The March 2013 Quarterly Employment Statistics have been published and bring the infuriating news that that the number of people employed in the formal non-agricultural sector of the South African economy increased by about 7 000 (+0.1%) from December 2012 (an estimated 8 456 000 employees) to March 2013 (an estimated 8 463 000 employees). Year on year there has been minimal job creation. So what do our experts make of it all?

Expert Comment:

Christo Luus from EcoQuant:

The Quarterly Employment Survey data for the first quarter held no major surprises, with the mining sector accelerating the shedding of jobs which started in mid-2012 and manufacturing continuing the job-shedding which has now lasted for more than five years. The fact that overall non-agriculture formal employment was up 1% (7 000 people) on a year ago and 0.1% on the previous quarter, came about mostly as a result of employment growth by government and parastatals. The outlook for employment growth in the remainder of 2013 remains bleak.

Loane Sharp from Adcorp:

The numbers show the formal sector is in a very weak condition. If you strip out the government sector, which created 32 000 jobs in the quarter, employment overall was very flat or down. The big story is how weak the private sector is. After the 2009 recession, when we lost a million jobs, the formal sector was clawing back – but it seems this was a false dawn. We are now 600 000 jobs short of the peak reached in 2008.

Dawie Roodt from the Efficient Group:

The 1% rate of growth in new jobs in the past year is significantly lower than the rate of increase in remuneration of over 8%. And with productivity also increasing well below the increase in remuneration, fewer and fewer are being paid more and more. Inevitably unemployment will increase! It is also of particular concern that manufacturing reduced its labour uptake – as it’s the one sector that has the most potential for creating more jobs.

Craig Pheiffer from ABSA Investments:

The numbers showed nothing more than the same pedestrian y/y and q/q change and it’s unlikely we’ll make any headway with GDP struggling to keep its head above 2%. The only good news was that we didn’t lose jobs.

Conclusion:

We are not creating jobs at a fast enough pace. We cannot just blame government – as business and the unions must also be held to account. A generation of young people faces despair and poverty unless this challenge of job creation can be tacked effectively and speedily.

Tweet of the Day:

jonny geller (@jonnygeller): #jamesjoyce walks into a bar on #bloomsday in Dublin. "Why the long phrase?" says the barman.

There was a stench of sewage in the underground car park of the Jo’burg Hyatt Hotel this morning. I am sure it had nothing to do with the event being hosted upstairs – the financial results presentation for Telkom up to March 2013. Troubled Telkom brought out a depressing set of financial results. Headline earnings were down 73%, revenue is in decline – and the presentation followed the announcement early this week that the semi-parastatal telecommunications giant had impaired assets to the tune of R12bn. The presentation included an admission that things are going badly and a warning of further job cuts. Although this was very sobering, no booze was on offer after the event.

Expert Comment:

Mario Pretorius from Telemasters:

Telkom is the almost invisible 800kg gorilla in the room. It is massive, dominant, patient and actually very good at what it does – except everyone expects it to deliver results like a pure-profit company. It is hamstrung by political constraints; it cannot right-size, tame its unions or choose where to provide its services. Should it be able manoeuvre like an MTN, it would be in the 20% return on sales category and a monster of note. The effect of the lowered interconnect rates reflects in the almost tripling of profits to a measly 1.4% of sales. It’s time Telkom delists to fulfil a social mandate – or gets serious about competing as a listed entity. Its hybrid status detracts from its goals.

Malcolm MacDonald from Tersos:

Although I applaud the rollout of a national fibre network, it is still a long way off the reach and cost of broadband offerings available in Europe. 40Mb/s for around R700pm, PLUS the line rental, is expensive. Having said that, the process and efficiency of installations is much improved. It is high-time the pure internet offerings decoupled from the voice-line becomes a reality. Smaller households use cellular telephony and fixed Internet Data. My peers and I seldom use a Telkom phone-line anymore – we just use data. Obviously Telkom knows this – it is hurting their bottom line, but the strategy to counter this, somehow does not seem innovative enough. In general I have been happier with Telkom service lately, and Telkom Mobile is very well-priced. I cannot fault CEO Sipho Maseko’s approach – I hope they can speed things up, get prices in-line with European offerings and continue to take accountability as they have demonstrated this year.

