Loosening of labour legislation would make more jobs possible

THE Minister of Finance, Mr Pravin Gordhan, was quite right when he said the loosening of labour legislation would make it possible to create more jobs,” says the Cape Chamber of Commerce.

“A very good place to start would be to lower minimum wages for young people entering the labour market,” said Mr Michael Bagraim, President of the Chamber.

“This will not affect the wages of people who already have jobs, but it will help firms to take on new workers and give them the opportunity to develop skills. What most young people need is a start in life and they will accept lower wages in their first years of employment. Once they develop skills and became productive they will be entitled to the best wages their unions can negotiate.”

The problem had been highlighted in the National Planning Commission’s diagnostic report which pointed out that South African starting salaries amounted to 60 percent of the average wage for the industry compared to 37 percent of salary average in developed countries.

The report also said that the average hourly factory wage in South Africa was five times that in Sri Lanka, China, India and the Philippines and three times higher than in Mexico and Malaysia.

The second major problem with our labour legislation was central bargaining which failed to take account of differing conditions in different parts of the country. “The closing down of clothing factories in Newcastle and the loss of thousands of jobs is a direct result of central bargaining and high minimum wages,” Mr Bagraim said.

He said it would be a simple matter to restrict concessions on wages and conditions of employment to young people and those starting their first jobs to ensure that there was no abuse.

“It should be obvious to the unions that bringing more young people into factories and other jobs will increase the pool of skilled workers and this will make it possible for firms to expand, start new projects and create even more jobs. The bottom line for the unions is that this will mean more members paying union dues. If we go on shedding jobs there will be fewer people to join the unions and the union bosses will see the erosions of their finances and power,” Mr Bagraim said.

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