COSATU Media Monitor 10 June 2011

The union was also demanding a one year collective bargaining agreement, a total ban on labour brokers in the industry and a 20 percent night shift allowance.

"The proposed 4,2 percent wage increase by engineering profiteers and the rejection of all other demands are not only a declaration of war, but a childish act of spewing bile on the face of the workers," he said.

He said if the industry failed to meet the union's demands, it would resort to militant action.

The engineering industry could not be reached for comment.

http://business.iafrica.com/news/733388.html

1.2 Nehawu SARS workers to march

BusinessLive, 9 June 2011

National Education Health & Allied Workers Union (Nehawu) members from all South African Revenue Services offices (SARS) in Gauteng were set to march to the Union Buildings in Pretoria on Friday to hand over a memorandum of demands, the union body said on Thursday.

This followed the failure of the agency to "respond and solve a myriad of problems" that were submitted to the senior managers on April 20, the union said.

"The poor management and the victimisation of our members at SARS offices in the province of Gauteng must come to an end because if our calls for action are not heeded we will be forced to escalate our action," the union said in a statement.

"Workers at the agency have worked hard to service South Africans and have built up a credible reputation for the agency.

The march to the union buildings is a cry for leadership and intervention from the presidency because workers are not prepared to sit idle while the agency is being sabotaged by managers who do not have the interest of the country at heart," Nehawu added.

"The level of anger and dissatisfaction from our members means that the taxpayers are likely suffer because an unhappy workforce cannot deliver quality service.

As a progressive organisation and a workers champion we are looking for an intervention and an amicable solution, but if we do not get a satisfactory response from government and the presidency in particular we will be forced to escalate our action," it said.

http://www.businesslive.co.za/Feeds/inet/2011/06/09/nehawu-sars-workers-to-march

1.3 SAPS employees who're not cops can strike - ConCourt

Politicsweb, 9 June 2011

On 9 June 2011 the Constitutional Court handed down a judgment in an application for leave to appeal against a decision of the Labour Appeal Court which interpreted the meaning of an "essential service" as defined in the Labour Relations Act (LRA).

The Labour Appeal Court's decision affirmed that only members of the South African Police Service (SAPS) employed under the South African Police Service Act (SAPS Act) were engaged in an essential service. It held that the employees of the SAPS employed under the Public Service Act (PSA) were non-member employees and did not engage in an essential service. The importance of this determination was that only those employees who were not engaged in an essential service were able to strike.

On appeal to the Constitutional Court, the applicant contended that the SAPS as a whole was defined as an essential service in the LRA, and therefore that all services - those carried out by members as well as those carried out by non-member employees - are essential to the effective functioning of the SAPS.

The respondents argued that the distinct use of "employee" and "member" throughout the SAPS Act indicated the legislature's intention to treat the services provided by each type of employee differently. Therefore services carried out by non-member employees are not essential, and their right to strike under section 23 of the Constitution should not be limited in any way.

In a unanimous judgment by Nkabinde J, the Constitutional Court interpreted the phrase ‘essential service' restrictively, so as to avoid impermissibly limiting the fundamental right to strike as entrenched in section 23(2)(c) of the Constitution. The Court held that the phrase cannot be interpreted in isolation, but that regard must be had to the purpose of the provisions of the LRA and the SAPS Act, and the context in which the phrase appears, so as to give effect to the right to strike.

The Minister could designate non- member employees as members of the SAPS if he deemed them as such in terms of section 29 of the SAPS Act. The Court upheld the decision of the Labour Appeal Court and held that not all SAPS employees carry out an essential service.

The Court dismissed the appeal with no order as to costs.

Issued by the Constitutional Court, June 9 2011. The full judgment can be found here - PDF.

http://www.politicsweb.co.za/politicsweb/view/politicsweb/en/page71654?oid=240443&sn=Detail&pid=71616

1.4 Ministry welcomes Con Court decision on SAPS

BuaNews, 10 June 2011

The Ministry of Police has noted and welcomed today’s decision by the Constitutional Court that police officers employed under the SAPS Act are not allowed to engage in industrial action.

“The judgment affirms our view that our members perform an essential service, and therefore should not be allowed to strike. The ministry had argued for all employees of the SAPS to be defined as an essential service, and that they not be allowed to participate in any industrial action,” the ministry said in a statement.

However, the Court disagreed and ruled that the civilian component of the SAPS workforce or staff members that are employed under the Public Service Act, should be allowed to strike or protest.

“We are slightly disappointed by this specific ruling, as the civilian component performs important supporting duties for the SAPS. Our firm view is premised along an understanding that a strike by the civilian component would cripple the normal functioning of the SAPS. We nevertheless pledge to abide by the Court’s decision,” the ministry said.

The ministry will further explore various mechanisms and put appropriate contingency measures in place in cases where industrial actions may arise.

The main objective would be to ensure that during such strikes, normal policing remains unhindered.

“After all we have a duty and a mandate to ensure the safety of all law-abiding citizens. We have demonstrated in the past, through successful securing of some of the biggest events this country has hosted; for example, the 2010 FIFA World Cup, the When Duty Calls festive season, the recent Local Government Elections to mention but a few – that we have the capacity to ensure the safety and security of society,” the ministry said.

http://www.buanews.gov.za/

1.5 NUM feels the pain

Charlotte Matthews, Financial Mail, 9 June 2011

Various mining employers, speaking on condition of anonymity, said internal union issues were the common factor, possibly related to political positioning ahead of the upcoming NUM regional elections.