Ron Klipin from SA Stockbrokers:

They are busy diagnosing the problems at Telkom. The jury is still out. What is positive is the cash flow generation. Leadership appears to be more knowledgeable and focused. Taking a wide perspective of the group there are still challenges from the regulator and general government interference remain a concern.

Tweets of the Day:

Lesley Stones (@Lesley_Stones): (John) Cleese explaining how he learnt to do an SA accent for Spud – keep a very tight sphincter at all times!

Tony P. (@Steelers1972): How to be a bouncer: 1) be an asshole. 2) stand near a door.

Today we look at mining, with this week’s publication of Ernst & Young’s report on “Business risks facing mining and metals 2013-2014”. At the media briefing on this I was struck that the issue of labour unrest did not appear to be a global trend, even though it is such a concern for ZA. So I asked Abbey Chikane, Africa Leader: Mining & Metals at Ernst & Young Advisory Services for his insight into the current risks facing miners here and around the world…..

Q: The big concern in ZA is the looming winter of discontent and industrial strife on the mines. But it’s not in the global top 10. Are we unique? Or is the labour unrest exaggerated?
A : Labour unrest and wage discussions influence the cost of doing business and the levels of productivity. South Africa’s exposure to labour unrest and wage increases differ slightly from its global counterparts due to the significance of the work forces. It is critical to manage these relationships, but at the same time, due to the squeeze in margins, it is important for all stake holders, including employees, to reconsider and reset their expectations.

Q: Your team said it takes at least 10 years to build a mine. And that confidence is needed to invest. So are we going to see any new mines in ZA?
A: New mines as well as expansion of existing mines are dependent on availability of capital, demand for the product as well as economic viability. For certain commodities such as thermal coal, manganese etc, the demand is still strong in South Africa, but export markets are perhaps softer. There haven’t been many new gold mines for quite some time, although there has been expansionary investment in maintaining the production of existing mines. As for platinum, there are currently quite a number of mines being built, and there are also quite a number of new applications, but these mines are planning to apply new mining methods that are more cost efficient.

Q: Capital allocation is the major global challenge, according to this new report. What does this mean and what is the situation in ZA?
A: South Africa, just like the rest of Africa, should focus on enhancing its attractiveness and competitiveness as an investment destination. This can be achieved through transparency, predictability and stability of policies and the economic environment, availability of reliable infrastructure (electricity, transport, logistics etc) and availability of skills to operate future mines.

Q: The third concern globally is resource nationalism – what does this mean, and does it include nationalization which has been a big issue in ZA?
A: Resource nationalism refers collectively to all forms of government participation. The three most prolific forms of resource nationalism are (1) increased taxes and royalties, (2) mandated beneficiation, (3) equity ownership. Resource nationalism is still very much a key item on the strategic agenda, but in light of the current more pressing issues such as capital allocation and maintaining operational productivity and profitability, resource nationalism has moved to number 3. In South Africa, further resource nationalism strategies will be dependent on Judge Dennis Davis’ findings and outcomes of government’s review of the tax system in South Africa.

Q: You appeared to suggest there is a problem with high wage expectations in a low skilled workforce. Is this correct and how does mechanization help the employer and threaten jobs?
A: The wage demands have to be considered in the context of cost management and maintaining productivity. Any increase in cost without a corresponding increase in productivity will lead to margin erosion and inflation. Over time, inflation significantly impacts the competitiveness of companies and economies.

Q: You also referred to the recent high turnover of CEOs in most of the majors…. Is this unusual, and is it a worry?
A: Several major mining companies as well as junior mining companies have appointed new CEOs. Investors are focusing on return on investment, and there have been large scale impairments across the globe and relatively weak share price performances. These pressures have contributed to the current capital dilemma.

Q: There was also talk of a great opportunity to diversify the mix of ZA commodities to produce more relevant metals and minerals for industry. Platinum and gold do not build bridges and factories…. Is this diversification practical?
A: The practicality of this should not be considered without considering the potential and the risk of relevance. Precious metals are an important part of our mining industry, but by focusing efforts to explore, find and produce other commodities, the mining industry will be less exposed to commodity-specific issues and will be able to operate in a more stable economic environment. This will also allow mining companies the flexibility to transition their focus between various commodities, depending on which commodities offer the greatest current return. In turn, this could offer to alleviate labour and employment pressures and provide workforce flexibility without compromising levels of employment.

