Labour

Briefing on the Programme of Work of the

Employment Conditions Commission

22 November 2011

Labour

Structure of the Presentation

– The Role and Functions of the ECC

– Introduction & Background of SD 13

– Issues raised on Implementation of the SD

– Relevant research findings• Impact of the Sectoral Determination on wages,

poverty and employment levels in the farming sector

– Current processes

Labour

Mandate informed by:

• Minister’s plan of Action• Matters set out in the Basic Conditions of

Employment Act: Chapter 9:1. Alleviation of poverty2. Cost of living3. Effect on employment4. ability to carry out the business

• Secretarial support provided by Employment Standards

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Role and function of the ECC

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The Role and function of the ECC• Department of labour‘s mandate is:

Protection of vulnerable workers. How?

• The Basic Conditions of Employment Act (BCEA) of 1997 (amended 2002) provides for the promulgation of sectoral determinations which establish minimum wages for workers in specific sectors of the economy.

• The BCEA s59( 1) makes provision for the creation of the Employment Conditions Commission (ECC).

Aim of the ECC• To protect vulnerable workers in SA labour force in sectors in which they are likely to

be exploited, or where worker organizations and trade unions are absent, or other wage regulating mechanisms.

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Members of the ECC

• Members of the ECC are appointed by the Minister after consultation with NEDLAC

• Chairperson:Prof I. Woolard• Members: Prof I. Valodia & Prof A. Van Der Walt• Organised Business:Mr. K. Moyane• Alternate Member (Business): Ms A. Ranchod• Organised labour:Mr B.Ntshalintshali• Alternate Member (Labour): Ms J. Barrett

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Functions of the ECC

• The ECC’s mandate is to advise the Minister on various matters such as:– The making of sectoral determinations in order to protect

vulnerable workers in SA in sectors in which they are likely to be exploited

– Matters concerning the BCEA– Wage differentials– Child labour: regulations on hazardous work

• Eleven Sectoral Determinations have been established namely: – Forestry, Agriculture, Contract Cleaning, Children in the Performing

Arts (under 15 years of age), Taxi Operators, Civil Engineering, Learnerships, Private Security, Domestic Workers, Wholesale and Retail and Hospitality

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SD 13 – Agricultural sector

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Background of SD:13 – Farm worker sector• The Sectoral Determination was published on 2

December 2002 and came into effect on 16 December 2002.

• The SD was reviewed in Feb 2006 and Feb 2009 and will be reviewed again in 2012

• The Farm Worker sectoral determination applies to all agricultural sector workers, excluding workers in the forestry sector (The definition includes a domestic worker & security guards working for a farm as well).

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Current wage levels in the sector

• The current wage levels in the sector until 2012 are – R7.04 per hour– R317.51 per week– R1375.94 per month

• South Africa’s QLF data showed that the agricultural sector has shed 24 000 jobs on agriculture.

• In the 1st quarter of 2010 the sector employed only 603 000 compared to 627 000 people in the previous quarter resulting in a decline of 3.8%.

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ECC’s approach in respect of agricultural investigation

• Set a floor of rights cognizant of the needs of the sector

• Address concerns of both farmers and farm workers

• Be mindful of and facilitate the transformation and restructuring in the agricultural sector.

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Issues Raised on Implementation of the SD

Exemption of small business- addressedYoung workers (15 -18 years) -addressed; Definition of task and piece work- addressed 27 hour provision-phased out in 2005. Demarcation- phased out in 2008; Medical certificates- addressed in GG. 30660 of 10 January

2008;

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Impact of sectoral determination

• A study was conducted to provide an analysis of the impact of the current sectoral determinations on a range of labour market outcomes, including wage levels, employment, and poverty.

• In addition, to provide an analysis of compliance and enforcement levels within regulated sectors in the South African labour market.

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Impact on wage levels

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Impact of the SD on wage levels

Table 1: Change in real monthly wages by sectoral determination (covered workers only).