Strong, even violent, labour protests at three platinum mines over the past month suggest something is deeply wrong.

On May 17, 9000 workers at Lonmin’s Karee platinum mine near Rustenburg began an illegal strike and, after ignoring a court order to return to work, were dismissed.

Two weeks earlier, at the nearby Crocodile River Mine owned by Eastplats, 180 employees staged an illegal sit- in and mine property was sabotaged — the mine’s second illegal sit-in within two years.

Late last month, contractor employees were dragged out of a vehicle leaving Platinum Australia’s Smokey Hills mine near Mokopane. One of them was killed by the mob, which allegedly included some ex-employees sacked after an illegal strike in February.

The incidents all involved members of the National Union of Mineworkers (NUM).

NUM spokesman Lesiba Seshoka says each incident has a different cause. At Lonmin’s Karee, he says, an election was due for branch leadership but the incumbent chairman didn’t want the election to take place.

“He started to act like a traditional leader and we don’t have space for that,” Seshoka says. “The regional office suspended him and he told workers it was because he knew money was owed to workers by NUM and Lonmin, and persuaded workers to boycott.”

Seshoka says about 500 of the 9000 sacked workers have not been re-employed by Lonmin, either because they had previously received written warnings or were perceived to be at the centre of the problem. “We are still trying to find a resolution with Lonmin.”

Lonmin CEO Ian Farmer says a relatively small group of people intimidated the rest.

“I think NUM is addressing internal corporate governance issues — they are trying to weed out rogue elements — and I commend them for that. In the long run this will result in a more responsible and efficient union structure.”

At Crocodile River, Seshoka says, there is a long running unresolved problem about the use of contract labour who are paid less than those employed directly by the mine.

“Workers want to be employed directly by the mine and paid better wages. Each time there is a sit-in, management promises the problems will be addressed and nothing happens.”

Eastplats CEO Ian Rozier says there are protocols to deal with disputes like this, which were ignored by a minority of the 900 NUM workers employed at the mine.

After the July 2009 incident, management and NUM discussed and agreed on the conditions under which contract workers would be employed at Crocodile River. But mines could not simply terminate agreements with contractors and re-hire their workers.

“I do agree with Mr Seshoka that this is indeed an ongoing issue, but it is an industry-wide issue in SA. It will take time to resolve at a national level, with input from all stakeholders, which we hope will result in clear employment policies and binding legislation. It cannot be resolved by the rogue action of a few militant NUM members at any one mine,” Rozier says.

At the weekend NUM central committee meeting in Boksburg, general secretary Frans Baleni condemned illegal strikes and destruction of property.

Seshoka firmly denied the suggestion that NUM could be losing its grip of the regions. He says NUM’s structure has always been decentralised.

“But remember the mining industry has always been a violent one and now there is an emergence of young, militant members, who don’t necessarily follow procedures, and control is needed from the regions. I personally believe we need more capacity in the regions to communicate with members, because the problems seem to arise out of miscommunication.”

http://www.fm.co.za/Article.aspx?id=145376

1.6 Deputy minister linked to R100m pension scam

IOL, 9 June 2011

Deputy Minister of Economic Development Enoch Godongwana and his wife Thandiwe have been linked to a company that disappeared with R100 million in workers' pensions, The Star newspaper reported on Thursday.

The SA Clothing and Textile Workers' Union (Sactwu) is trying to get back the R100m of pension funds from an investment company.

The money was placed with Trilinear Empowerment Trust, which in 2007 agreed to lend R93m to Canyon Springs Investments 12, so that it could buy an unnamed and unlisted company, but the deal never happened.

Canyon Springs Investments 12 could not repay the loan as it had allegedly “lost” the workers' money

Canyon Springs is currently facing liquidation proceedings in Cape Town.

The Godogwanas acknowledged to The Star that one or the other of them had been linked to Canyon Springs since at least November 2007.

In a joint statement, they said Enoch was chairman from November 2007 to May 2009, while the wife had been a non-executive director since May 2009.

The loan payments were made from March 2007 to December 2009, and the loan agreement was signed in February 2009.

Cosatu said on Tuesday said it was “shocking” that the low-paid clothing and textile workers could lose millions through the loan that was allegedly “lost”.

“If these allegations are proved to be true, it is absolutely shocking. Textile workers are the lowest paid workers in the whole of the manufacturing sector,” Cosatu spokesman Patrick Craven said in a statement, at the time.

http://www.iol.co.za/news/crime-courts/deputy-minister-linked-to-r100m-pension-scam-1.1080824

1.7 Murky Sactwu pension deal probed

Glynnis Underhill, Mail & Guardian, 10 June 2011

The Financial Services Board (FSB) is investigating the investment in 2007 of R420-million of pension funds belonging to members of the South African Clothing and Textile Workers' Union (Sactwu).

It is concerned about the recovery of the funds after it emerged that the money had been placed in Trilinear Empowerment Trust, which has invested heavily in struggling Cape luxury property development Pinnacle Point.

The board has been trying to establish whether the pension fund trustees were aware their money was going to be placed with Trilinear Empowerment Trust, which is not recognised by the board as an investment vehicle for pension funds.

"Pension fund investment can either be in the name of the pension fund or it can be held in a nominee account that is registered with the FSB," said the deputy chief executive of the board, Jurgen Boyd. "So we don't recognise these type of trusts as an investment vehicle."

In 2009 the Cape-based Trilinear Empowerment Trust invested R100-million in Pinnacle Point and last year bought Absa's R150-million stake in the development, making it the main shareholder.