Q: Is the volatility of the rand scaring off investment?
A: The volatility of the rand is creating challenges in terms of long term planning. Mining is a global industry, and weaknesses in currencies in which the commodities are produced usually only provide short term benefits. In the long term, weaker currencies create policy, inflation and competitiveness pressures.

Tweets of the Day:

Clark Kent (@kentgrossarth): Vegetarian: ‘You know, a cow died so you could have that burger’. Me: ‘Maybe he died because you keep eating all of his food’.

Roman Cabanac (@RomanCabanac): Ban Toddlers RT @BostonReview: So far this year, gun-toting toddlers have killed more Americans than have terrorists. opposingviews.com/i/society/guns…

Keith McLachlan (@keithmclachlan): "Wine is sunlight, held together by water." – Galileo

Retail sales increased in real terms by 1.9% year-on-year in April 2013. It doesn’t look a particularly encouraging number, but what did our experts make of it?

Expert views.

Azar Jammine from Econometrix:

Year-on-year growth in retail sales at constant prices was slightly disappointing in April, coming in at 1.9%, down from 3.9% in February and 2.7% in March. Month -on-month seasonally adjusted growth was negative for the second successive month, at -0.6%. On a quarterly basis, growth in the three-month period February to April was 0.6% higher than in the preceding three-month period November to January, indicating annualised growth of around 2.5%. Nonetheless, it is dangerous to draw unduly pessimistic conclusions about the slowdown in consumer spending from these figures. This is because, unlike other industries such as manufacturing, mining and electricity production, retail sales are often affected positively by public holidays nowadays. Consumers frequently tend to use public holidays to go shopping. Accordingly, to the extent that there were fewer public holidays in April this year than in April last year, this may have dampened performance. Without doubt, the erosion of disposable income arising from increased inflation on the back of a lower Rand, coupled with a slowdown in the growth of unsecured lending and the reduction in the growth of the public service, are combining to drive down the growth in consumer spending. On the other hand, the maintenance of interest rates at extremely low levels is providing some support, thereby preventing a complete collapse. The outlook for the retail sector depends crucially on the extent to which the Rand’s weakness is sustained in such a way that forces the Reserve Bank to increase interest rates as opposed to enabling interest rates to remain unchanged over the remainder of the year. We favour the latter scenario as being more likely.

Nedbank economic unit:

Annual growth in retail sales slowed to 1.9 % in April from 2.7 % in March and substantially below market expectations of 3.5 %. On a monthly basis, seasonally-adjusted retail sales declined by 0.6 %. The trend in retail sales has been weak and will probably remain so in the months ahead. A combination of the poor economic outlook, weak consumer confidence, high inflation, which erodes consumer’s spending power, and the struggling job market will continue to contain consumer spending during the year.

Hein Kruger from Kruger International:

With the Rand on a slippery long term slope, causing a spiralling consumer inflation on top of a too high debt to expendable income ratio, at a time when interest rates can only rise in future from their current 40 year low, South African consumers are on the precipice of a fundamental recession. The latest retail figures underline in bold my statement at the frightening rate of the slowdown which can be roughly indicated as 50% down from the 3rd quarter to the last quarter last year, and a third down to the first quarter of this year.

Chris Gilmour from Absa Investments:

Retail sales growth, as measured on a year/year basis, rose by 1.9% in April from a revised 2.7% in Mar. This is a shade more than half of what we were anticipating and is thus extremely poor. It endorses the view – if such endorsement were necessary – that consumer spending is slowing considerably, due to increased pressure on consumers generally. But that’s not all; sales growth has now declined in three of the last four months, suggesting that momentum in spending is gradually decreasing. This is especially worrying for an economy where consumer spending accounts for 59% of GDP. With manufacturing in the doldrums (notwithstanding yesterday’s 7% bounce), one wonders where any growth is coming from in the SA economy.

Conclusion:

With retail more rotten than rampant, today’s numbers do not do much to bring out a smile.

Tweet of the Day:

Alexander Parker (@thealexparker): As opposed to rising down, which is a relief RT @busrep: Naspers profit rises up

Nothing to celebrate in today’s data. The annual rate of decline in mining output slowed to 0.4 % in April, from 3.8 % in March. Meanwhile, manufacturing production rose by an unexpectedly large 7 % y-o-y in April, up a seasonally adjusted 8.4 % m-o-m, – after shrinking by a sharp 2.2 % in March. But when three-monthly data is considered, manufacturing is in decline, as our experts point out…….

