failing to verify such outcome. Treasury, on the other hand, also appears to have a model that says that by cutting wages annually, SA would have stronger growth and development. What I am hinting at here is that unless civil society (and I am here referring to business, religious, faith, labour and legal etc.) need to show a genuine desire for an alternative, fruit bearing economy if government is to be able to put on the table in World forums the desired principles and regulations for a renewed economic system. If South African society wants to see an economy that cares for the poor, protects vulnerable labour groups and cares for the environment - by using income and consumption models to reach these ends - then government has little room in which to move. On the other hand, and this is a broad form of moral idealism - if labour and business were able to work together to set up special funds from profit and wages and then directed such investment in human and social capital, there would be endless possibilities for a renewed society. Here I mean that labour and business can use this opportunity to explore the available real needs and means that communities have available to address the market other than through the dictates of the global system. Surplus funds by unions could be used to create and expand jobs in the field of a fruit bearing economy. Having said that, business manifestoes of corporate responsibility also needs to be more than a chocolate cream public relations exercise dressing up the pudding of its social image.

Principle 3: Just business and labour - tools of sustainable livelihoods.

I grant that there are limits that restrict retailers and businesses opening themselves to notions of social responsibility. Such ventures are only undertaken if they are not broader than the scope of the product market, as inexpensively as is possible and are often hampered by the lack of flexibility available to the industry. Competition is stiff, and there is little for risky ventures even if commitments have been made within society to slacken pressure for wage and salary increases. This is a problem of social pressure and order. Not only does society resist the promotion of such initiatives but it is not geared toward rewarding them. In fact, the norm tends even to punish the cost of such initiatives. How can this be positively promoted? The formation of public benefit companies is a possibility - business organisations that acknowledge the right of South African citizens to health, welfare, food, housing, etc. are also our responsibilities. Labour law could presumably focus on legal structures that govern the foundation of such new and or conglomerate social initiatives and entrepreneurships.

Principle 4: The promotion of financing comprehensive social security.

One of the major ways in which poverty eradication is possible, says the SACC, COSATU and SANGOCO, is through prioritised government fiscal expenditure. Noting that the poverty ratio is approximately 40% of the SA population (depending on the nature of source) the Taylor Committee of Inquiry into Comprehensive Social Security concluded that the most effective manner of reaching those in need would be through a universal income grant for those who live in dire income poverty, this ensuring them a guaranteed source of income removing them from the cycle of cashlessness and poverty. At present we also note that in SA the major means of survival of those who live in income poverty is dependence on those who have access to some form of income. So, the working poor are very often the major means of income to the most vulnerable (women, rural, etc.). We would argue, at this precarious stage of South Africa's labour insecurity, that rather than focussing on relaxation of labour laws (cheaper labour, more sweat conditions?), that labour, business and SA society work together on finding funds that can push government to a model of economy that says, "civil society cares and wants an economy of compassion" - rather than rely on the current macro-economic model that limps on after a decade of democracy saying - "grow the economy and we will distribute the dividends to the poor." Let us invest in an economy that says we will ensure the right od an income to all in South Africa rather than an economy that sucks up even the wealth of the poor and poor communities for the ideal of profit.

Principle 5: Let us encourage ongoing public debate on income levels and serious study on the impact of labour laws

The most discomforting issues in a new South Africa are not, for me, about wealth and poverty. I am most disturbed at the level of inequality that exists between the rich and poor, apparently exacerbated by historical positions of privilege, wealth and power. The labour laws that have been promulgated are here in order to redress these past imbalances and I do not envisage that the intended consequences have been achieved - nor do I believe they will for some time. The unintended consequences of the integration into the global economy - described by Archbishop Ndungane as a form of global apartheid - now needs to be evaluated for its consequences on the South African economy. For this to happen, time will be required so that, amongst other issues, the public scrutiny of various levels of income can be dealt with. I suggest that on such occasions we discuss what are acceptable public standards for maximum levels of earnings for a given job or occupation. The idea is to tackle in our own country any form of self-aggrandizement of the elite that may be occurring here. Then, if we are able to set limits to private earnings, we would have introduced some means by which to extricate ourselves from the acquisitive society that a global economy requires us to become. By doing this, South African civil society will have gone a long way in submitting that today's faith in unimpeded capital and economic growth has roots in our organisational, faith, civic and national cultures. By this I imply that the assumptions we make in the questions we ask, are that economic growth may be equated with well being for all and with signs of progress. In fairness, though, I think that the reason you have asked me to address you from a moral perspective, is that there are some doubts in your minds about such unqualified assumptions. If this is so, we agree that reasonable doubt exists in placing our faith in an economic growth model that may have drastic consequences for the norms and values of our societies, our nation, our Continent and world. The story of the Save Jobs Coalition and the Rex Trueform Campaign compels us to align ourselves with those who have another vision of the economy. It is warning us of the extent to which we are drawing ever nearer to the disaster and precipice that global economy holds for us. Now more than ever, we must speak without fear about our situations, our concerns, and we must be open to consult with one another, even if that means subjecting our own philosophies and patterns of life to the scrutiny of one another. And, for venturing into this daring terrain, I thank and salute the organisers of the Western Cape Chapter of the South African Society of Labour Law.

Rev. Keith Vermeulen
Director of the Parliamentary Office