However, in February this year Investec applied for the liquidation of four Pinnacle Point subsidiary companies due to non-payment of debt. The case has been postponed until next month, but Pinnacle Point is reported to have been in talks with Investec to try to prevent the liquidation of some of its assets. It is involved largely in developing golf estates, which have been hit by the global credit crunch.

Boyd said the board was talking to the trustees of a number of affected provident funds, which include the Cape Clothing Industry, the Textile Industry, the Textile Open, the Textile and Allied Workers and Pep Limited.

"Some are claiming the placement of their money in Trilinear Empowerment Trust was contrary to the mandates they had with Trilinear," said Boyd. "Others alleged litigation would follow as a result of what they claimed was misrepresentation on the part of Trilinear."

An application has now been lodged by Trilinear Empowerment Trust in the Western Cape High Court to liquidate Canyon Springs Investments, which was allegedly granted a R93-million loan from the provident fund money.

Sam Buthelezi, the director of Trilinear Capital, said this week he was not able to comment on the matter as it was sub judice.

But questions have been raised about why Trilinear gave a loan of R93-million to Canyon Springs Investments 12, a company owned by Thandiwe Godongwana, the wife of the deputy minister of economic development, Enoch Godongwana, and Mohan Patel.

"If you are looking for a quick juicy story that involves a deputy minister's wife, then I can't help you," said Buthelezi. "But if you can wait until our court papers are filed, I will give you the real story. Until then, my lawyers have told me that I can't comment."

The Financial Mail has described Trilinear as having established expertise in bonds, cash and equities. Buthelezi said he has been running the company for 15 years. Neither Godongwana nor Patel could be reached for comment, and they did not respond to phone calls.

Sactwu general secretary André Kriel said the pension fund trustees took the decision about where to invest the money, not Sactwu. The union had appointed a legal firm to conduct a forensic investigation.

"The investigation has not yet been completed, but no stone will be left unturned. If any wrongdoing is found, the guilty must go to jail for a long time. The union will do everything in its power to help recover every single cent if it is proved that monies are indeed missing," he said.

The pension fund money belongs to thousands of clothing factory workers who contribute about 6.5% of their salary to the provident fund. They earn, on average, about R700 a week.

http://mg.co.za/article/2011-06-03-murky-sactwu-pension-deal-probed

1.8 Public service wage deal expected soon: Manyi

TimesLive, 9 June 2011

A wage settlement between the government and public sector unions is expected soon, cabinet spokesman Jimmy Manyi said on Thursday.

In its regular meeting on Wednesday, the cabinet had endorsed "the discipline by government to respect the Public Service Co-ordinated Bargaining Council (PSCBC) decision to refrain from negotiating in the media", he told a post-cabinet media briefing.

"Government is confident that a settlement will soon be reached despite the challenging nature of the negotiations," Manyi said.

http://www.timeslive.co.za/local/article1109457.ece/Public-service-wage-deal-expected-soon--Manyi

1.9 Home Affairs targets skilled migrants

BuaNews, 10 June 2011

The Department of Home Affairs aims to attract about 50 000 skilled migrants to the country in the coming years.

Briefing the media on the department’s Strategic Plan 2012/15, Director-General Mkuseli Apleni said the department needed to contribute to level of skills and general economic development in the country.

The department was also developing a policy relating to visas, in order to attract more skilled migrants to the country.

However, Apleni said certain areas would be targeted as South Africa did not want to create a situation where there would be a brain drain from Africa to the country.

“Focus should be on critical skills shortages, supportive of the medium term strategies and outcomes adopted by government,” Apleni added.

Other areas included in the plan relate to the Department’s Counter-Corruption Strategy, and securing the identity and status of citizens.

To help achieve this, Apleni said all strategic information and identification projects would need to be completed and effective, efficient refugee management strategies and systems implemented.

The department also wants to improve access and quality of service delivery by registering every child birth within 30 days of delivery, issuing ID documents to every South African 16 years and older; improving turnaround times for all services; and reducing the distances people need to travel in order to access Home Affairs services.

Apleni said other priorities include securing processes and systems to combat fraud and corruption, as well as increasing capacity to help fight cyber crime.

The department also wants to ensure ethical conduct from all its employees, adding it would continue with its zero tolerance approach to corruption.

http://www.buanews.gov.za/

2 South Africa

2.1 Union urges ‘maturity’ in mines debate

Carrien du Plessis, Business Report,, 9 June 2011

The National Union of Mineworkers has pleaded for “maturity” and “no political undertones” in debates on the nationalisation of mines ahead of the ANC Youth League’s conference next week, where the issue is set to crop up again.

NUM general secretary Frans Baleni said in Joburg on Wednesday that workers stood to lose too if talk of nationalisation deterred investors or harmed the industry.

“It is not only the private sector that has invested (in mines), but the workers with their pension and provident funds have also invested. We should have maturity and the debate should not have political undertones,” he said.

The league has previously threatened not to support ANC leaders who failed to support its stance on nationalisation ahead of the party’s elective conference next year.

It also slammed the NUM’s views as “reactionary” when the union warned last year that the league’s radical talk on the matter could cause mineworkers to lose their jobs.

But Baleni said on Wednesday that the NUM’s central committee at its meeting in Boksburg last week had again declared its support for the Freedom Charter clause on nationalisation, the same clause used by the youth league to back its call.

It reads: “The mineral wealth beneath the soil, the banks and monopoly industry shall be transferred to the ownership of the people as a whole.”