Expert views:

Independent Economist and Analyst Ian Cruickshanks:

There was a strong 8.4% jump in the manufacturing data for March over February. However, a more accurate view of SA’s second-largest sector, contributing around 14% of national GDP, is shown in the fall of 1.9% in the 3 months to April over the preceding similar period. Manufacturing data has a relatively volatile short-term time series, but April’s release confirms expectations for a lower level of overall GDP growth in the SA economy in 2013, likely to fall to around 2% year-on-year, which is significantly below Treasury’s 2.7% target. It is clear there has not yet been a significant improvement in export volumes, despite the rand’s plunge this year.

Russell Lamberti from ETM:

The mining data only confirms that mining is a sclerotic sector that requires wholesale restructuring. The required restructuring has not yet begun, and until it does the mining industry will resemble a zombie more than a viable source of value. The job cuts required in mining are probably in the order of tens of thousands. Until this happens, shareholder value will keep being eroded. As for manufacturing, the jump in y/y production by 7.0% in April is a statistical anomaly due to Easter holidays, while the 8.4% seasonally adjusted jump m/m is due to an excessively weak March. Smoothing this out reveals the cold hard truth – manufacturing output is stagnant at best. The number to focus on is the change in real, seasonally adjusted quarter-on-quarter production, which fell 1.9%. The benefits some manufacturers may be feeling from a weaker rand will soon be discovered to be transitory when they realise it is creating an inflation firestorm that will drive up wage and imported capital costs. and strip their local customers of purchasing power – as prices rise for fuel and other key imported consumer goods. The industrial heart of South Africa is in big, big trouble.

Nedbank Economic Unit:

Despite April’s improvement in mining production, prospects for the mining sector remain poor. Poor global growth, generally weak commodity prices and difficult operating conditions in the local mining industry will continue to undermine the performance of mining production in the months ahead. In manufacturing, just like March’s unexpected fall, April’s surprising surge is partly due to seasonal factors, which have not been fully adjusted for, due to the fact that the Easter break fell mainly over the March this year, adding three more working days than last year to the month of April. The figure was also boosted by the return to production of a large steel foundry. The markets generally expected output to increase by a more subdued 1.2 % y-o-y. A more accurate indication of the underlying performance of the manufacturing sectors is captured by the quarterly figures, which shows that total output fell by 1.9 % over the three months to April compared with the previous three months. The manufacturing sector will continue to face subdued demand conditions. In the large export-orientated industries, output growth will be contained by recession in the Eurozone, a more measured Chinese economy and weaker international commodity prices. At the same time, costs pressures will remain elevated, with high electricity costs, rising unit labour costs and expensive transport and logistics. However, a weaker rand, if sustained, should help compensate for some loss of price competitiveness and shore up profitability. In the inwardly-focused industries, demand conditions will also be broadly softer. Slower growth in household spending and private sector capital outlays will probably contain the benefits of any acceleration in public sector infrastructure spending. Finally, there is the risk of renewed disruptions to power supply given winter maintenance at many power stations across the country. Consequently, another year of modest production growth is anticipated in 2013. Today’s mining and manufacturing production figures suggest that production and exports remained under pressure into the second quarter, making any significant improvement in the current account deficit unlikely and leaving the rand still very vulnerable. Given the mounting upside risks to inflation and persistent downside risks to domestic growth prospects, the MPC is still expected to keep interest rates unchanged until around the second half of 2014.

Coenraad Bezuidenhout, Executive Director, Manufacturing Circle:

April manufacturing production and sales figures released by Stats SA today shows the Manufacturing Circle was correct in its prediction that once past the first quarter growth shock (GDP growth stats showing a 0.9% year-on-year growth, with 1.2% decline in manufacturing’s contribution), the manufacturing sector would prove its resilience. While seasonally adjusted figures for the latest three month period still registered negative growth, we believe this will improve as we move further away from the first quarter, which saw a number of period-specific negative influences, amongst other, due to upstream industrial action and the shutting down of a steel mill and a liquid fuel gas plant. While volumes in lagging sectors (include electrical equipment, food products, furniture, textiles, transport equipment and wood products) still show strain due to lacking demand from export markets and weakening consumer demand, margin squeeze is being ameliorated by the weaker rand, allowing these manufactures to live to employ another day. Employment in the sector is expected to remain relatively stable in the foreseeable future. However, should the costs of ongoing industrial peace and utility services continue to escalate, the comparatively low cost of capital could increase the lure of mechanisation for some employers.

