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June : Radical COSATU Policy on Minimum Wage and Other Issues

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13 June, 2012


Copy of an article that appeared on the front page of the Business Day on Wednesday 6th June.  The policy proposals are extremely radical and if adopted by Government could lead to job shedding on a large scale.

Cosatu set to push for minimum wage policy
Congress of South African Trade Unions also proposes radical overhaul of collective bargaining 


Published: 2012/06/06 06:30:26 AM

 THE Congress of South African Trade Unions (Cosatu) is proposing the introduction of a national minimum wage and a radical overhaul of the collective bargaining system, according to a draft policy document to be discussed at its congress in September.

The call was influenced by concerns about a wage agreement in the clothing sector last year, where a Cosatu affiliate agreed new employees could be paid 30% less than the negotiated, minimum wage. It is also part of Cosatu's campaign for "decent work", which has led to clashes with its ally, the African National Congress (ANC).

The national minimum wage - which last year would have been R4800-R6000 according to Cosatu's calculations - would, coupled with collective bargaining "forge a new wage policy for SA", the document reads.

"We are therefore at a strategic crossroads. Either we continue the current approach of trying to win wage battles purely at a sectoral level, with the danger of systematically being driven back, particularly in low wage areas of the economy ... or we adopt a new approach, which builds on the strengths of a reconfigured centralised bargaining system and combines this with the exercise of state regulation through the implementation of a national minimum wage, and comprehensive social protection," it argued.

Minimum wages are established through collective bargaining councils or by the government through sectoral determinations.

South African Chamber of Commerce and Industry CE Neren Rau said the proposals did not adequately take into account the structural weaknesses partly responsible for the plight of SA's workers - such as skills shortages, lack of economic momentum and labour militancy.

A national minimum wage was more "interventionist ", which spelled rigidity, when what the country needed was more labour flexibility. Mr Rau warned of "unintended consequences", including a flight by employers to lower wage levels away from higher-salaried, older workers.

Cosatu proposed a three-tiered approach - the introduction of a national minimum wage; establishment of a "mandatory" centralised bargaining system to replace the current "voluntary" one; and "universal income support" for all adults.

"Our departure point is that one national minimum wage has numerous advantages over the current situation, providing it is set at a reasonable level, to improve workers' lives," the draft document reads.

"It would be comprehensive, clear, simple, and provide a social floor for all. This is in contrast to our numerous, fragmented sectoral minimal wages with massive discrepancies and gaps."

The document recommended that if Cosatu endorsed the proposals, it should develop a political strategy to ensure buy-in from the ANC by the end of this year for implementation next year.

An overhaul of collective bargaining would include "wall-to-wall mandatory" sectoral bargaining; the demarcation of national sectors; an alignment with developmental strategies, industrial policy, skills, retirement funds; and an explicit mandate to address wage and income inequalities.

Labour analyst Tony Healy said yesterday that any minimum wage legislation would affect job creation negatively.

Although the proposals were "understandably" in the best interest of Cosatu's members - the employed - it was not in the best interest of the "silent sizeable majority" of unemployed people as it would increase the burden on companies that were hiring.

"Minimum wage legislation inhibits job creation and we have a crisis when it comes to unemployment. We should rather focus on removing minimum wage legislation already in place," he said.

Cosatu spokesman Patrick Craven said the draft document had been distributed to affiliates for discussion.