Baleni said the NUM was part of the ANC’s task team set up in February to research the nationalisation of mines, following a resolution to this effect at the party’s national general council in Durban last year, but the union would not be taking part in the youth league’s discussions on the matter next week.

The ANC’s task team comprises mineral resources specialist Paul Jourdan, University of Witwatersrand researcher Pundy Pillay and Margaret Chitiga-Mabugu from the Human Sciences Research Council.

The league has objected to the inclusion of Jourdan, because it says his views “contradict the Freedom Charter”.

The task team is set to report back to the ANC’s policy conference, scheduled for the middle of next year, and a policy position is likely to be adopted thereafter at the ANC’s conference in Mangaung.

ANC spokesman Keith Khoza said it was likely the ANC would make inputs at the league’s conference on the mother body’s views on the matter, but it would not dictate the league’s position. “The ANC may attend purely to develop an understanding of what the youth league is discussing,” he said.

Baleni also said yesterday leadership discussions ahead of the ANC’s conference next year should be based on who had “the capacity and the ability to deliver”. He said: “We should refrain from focusing on the leadership contestation as if we are dealing with a beauty contest”.

He said the NUM would support the possible scrapping of provinces, to be discussed at the ANC’s policy conference, because provinces “perpetuate tribalism and bantustans”.

The NUM also called on public-sector unions, which include Samwu and Sadtu, not to disadvantage citizens when they went on strike, and not to remain angry at the government after a strike.

http://www.iol.co.za/business/business-news/union-urges-maturity-in-mines-debate-1.1080847

2.2 Malema mouths off on mines

Mandy Rossouw, Mail & Guardian, 10 June 2011

Nationalisation is a fait accompli and the ANC is merely looking for the best way to implement it, ANC Youth League president Julius Malema claimed in a documentary titled: Mining for Change: A story of South African Mining.

"The NGC [national general council] told us to go and look at the best model of nationalisation. We are no longer talking about whether nationalisation is going to happen or not, it's going to happen," Malema said in the documentary, screened at the Encounters Film Festival in Johannesburg and Cape Town.

The documentary was funded by junior miners Nonkqubela Mazwai and Nchakha Moloi, the chief executive and chairperson of Motjoli Resources. Both also feature prominently in it, expressing views about why nationalisation is needed. They are credited as executive producers. Eric Miyeni and Navan Chetty are directors.

But, according to ANC spokesperson Jackson Mthembu, Malema is jumping the gun. "At the NGC we didn't adopt anything. We said we must look at what the pros and cons are of adopting this policy. We are still at the stage of investigating. You don't adopt a policy without scientific research," he told the Mail & Guardian this week.

Mthembu said ANC secretary general Gwede Mantashe had put together a team that would visit 13 countries to study the success of nationalisation in those countries.

In the documentary Malema argued that the mines needed to be taken by the state without compensation for the owners because they already belong to the people of South Africa. "Why should I pay for what I own? This is mine. Once I own it, I will decide what size of it I share with you. I've got the minerals, you come and bring the machines and equipment to extract the minerals. That equipment, in their nice English, they call it investment," he said in the documentary.

Malema admitted that the youth league was not taken seriously when it began its campaign to nationalise the mines. "When we started this debate, people were brushing us off. People were saying: 'These are kids, they don't know what they're talking about.' And we said: 'They don't know where the ANC comes from.' "

As he did during the election campaign, Malema referred to "they" -- presumably white colonialists -- who "stole everything".

"They have stolen, they've stolen our minerals, our land, they want to control everything. Now is our time to demand what they've stolen from us." He argued that the balance of forces internationally was not conducive to nationalisation when former president Nelson Mandela was at the helm of the country, but this had now changed.

"Now it is not just the United States, now we have China and India willing to work with us. The conditions are favourable now." The nationalisation of key industries, especially mines, will be top of the agenda at the youth league conference next week.

Other policy issues that will receive attention include the relationship between the league and the National Youth Development Agency (NYDA).

A discussion document prepared for the ANCYL conference, titled "Youth development for economic freedom in our lifetime", delivers a scathing critique of the work of the NYDA. "While there has been progress since the establishment of the agency, albeit hesitant and fragile, critical challenges still remain, chief among them the resourcing and coordination of youth development work. Structures of youth development within provinces remain in a regrettable state of limbo, with no consistent approach in form, content or location," the document says.

The National Youth Policy was supposed to be a "Freedom Charter-type document for youth", but it is not widely known by young people and society at large, according to the document.

The document also blasts the NYDA for focusing largely on the public sector as a vehicle for youth development and neglecting the private sector. It proposes that the ANCYL "reins in this organ of development in the interest of South Africa's youth".

The document places the NYDA circumspectly as the youth league in government.

"The aspirations of young people as captured through the resolutions of the youth league must find concrete expression in the programmes of the NYDA and all its components." Opposition parties and the Young Communist League complained last year, when the NYDA was established, that it was merely an outlet of power for the league.

The document proposes that the NYDA attend Cabinet meetings four times a year and has direct representation in the National Economic Development and Labour Council and on all government clusters.

Although the discussion document argues in favour of a year of national service after matric, it calls the National Youth Service (NYS) a failure. "The NYS is used as a supplementary expanded public works programme, in which government is in a frenzy to be seen to be doing something about youth unemployment, implementing programmes such as grass-cutting or school maintenance."