Conclusion:

We have very low interest rates and a weak currency, but still neither mining nor manufacturing is flying. Let’s see what tomorrow’s retail sales numbers tell us.

Tweets of the Day:

Michael Jordaan (@MichaelJordaan): Blind tasting some wines tonight. Not ’cause I really want to. It’s just what happens without electricity.

Barry Hilton (@barry_hilton): New legal ages: a 16yr old can drive to his 12yr old girlfriends house and have sex but they can’t have a drink and a smoke afterwards (?)

One of the trickiest relationships in the country is that between organised business and government – although arguably an equally tricky set of relationships exists among the different players in organised business. Few can argue with the sentiment expressed by Black Management Forum President Bonang Mohale, as reported in Business Day, with his call for a single unified body to represent ZA business. We asked a few experts for their views……

Expert views:

Cas Coovadia, Managing Director of The Banking Association South Africa:

I agree we should strive towards a single confederal business group that is not based on race, but instead is a robust representative of business interests in the macro economy. This should be the mandated voice of business and should represent business in engagements with critical stakeholders, particularly government. This need not preclude business organisations with specific programmatic roles, like the National Business Initiative. The organised business environment should also enable sectoral organisations like The Banking Association, which should be members of a single confederal business structure.

Alec Erwin, former Trade and Industry Minister:

This has been a perennial challenge for organized business. When they formed BUSA we (government) stressed that they must not lose sight of the imperative to meet the needs and aspirations that are specific to black business. On the other hand, black business must not isolate itself on the margins of major business undertakings. So far they have not managed to have unity, to keep up the energy levels needed to assist black business in particular. One reason for this is that the Chamber of Commerce movement is just not strong enough, as it should play a key role in supporting black business. It is not an insurmountable challenge – it just needs constant attention and energy.

James Lennox, former CEO of SACOB (now SACCI):

Not really my place to comment, although having been involved in the process that resulted in the formation of BUSA it is a given that the formal involvement of the Black Management Forum and its membership in BUSA would increase the effectiveness of both organisations to the benefit of business, the economy and society in general. Managing a diverse membership base in a rapidly changing environment, both locally and globally, does require any organisation to continually adapt and evolve their structures. This is particularly the case with a business representative organisation, given the pace of change facing all levels of business. Mr Mohale’s comments should be welcomed, and the sooner they result in formal discussions that achieve a positive outcome the better it will be for business and the country.

Conclusion:

If it were easy, it would have happened already. However, different race and language groups have specific territory which they do not want to surrender, and hence the current disorganisation of organised business. Without real will from the business side and real pressure from government not much progress is likely. Which is as shame, because now more than ever the business world needs a clear, loud and forceful voice.

Tweet of the Day:

Barney Stinson (@stinsonsays): I hate it when I’m doing push-ups and I lose count after 1000.

Wine producers in France and Italy may be targeted in a new trade war between the EU and China. So would fewer EU imports open up the potentially massive Chinese wine market for exports from our own South African producers? We asked a few experts.

Expert views:

Jeremy Sampson from Interbrand Sampson:

It is early days in the dispute. But the implications for stopping all exports of French and Italian wines to China would be significant and create huge opportunities for other suppliers – of which South Africa is but one. Of late, the Chinese have been investing heavily in both French and Australian wine suppliers/ estates. To me it is surprising that to date there is no news of the Chinese acquiring any South African estates. That could change, especially as the currency weakens. Those who argue for a weaker currency don’t seem to understand that one of the side-effects is that South African assets become cheaper for overseas buyers to acquire.

