VZCZCXRO8527
RR RUEHBZ RUEHDU RUEHMR RUEHRN
DE RUEHJO #0158/01 1491053
ZNR UUUUU ZZH
R 291053Z MAY 07
FM AMCONSUL JOHANNESBURG
TO RUEHC/SECSTATE WASHDC 5784
INFO RUCNSAD/SADC COLLECTIVE
RUEHC/DEPT OF LABOR WASHINGTON DC
RUEHJO/AMCONSUL JOHANNESBURG 2502

UNCLAS SECTION 01 OF 02 JOHANNESBURG 000158 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ELAB ECON SF
SUBJECT: SOUTH AFRICA: LABOR MINISTER MDLADLANA'S BUDGET SPEECH 
 
 
JOHANNESBU 00000158  001.2 OF 002 
 
 
Summary 
------------ 
 
¶1.  Job creation was the centerpiece of Labor Minister 
Membathisi Mdladlana's May 15 address to Parliament on May 15, 
in which he noted that all social partners had participated in 
discussions and had emerged with a common understanding, 
including the need to improve implementation of the legislative 
framework.   Mdladlana praised the improved speed of work of the 
Commission on Conciliation, Mediation and Arbitration (CCMA) but 
noted that "lawyers were milking the labor market regime to 
death," requiring a reexamination of the function of legal 
representation within the CCMA.   Mdladlana provided a variety 
of statistics on training conducted under the auspices of the 
Department of Labor and the Sectoral Education and Training 
Authorities (SETAs).  He also introduced a "sectoral 
determination" for the hospitality workers, which entitles them 
to a minimum wage of R 1680 (USD 240) per month.  End Summary. 
 
Praise for the CCMA 
------------------------- 
 
¶2.  Minister Mdladlana praised the Commission on Conciliation 
Mediation and Arbitration (CCMA), currently under the leadership 
of Nerrine Kahn.   He noted that the CCMA received about 120,000 
referrals a year and managed to resolve its cases in an average 
of 66 days per case, with 26 days the average for cases 
conciliated and 48 days the average for cases arbitrated.  The 
CCMA managed to settle approximately 70 percent of cases 
referred to it.  The minister noted that the number of workdays 
lost annually due to industrial action had decreased by 68 
percent since the CCMA's creation.  He also noted that the CCMA 
required additional resources to quickly deal with the 
increasing demands made on it.    However, Minister Mdladlana 
also noted that a study on the overall efficiency and efficacy 
of dispute resolution provided "objective data" that lawyers 
were "milking our labor market regime to death" by unnecessarily 
complicating and prolonging cases.   The minister proposed to 
examine the role and functions of legal representation within 
the dispute resolution process. 
 
Improved Services at SADOL, Unemployment Fund 
--------------------------------------------- ------------------ 
 
¶3.   Minister Mdladlana noted that the Department of Labor had 
decentralized a large number of critical functions to provincial 
offices and labor centers.   He noted that unemployed workers 
could file and have their unemployment claims processed in the 
same office, and that many functions could now be performed 
without approval from Pretoria.   The Unemployment Insurance 
Fund (UIF) had also undergone structural changes and had 
undergone and improved benefit administration system that 
allowed it to process 96 percent of claims filed since April 
¶2006.   Benefits were paid electronically into the bank accounts 
of employees.  The U-Filing system introduced in 2006 also 
permitted employers to submit declarations and payments via the 
internet.  Mdladlana noted that the UIF currently had a surplus 
of R19.8 billion (USD 2.8 billion), which was invested via the 
Public Investment Corporation.   He also noted that the 
Compensation Fund (which pays out disability and other payments) 
continued to experience problems but had reduced its backlog of 
claims and had increased the settlement of claims from 48 to 58 
percent. 
 
Concerns about Collective Bargaining 
--------------------------------------------- 
 
¶4.  The Labor minister voiced his concern about the 
representivity of bargaining councils. He said that the 
increasing casualisation of workers (i.e. temporary workers 
hired outside formal employment structures) reduced the capacity 
of the labor movement to organize workers and limited the extent 
to which collective bargaining could be extended to non-parties. 
 Mdladlana said that less organized sectors tended to be more 
prone to strikes, which "easily became uncontrollable and 
violent."   He also said that investors were less willing to 
invest in countries in which the "rules of the game" where not 
agreed upon by the players.  He described the weakening of the 
bargaining councils as a "worrying and negative development." 
 
Job Creation 
--------------- 
 
¶5.  Job creation was the centerpiece of the minister's speech, 
though he proposed few remedies to South Africa's 25.5 percent 
unemployment rate.  He noted that all social partners had been 
brought to agree on the broader context of the legislative 
framework including the "redistributive role" of government 
policies; and that the issues of job creation and small business 
development had to be viewed within a broader macro-economic, 
social and trade policy context rather than just limited to 
labor market policies.   He noted that weaknesses in the 
 
JOHANNESBU 00000158  002.2 OF 002 
 
 
implementation and operational side of the legislative framework 
impacted on labor market systems.  Mdladlana added that the 
International Labor Organization (ILO) had been asked to review 
South Africa's labor market.    Employers will be required to 
register all placement opportunities and job vacancies with the 
Labor Department. 
 
Training and Employment Related Education 
--------------------------------------------- ---------- 
 
¶6.  (Note: Sectoral Training and Education Authorities (SETAs), 
which provide job-related training, fall under the purview of 
the Minister of Labor.  Employers are required to contribute one 
percent of payroll towards these funds but can reclaim 
expenditures from their SETA for job-related training.  End 
Note.)   Minister Mdladlana said that all SETAs had aligned 
their interventions with the National Scare Skills list, which 
identified approximately 250 job skills in short supply in South 
Africa.   The minister noted that he was developing an 
employment services system to link the unemployed to vacancies 
and training and highlighted a variety of training undertaken 
during the past year.   The Department of Labor will spend an 
addition R300 million (USD 43 million) over the next 18 months 
to provide 60,000 unemployed adults with basic education and 
training programs. 
 
Minimum Wage for Hospitality Workers 
--------------------------------------------- ----- 
 
¶7.  The Minister also announced a minimum wage for workers in 
the hospitality industries - i.e.,  waiters, waitresses, 
receptionists, bartenders, etc.   Their monthly minimum wage 
will be R1,680 (or roughly $ 240) and they will be entitled to 
overtime and annual leave.   The "sectoral determination" will 
remain in effect until 2010, with workers covered under this 
measure receiving annual wage increases of two percent over 
inflation. 
 
Comment 
------------ 
 
¶8.  The CCMA has turned itself around under Nerrine Kahn 
leadership to provide faster and more user-friendly mediation 
and related services.   Much of the business criticism of the 
CCMA has muted in the past year.   The Minister's speech, apart 
from the welcome minimum wage determination for hospitality 
workers, did not break much new ground. His assertion that all 
social partners accepted the macro-economic framework may have 
been over optimistic.   End Comment. 
COFFMAN