While these are necessary interventions, the document says, they fail to create youth who can be easily employed.

http://mg.co.za/article/2011-06-10-malema-mouths-off-on-mines

2.3 Jobs ‘blocked’ by strict labour rules

Sam Mkokeli, Business Day, 10 June 2011

WHILE SA’s labour regulations had positive effects, they blocked rapid job creation, the National Planning Commission has found, in a candid admission contained in a document released yesterday diagnosing the country’s socio- economic problems.

The commission’s assessment comes at a time the government is pushing through a raft of proposed labour laws that have been criticised for their potential to discourage employment.

The bills have been opposed by some as likely to increase the cost of doing business while potentially making the labour market more rigid at a time when the government has embarked on an initiative — its new Economic Growth Path — to create 5-million jobs in 10 years.

"While labour regulations have had several positive effects, most notably the protection of workers’ rights, the extension of second-tier social security benefits and the ending of unfair discrimination, there have also been negative unintended consequences," National Planning Commission chairman Trevor Manuel said in the diagnosis report, released in Parliament yesterday.

The regulations made it difficult for employers to penalise poor performance. This discouraged businesses from hiring inexperienced workers, he said.

"Relatively high starting salaries in some sectors and the disincentive to hire inexperienced workers are at least part of the explanation for high youth unemployment," the report says.

SA has a critical shortage of technical skills, while most of the skills being acquired were "out of line" with the needs of a modernising economy. Tertiary institutions were not producing the numbers required by the economy. This pushed up the cost of hiring and retaining people who did have skills. The report cites unemployment as the cause of SA’s poverty and inequality.

"SA has extremely high rates of unemployment and underemployment. A large proportion of out-of-school youth and adults are not working. Those in low-income households that are working support many dependents and earn little relative to the cost of living. This is a central contributor to widespread poverty.

"Only 41% of the working age population is working, well below the average of similar countries," says the report.

SA’s unemployment problem was recently called a "ticking" time bomb by leading trade unionist Zwelinzima Vavi.

http://www.businessday.co.za/articles/Content.aspx?id=145467

2.4 SA public service ‘lousy’, says Manuel

Gaye Davis, Pretoria News, 10 June 2011

A diagnosis of the major challenges confronting South Africa pinpoints a public service that is “lousy” in parts, infrastructure that’s not maintained, apartheid planning that continues to marginalise the poor and a growth path that relies too much on the country’s natural resources, making it unsustainable.

An ailing health service confronted by a huge disease burden, corruption that undermines both the legitimacy of the state and service delivery and the fact that South Africa remains a divided society are also on the list of nine challenges drawn up by the National Planning Commission.

But its head, Minister in the Presidency Trevor Manuel, has highlighted massive unemployment and sub-standard education for the majority of poor South Africans as the most critical and urgent problems that need fixing.

Manuel on Thursday unveiled a 30-page “diagnostic review” compiled from the findings of detailed research by the commission’s 25 commissioners since it started work a year ago on mapping out a vision for South Africa to achieve by 2030.

At the same time, Manuel launched what he hopes will turn into a national three-month-long conversation involving all South Africans – using various platforms from broadcast, print and social media to town hall meetings – to debate, critique and challenge the commission’s work to date and help draw up a Vision 2030 statement that will be used to develop the country’s first overarching long-term plan.

To be delivered to President Jacob Zuma by November this year, it’s also intended to unite South Africans in doing what’s needed to turn the country around.

Briefing journalists before launching the review in Parliament, Manuel said South Africa could have gone the way of Libya, but people “dug deep inside ourselves” and, in the face of critics saying it was impossible, achieved a peaceful transition to democracy.

The nine challenges identified by the NPC might sound familiar, but were borne from detailed research and extensive consultations, backed by empirical evidence.

Only 41 in 100 adults worked and a high proportion of those without jobs were young. There was an urgent need to upgrade economic and industrial infrastructure to support the existing economy and promote more labour-absorbing, knowledge-intensive sectors – but the economy also needed to become more efficient and less dependent on unsustainable resources.

Not enough progress was being made in improving the quality of education, starving the economy of skills and blocking people from jobs. Only 1 percent of black schools were “peak-performing”; 88 percent were “dire”.

The health system was under strain from high rates of HIV/Aids and TB infections, injuries and violence-related trauma, infant and maternal mortality, heart disease and diabetes.

While parts of the public service were exemplary, “parts of it are actually quite lousy”.

Social fragmentation and a “breakdown of ethics” fuelled high levels of corruption, impeding service delivery. Apartheid planning patterns were being perpetuated, trapping people in poverty in the former homeland areas.

He praised Zuma’s foresight in setting up the commission and allowing it to make its work public.

“It’s a big, bold move,” Manuel said.

The commission said its work was not premised on party political lines or dependent on election cycles. This boldness should be lauded, Manuel said.

Manuel acknowledged gains made but said his role was to present an honest, critical appraisal.

Opposition parties largely welcomed the report’s frank and “sobering” assessment. However, the report’s reference to “Africans and other race groups” drew fire.

“We are all Africans,” said DA finance spokesman Dion George.

ACDP leader Kenneth Meshoe said the report suggested that helping solve continuing divisions in South African society would be for all citizens to help tackle the challenges it faced – but the definition of “African” would only raise more problems.

http://www.iol.co.za/news/politics/sa-public-service-lousy-says-manuel-1.1081458

2.5 ‘Signs of decline’ a threat to democracy, says Manuel

Wyndham Hartley, Business Day, 10 June 2011

SA is showing signs of decline — through rising corruption, political factionalism, crumbling infrastructure and skills and capital flight — which could unravel its democracy, the National Planning Commission warns.