Francois Dubbelman from FC Dubbelman & Associates :

If EU wine is targeted, the EU might look at other countries to export to – and this could harm SA wine industry. Same with China – they need to offload their solar panels somewhere – sunny SA might be a good place. Again SA industry, which is small by world standards, might be put under pressure. China is already in the SA market with solar panels. Action against EU wine producers might open demand for SA exports to China – one needs to assess the import duties and non-tariff barriers – and our capacity…

Duane Newman from Cova Advisory:

While the EU and China trade dispute seemed to start with the anti-dumping duties imposed on solar panels, it is fascinating that China chose wine to target. I would expect this was a strategic move by the Chinese as this is a very crucial industry to the EU/French, just like the solar panel industry has become to the Chinese. I believe the Chinese are trying to make a point: "hit you where it hurts". There is clearly an opportunity for SA wine exporters to China. Whether we can take advantage of this trade dispute is debatable as it takes a while to build a market for a country’s wine. The French have a well-established wine brand in China as 20% of their production goes to China. But is clear there is a very large market for wine in China which SA exporters must grow.

+++++Jeremy Sampson comments: 20% of wine drunk in China is from the EU and 60% of that French. That’s 227m bottles. 150% up in 3 years

Mike Schussler from economists.co.za:

Perhaps EU rules and regulations will help South African products in China. I hope they all want more of our excellent wines, and certainly the EU may by mistake open the doors for SA wines into China. Most of our wines are similar to French wine styles, and thus we could see a bit of our wine glut get to a major market which is growing fast. Already luxury goods are seeing major growth in East Asia, helping those firms maintain some growth. Our wines could just get great support from this source!

Martyn Davies from Frontier Advisory:

Regardless of the potential for protective tariffs against wine imports from the EU, South African wine producers should be pursuing far more aggressive marketing strategies in China. We always play second fiddle to European, Australian, American and Latin American wines in China’s burgeoning wine market. We are increasing the sale of wines into China but our presence remains very marginal at best.

Mike Ratcliffe from Warwick Estate added this comment on 11/6/2013 :

At this stage the SINO/EU sabre rattling is purely empty rhetoric – but it could escalate. Having returned from a wine trip to China 2 days ago, the trade is certainly talking about this issue and there are a lot of Franco-focused wine companies that are very worried about it. One could argue that there is currently a growing bias towards new world wines from Chinese consumers driven by the already high European wine prices. Contrary to popular belief, the Chinese wine-drinker is a rational value-seeking consumer seeking the best ‘claret for their buck’. A trade war between the Chinese and the Europeans would no doubt indirectly benefit SA wines, except that there is very little South African vino in China. Our direct new-world competitors like Australia and Chile currently control massive market share for new-world wines and would no doubt capture most of the benefit.
Perhaps it would be more prudent to focus on the fact that Australian and Chilean wines already pay lower import duties than South African wines due to their existing free-trade agreements? In a meeting with Bheki Langa, South Africa’s Ambassador in Beijing a few days ago, the honourable Ambassador told me that a SA/Chinese free-trade agreement is ‘not even on the horizon’. Perhaps SA should be more pro-active than reactive in this regard?

Conclusion:

Some South African wine producers are already working hard on the Chinese market. One of these was unable to comment to us as he is actively promoting his wines on a trip to China! If the supply of EU wines turns from a flood to a trickle, then this may well help the South African industry. Or at least the more nimble and effective marketers.

Tweets of the Day:

Ellen DeGeneres (@TheEllenShow): Happy birthday Prince! I hope you party like it’s 1999. That involves listening to Destiny’s Child on Napster and worrying about Y2K.

Joan Rivers (@Joan_Rivers): Turning 80 tomorrow and realizing that being old stinks! The only good thing about a sagging body is you can use your breasts as a scarf.

Business Day has reported that ANC MPs plan to overturn government concessions on labour law, which many in industry believe would have made it easier to employ and retain workers. This would overthrow the compromise reached in Nedlac – the bargaining forum which brings together government, the unions and the employers. The suggestion is that this stance by the MPs is in deference to the ANC’s Cosatu comrades. But if the country’s labour laws are indeed tightened up beyond the existing compromise, what do our experts believe the impact will be?

Expert views:

Mario Pretorius from Telemasters:

Many business people regard Tito Mboweni’s 1996 labour laws as the largest obstacle to liberal capitalism’s efficiency. The tightening of the regulations to remove the last wriggling space of business to accommodate demand fluctuations should not be a surprise. The ANC has a stated economic dogma. It implements its New Democratic Revolution’s as it deems fit. It will continue and accelerate the destruction of a semi-liberal capitalist economy as it has promised. No amount of debate will alter its ideology, shock and horror post facto merely indicates a lack of understanding of the democratic process. In many ways, the complicity of business of ‘not wanting to offend’ is oiling its own demise. If the poison is accepted, it must be swallowed and the consequences borne. Thus we have BEE, the labour laws, employment equity, the CCMA, and soon zero tolerance in employment. The People shall govern, and so we let them without a whimper. This statutory entrenchment of race-based protection will only ratchet up and will not relent. Are there enough cojones to draw a line in the sand before the inevitability of ownership and control is demanded a la Zim? So far there are few takers and many complainers – that gurgling sound is the noose tightening around willing necks.