Sectoral Determination 2001 2007 Mean annual growth rate 2001-2007

Retail 3,312 3,517 1.0%

Domestic 662 971 6.6%

Farm workers 881 1,346 7.3%

Forestry 1,246 1,728 5.6%

Taxi 2,854 2,383 -3.0%

Security 2,613 2,276 -2.3%

Hospitality 2,203 2,742 3.7%

Contract cleaning 2,413 2,601 1.3%

Civil engineering 14,827 11,955 -3.5%

Total 1,871 2,117 2.1%

Source: http :// www.commerce.uct.ac.za/dpru

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Research Findings: Impact of the SD on wage levels

• The table above explored the changes in real wage between 2001 and 2007

• The table indicates that a rise in real wage was driven by the farm worker sector with 7.3% increase

• The significant rise may indicate that the minimum wage has had an effect on vulnerable workers such as farm workers

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Impact on Poverty

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Impact of the SD on poverty

Source: http :// www.commerce.uct.ac.za/dpru

Table 3: FGT poverty measures by sectoral determination

2001 2007

Sectoral determination p0 p1 p2 p0 p1 p2

Rand 322 (2000 prices)/day poverty line

Retail (at least one retail worker) 30.6% 15.0% 9.8% 22.9% 9.2% 5.2%

Domestic 70.8% 45.9% 34.2% 53.8% 30.0% 20.2%

Farm 77.1% 46.7% 33.4% 59.6% 30.4% 19.3%

Forestry 54.0% 31.4% 20.8% 34.9% 19.3% 12.5%

Taxi 40.1% 18.0% 10.3% 38.4% 18.2% 10.9%

Security 36.0% 17.6% 11.3% 32.6% 15.0% 9.0%

Hospitality 41.8% 21.1% 13.4% 32.8% 15.4% 9.0%

Contract cleaning 45.2% 20.4% 12.1% 39.9% 18.5% 11.1%

Civil engineering 1.6% 1.1% 0.8% 8.6% 6.6% 5.1%

Total (at least one covered in household)

54.4% 31.9% 22.7% 42.7% 22.1% 14.2%

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Research Findings: Impact of the SD on poverty

• There has been a significant decline in the level and depth of poverty between 2001 and 2007.

• In households with at least one worker covered by sectoral determination in South Africa, under the Rand 322 per day poverty line, the percentage of poor individuals declined significantly from 54.4 percent to 42.7 percent between 2001 and 2007, while the poverty gap declined significantly by 9.8 percentage points respectively.

• In South Africa as a whole, the decline in poverty using both definitions of the poverty line, was also statistically significant.

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Current issues under consideration

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Current Issues

• Provident Fund– The current sectoral determination does not make

provision for the provident fund or pension fund for the farm worker sector.

– The Department has commenced with the consultation process to determine the feasibility of having such a fund for farm workers established.

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Provident Fund

• Such a fund was already mooted as early as 2002 but has been impacted by the discussions on social security reform.

• Public hearings measured significant support for the establishment of some form of retirement benefit.

• The ECC is mindful of the social security reform and some pronouncement in the media on provident funds .

• The mechanics of such a fund (if established) will be developed in dialogue with social partners

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Going Forward

• Finalise the investigations into the possible establishment of provident funds and medical schemes in the sectors identified

• Investigate new sectoral determinations: Fishing and building sectors

• Consider the welfare sector as a possible sector for establishing a SD

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Going Forward

• Review on a regular basis existing determinations

• Research on the taxi sector in the context of a broader transport sector and the impact of transport transformation on the taxi sector.

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2012-2013 - WorkplanSERVICE DELIVERY OUTCOME: Decent employment through inclusive economic growth

STRATEGIC OBJECTIVE: KRA 3: Protecting vulnerable workers

KEY OUTPUT PROGRAMME PERFORMANCE INDICATOR

ANNUAL TARGET

Sectoral determinations published for residual and emerging vulnerable workers

Review existing sectoral determinations

Publish amended Sectoral Determinations for Hospitality ,Wholesale and Retail, Taxi,

Contract Cleaning, Private Security, Civil Engineering and Provident Fund for Farm and Domestic Workers

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Thank You!!!