Minister in the Presidency Trevor Manuel , also chairman of the commission, tabled a diagnostic overview of SA in Parliament yesterday. It identifies the state of SA’s economy and social fabric, and problems that a "national plan" should urgently address.

The diagnosis is a harsh look at the country based on hard facts gleaned from detailed research reports giving an empirical analysis of the major problems facing SA.

It identifies nine major problems that urgently need to be fixed — poor education, high disease burden, divided communities, uneven public service performance, existing spatial patterns, unemployment, corruption, an unsustainable resource-intensive economy and crumbling infrastructure.

Mr Manuel, briefing the media ahead of his statement in the National Assembly, said SA had significant successes which should not be underestimated or glossed over, but the commission’s task was to identify and understand the country’s weaknesses and problems.

"Political change brings no guarantee of social, economic or indeed political progress. Throughout history many civilisations, empires and countries have experienced dramatic decline rather than progress," the diagnosis read.

"The indicators most often associated with decline include rising corruption; weakening of state and civil society institutions; poor economic management; skills and capital flight; politics dominated by short- termism; ethnicity or factionalism; and lack of maintenance of infrastructure and standards of service.

"Elements of these indicators are already visible in SA, though their strength and prevalence is uneven and differs from sector to sector. If they become more prevalent the country’s progress could be stalled, its gains reversed and even the foundational aspects of democracy unravelled."

The National Planning Commission believed that if these threats were not tackled, the probability of decline would increase.

Mr Manuel acknowledged that many of the issues identified by the commission might sound "familiar", but insisted they were backed up by numerous detailed reports.

The commission was responding to President Jacob Zuma ’s injunction to take a bold look at SA.

He said its mandate to pose difficult questions and find solutions was unmatched anywhere in the world. The commission believed SA could be turned around if South Africans confronted what was facing them.

Commission deputy chairman Cyril Ramaphosa said some "stark" choices would have to be made.

The commission planned to take the diagnosis to South Africans to help it plan the way ahead.

Mr Manuel said it was critically important for South Africans to take ownership of SA’s future. He envisaged a vision and a plan being completed by November 1. Public consultation would involve the internet, social media and public meetings.

http://www.businessday.co.za/articles/Content.aspx?id=145439

2.6 Economist says jobs target not ambitious

Alistair Anderson, Business Day, 10 June 2011

SA’s target of creating 5-million jobs over the next decade might appear unattainable but is, in fact, far from overambitious, economist Mike Schüssler said yesterday.

Mr Schüssler said the country needed to create 10-million jobs in a decade to become a "normal" country in terms of economic standards such as per-capita gross domestic product . This would equate to generating 83000 jobs a month .

The government set itself the target of creating 5-million jobs in 10 years in its new growth plan, announced late last year .

"If we achieve the 5-million jobs we will have an employment ratio of 49,7%, which will still leave SA among the lowest 25 countries … 5- million jobs in the next 10 years is therefore not an ambitious target at all in a realistic sense of the word," Mr Schüssler said at the release of the 10th United Association of SA employment report.

Employment in SA grew by 3% over the last decade. This compares with average employment growth of 4,9% in advanced economies and 17,1% in developing countries.

"We really lag the world in creating jobs," Mr Schüssler said.

He said the country needed to make it easier for businesspeople to take out loans and employ others.

"The state needs to begin to promote entrepreneurship. People are probably self-employed for the wrong reasons. They tend to employ themselves to survive, not because they are good businessmen who employ others," he said.

There were 2,2-million self- employed people in SA in 2000, and 1,7-million in 2006. Median earnings of the self-employed were R1820 a month overall, while there was an estimated median of R7000 for a formal-sector employee.

Frontier Advisory’s Martyn Davies said on Tuesday that red tape and divisions, many of them political, were holding SA back from developing itself.

"SA and this region, we lack cohesion, we lack a focus … I have never come across such a fragmented society. How can we become internationally competitive if we are so internally divided?

"Africa’s development challenges are purely political," he said.

Dr Davies was addressing media after the release of the inaugural Master Worldwide Insights report on sub-Saharan Africa.

SA needed to emulate countries such as Rwanda and Ghana in removing red tape and allowing entrepreneurship and business to flourish, Dr Davies said.

Mr Schüssler agreed that there needed to be less focus on rules, "as they often take the countries focus away from the real need — employment creation".

"Job subsidies to low-income earners are better than, say, more unconditional welfare," he said.

http://www.businessday.co.za/Articles/Content.aspx?id=145486

2.7 Manufacturing slump leads to growth fears

Mariam Isa, Business Day, 10 June 2011

MANUFACTURING output plunged unexpectedly in April, signalling that the rapid growth seen in the economy early this year is unlikely to be sustained.

Factory production fell by a seasonally adjusted 3,7%, after rising by 1,6% in March, figures from Statistics SA showed yesterday.

This is worrying as manufacturing was the main driver of growth in the first quarter of this year, and is one of the biggest employers in the formal sector of the economy. It will add to pressure on the government to do more to boost job creation.

"For want of a better word, this is scary," said Nomura International economist Peter Attard Montalto. "It will do little for sentiment about how sustainable the economic recovery is ... it points to a larger dip in the second quarter of this year."

Manufacturing rose 14,5% in the first quarter of this year, accounting for nearly half of the economy’s growth of 4,8% in the period.