Mike Schussler from economists.co.za:

I suspect that the labour law "reversal" from what was agreed to at Nedlac is going have negative effects on the South African economy. Already big firms are under pressure to show results in their South African operation in many sectors- as the same firms are seeing better results in other countries. So if we take ever more flexibility away from firms there will be a negative effect, as companies will not invest more here. We need to be realistic and we need people to understand that companies go over borders quickly. Already by 2012 the Top 60 listed companies in SA got 65% of their revenue from outside the country, and this part is growing quickly – not only due to a weaker Rand but because companies are actively seeking more opportunities outside of our borders. Even state-owned companies such as ACSA, Transnet, Telkom etc. have invested outside the country as the risks are consider lower in other countries and the rewards are as good. We cannot afford to have more constraints added to it. Often we live in a false world when we think we can just add rules and regulations and still see major reductions in employment.

Dawie Roodt from the Efficient Group:

It seems there is an unsustainable relationship between organised labour (Cosatu) and the ANC. Government can’t be referee and player. Clearly the forthcoming election clouds their views.

Loane Sharp from Adcorp:

We are still processing the news and checking the details provided in the news report with our sources in Parliament. However, it is important to note that, contrary to what is indicated in the newspaper, the question of “0 months” or “6 months” relates to something quite specific: whether and when a temp will be able to cite its employer (the agency) or the agency’s client (the de facto employer) in any unfair labour practice dispute at the CCMA or Labour Court. The 0-month or 6-month period does not relate to when a temp will become permanent, which the newspaper alleged. This is therefore not a “ban” (on labour brokers) as the newspaper report suggests. For example, labour brokers will typically carry on with business as usual by issuing their clients with indemnities against any adverse award by the CCMA or Labour Court. So, while it is an indication that Parliament is a wild card in labour relations, and that decisions reached at Nedlac are nothing more than window dressing, the practical effects on labour brokers will not be significant.

Statement by BUSA:

We gather with deep concern from the media that the ANC Members of the Labour Parliamentary Portfolio Committee, are swinging strongly in favour of removing provisions for strike ballots, picketing rules and effectively banning Temporary Employment Service Providers, otherwise known as labour brokers. If these reports are accurate, we are deeply perturbed as business because not only does this create further destabilisation in the current fragile economy but also makes a mockery of the NEDLAC process.
These Bills have been subject to negotiations between government, labour, business and the community constituencies for over 3 years at NEDLAC, and were presented to the Labour Portfolio committee in March 2012. While it is understood that the process of public hearings plays a role in law making, care should be taken not to undermine a thouroughsocial dialogue process backed up by comprehensive supporting studies.
Additionally, business went to great lengths to get a Regulatory Impact Assessment study on amendments contained in the Labour Relations Amendment Bill, which indicated that hundreds of thousands of job losses would occur if such amendments were introduced. In Government’s own Regulatory Impact Assessment study of the 2010 proposed amendment Bill, the study indicated significant job losses if labour brokers were to be banned. As a result of this very same study, it was recommended that regulation was a more sensible option that an outright ban, taking into consideration the impact on employment, in particular.
Labour market announcements and inconsistent messages such as these add further damage to business confidence and will impact negatively on South Africa’s already weak economic growth projections for this year.
These pronouncements and the manner in which this is being handled, including the line by line negotiation that is taking place in the Labour Portfolio committee right now, do not do any justice to the structures that have been put in place to deal with these matters in South Africa, like NEDLAC.

Conclusion:

It would be strange if government cannot deliver through ANC MPs on an agreement made at Nedlac. However, this issue does highlight the sensitivity of all employment-related issues in a country which has far too little employment.

Tweet of the Day:

Piers Morgan (@piersmorgan): Remember, you’re not allowed to buy kinder eggs at Walmart because you may choke on the toys. But AR-15 assault rifles? No problem.