"With other sectors yet to show signs of a more robust turnaround, the latest data will weigh heavily on sentiment," said Razia Khan, Standard Chartered’s regional research head for Africa. "It is no longer clear what will sustain overall growth ... are things really this bad or is there some scope for recovery?"

Compared with the same month last year, manufacturing output nudged up just 0,4%, way below consensus forecasts for a 5% increase, the data showed.

The monthly drop in output could be blamed in part on the large number of public holidays in April. But analysts said a slowdown in export demand from Asia and Europe was probably also to blame.

Manufacturing is the economy’s second-biggest sector, accounting for about 15% of overall output.

A drop in the production of motor vehicles and parts, followed by electrical appliances, was the main reason for the poor output in April.

But analysts said the figures should not be a complete surprise given the downturn in SA’s purchasing managers index (PMI), a key barometer for the health of the manufacturing sector.

The PMI dipped in April and last month, although it stayed above the 50 level marking the cut-off between expansion and contraction.

Both the business activity and new sales orders components of the PMI have fallen, which suggests that manufacturing output may be disappointing in the months ahead.

There will probably be an initial bounce in May due to the lower number of public holidays.

"However, growth is likely to taper off in the months ahead after the strong start in the first quarter," said Nedbank economist Nicky Weimar. "Export-oriented industries will probably feel the effects of a softer global economy and some moderation in commodity prices."

http://www.businessday.co.za/articles/Content.aspx?id=145460

2.8 I'm not trying to oust Zuma - Malema

Carrien du Plessis, IOL, 10 June 2011

ANC Youth League leader Julius Malema has denied that he is gunning for President Jacob Zuma or that the league is the puppet of ambitious ANC leaders who want the organisation’s backing in the run-up to the party’s elective congress in 2012.

At a briefing on preparations for the league’s elective congress from Thursday to Sunday next week, Malema told journalists on Thursday there was no “fight” between the league and Zuma.

“These people going around saying that we don’t want President Zuma, they are using President Zuma to campaign against us. There is no fight between this organisation and President Zuma,” he said.

Malema’s praise of former president Thabo Mbeki’s leadership in his address to a Limpopo Youth League gathering over the weekend was interpreted as yet another swipe at Zuma’s leadership, and it has been rumoured that the league would gun for Zuma in the run-up to the ANC’s congress in Mangaung next year, despite spearheading his campaign for election in 2007.

Malema was disciplined last year for saying Mbeki was a better leader than Zuma, and he has followed this up with indirect criticism of Zuma, such as criticising polygamy, which is practised by Zuma. Malema has also openly expressed his support for his predecessor, Sports Minister Fikile Mbalula, to take over the reins from ANC secretary-general Gwede Mantashe next year.

Malema on Thursday denied rumours spread by some within the league that Mbeki would address next week’s congress in Midrand’s Gallagher Convention Centre.

Zuma and his deputy, Kgalema Motlanthe, would be the only ones representing the ANC, he said.

“There is one president of the ANC and that is Jacob Zuma, and he will not be contested. If you want to suffer political humiliation, you will contest President Zuma between now and the 2012 congress of the ANC,” he said.

Malema also repeated what he said last year when he compared Zuma to Mbeki: “We have seen enemies becoming closer friends, but we know in politics there are no permanent friends or enemies.”

He denied, however, that the league’s congress would have a bearing on the ANC’s leadership elections.

“President Zuma is not a candidate of (this) congress,” he said.

Turning to his own race for leadership, Malema said the conference would be “the end of me”. If he were re-elected, he would be the “new president” and a “new person” with a “fresh life and a fresh mandate”.

At least four provinces have so far formally declared their support for Malema, with two others saying they were likely to come to the same conclusion at their provincial general councils this weekend.

Malema challenged his contender, the league’s Gauteng chairman and Sports MEC Lebogang Maile, without mentioning him by name, by saying anybody who wanted to be elected youth league leader needed “numbers” of people to vote for him. He promised that the league’s conference, where 5 500 delegates are expected, would be without disruption.

He said the league would handle its own security and no police or intelligence officials would be allowed in the venue. But he hinted that disciplinary action would be taken after the conference against those who stepped out of line in the run-up to the summit. He said despite accusations that he had suspended people, only former Limpopo leader Lehlogonolo Masoga had been suspended.

http://www.iol.co.za/news/politics/i-m-not-trying-to-oust-zuma-malema-1.1081411

2.9 Fury at state ‘media bribe’ bid

Michelle Pieterson, IOL, 10 June 2011

Government spokesman Jimmy Manyi says the media is failing to communicate government activity, and suggested it would favour those that did with advertising.

He was briefing the media on Thursday following the cabinet’s approval of a new communication strategy that would see the government’s advertising budget centralised under the Government Communication and Information System (GCIS), of which he is also the head.

“Government has got a truth to communicate. Government has got programmes of action; this government has been busy doing good work, and so now this government would like the citizens to know the truth,” he said.

Asked whether, when he said the government wanted more bang for its advertising buck, he meant it would reward favourable reporting with advertising, he said: “As (the) government we do not want to be done any favours by anyone, but what we report as government we would like to see that covered, because we think media has a role, not only as a watchdog, but …also to provide information.

He said the government would “focus” on media that “pass on our content much more effectively to the public of South Africa”.

“So all the people that want to work with (the) government to make sure that the people of this country know the truth about service delivery … clearly we will work with those people,” said Manyi.

However, the SA National Editors’ Forum (Sanef) condemned the move, saying it was a plan by the government to “bribe newspapers to be its propagandists”.

“This incredible plan which was approved by the cabinet means the government wishes to bribe newspapers to become its propagandists, or even its mouthpieces, by publishing only the government’s view of news and affairs,” said Sanef chairman Mondli Makhanya.

He said the decision constituted a “serious offence” against the freedom of the media clause in the constitution which the government had sworn to uphold. “Freedom means liberty and particularly conduct where financial inducement or threat play no part,” he said.

He said aside from the “abhorrence” with which media houses would view “this attempt to coerce the press” – which was in contravention of the Press Code of Conduct and the Advertising Standards Authority – the consequences for the government’s reputation internationally, especially among investors, and that of the news media which enjoyed high regard internationally, were being ignored.

Makhanya reminded the government that several attempts to use the threat to withdraw advertising as a means of punishing newspapers for being outspoken and critical of official malpractice and corruption in South Africa, had failed, while in Botswana the Supreme Court had forced the government to abandon such practices.

Advertising experts expressed their concern about Manyi’s statements, especially in light of the proposed media appeals tribunal and the Protection of Information Bill, now before Parliament.

Communications expert Gordon Patterson, managing director of Starcom, said Manyi’s reasoning was “immature”. While the centralisation of media buying was a good idea, he warned that co-operative governance, in a structure where you have the client and the agency under the same umbrella, could be undermined.

“Historically we’ve seen that the focus became corrupted... Politics and communication must be kept at arm’s length,” he said.

Manyi said reports on budget votes in Parliament the previous day showed media had “done very well, so I want to say, keep it up … I see my boss Mr (Collins) Chabane has been well reported, so keep on doing that, then we will be friends”.

Currently the 34 national departments are responsible for the procurement of their own advertising space and airtime.

“GCIS will (now) procure media space and airtime for national departments in order to realise economies of scale,” said Manyi.

It was estimated that the departments’ combined budgets totalled just under R1bn, said Manyi, adding that the numbers still needed to be consolidated.

Of the government advertising budget, 52 percent goes to television and radio and 41 percent to print.

The government, through GCIS, would monitor and enforce adherence to the government brand, said Manyi.

Following his earlier statements during the briefing and under a barrage of questions from journalists, Manyi later said he needed to “rephrase” his statements so as not to “create confusion”.

“Even if you do write badly about (the) government, we will still work with you. The criteria, if anything else, is to report on government work, that is the issue.

“Once you have reported on government work you can do what you like to criticise.”

The government, he said, was battling to get its message across to its audiences.

The challenge was that the media were not subscribing to the “role which we want the media to play, that of passing on information of government”.

“The only thing that is happening is just criticism, so we are saying just create a balance. Criticise, yes, carry on criticising, you will help us, we want it. But as you do, please also communicate that which the government is trying to communicate otherwise it means we will have to resort to our own means, as it were,” he said in reference to the monthly tabloid Vukuzenzele, which the government launched recently and which he hailed as publishing “the truth”.

“So this partnership (mainstream media and the government) that we must have must be a partnership that is mutually rewarding, it must be mutually beneficial. We have content, please pass on the content and by all means criticise it as much as you can, but first pass it on, that is the issue,” he said.

Questioned on what guarantees there were that media critical of the government would not be prejudiced in the allocation of the government’s advertising budget, and whether more sympathetic media publications, like the New Age or the SABC, might be favoured with advertising, Manyi said: “The mainstream media will get its fair share. Of course, not everybody will continue to get their fair share of the cake, as it were, but I think what will determine all of this is a scientific approach.”

The “scientific approach” would be determined by “we get the bang for our buck as the government”.

http://www.iol.co.za/news/politics/fury-at-state-media-bribe-bid-1.1081408

3 Comment

3.1 Some valuable lessons for Walmart

Phillip Jennings, Cape Times, 9 June 2011

While the decision of the South African Competition Tribunal approving Walmart’s purchase of a 51 percent share of Massmart with limited conditions may have fallen far short of what the global union coalition believed and argued was necessary, how the process evolved should also provide some valuable lessons for Walmart.

UNI Global Union has worked with many unions around the world that represent workers at Walmart. The company is famous for its business model, which forces suppliers to cut costs or lose the world’s biggest retailer as a customer, and this was the primary reason why the tribunal proceedings attracted such attention in South Africa.

At the end of the process, the merger was granted approval, with the merged entity being compelled to establish a programme for South African suppliers to the amount of R100 million. It must also, according to the tribunal, impose no worker retrenchments for two years, not challenge the representation rights of the South Africa Commercial, Catering and Allied Workers Union (Saccawu) for at least three years and offer preferential hiring to 503 workers who were retrenched in mid-2010. The above conditions largely track what was offered “voluntarily” by Walmart at the end of proceedings.

First, it is an ominous indication as to Walmart’s possible future business practices that instead of raising these conditions at the commencement of the hearing, it waited until the final hour, depriving any intervening party of the ability to discuss them during proceedings.

There are, however, more substantive concerns that one could level against each of the conditions.

The fund for suppliers equals approximately 0.003 percent of Walmart’s annual global sales, so, while the figure may appear a large one at first glance, it is inconsequential to a company of Walmart’s size. The redeeming feature may be the inclusion of various stakeholders, including labour, in the administration of the scheme, but we will require further clarification from the tribunal as to how this may work in practice.

The prohibition on worker retrenchments for two years is far too short a time frame to offer ample comfort to Massmart employees. Of more significance, however, will be the manner in which Walmart plans to engage in labour negotiations within the two-year period, in addition to thereafter.

Indeed, in the wake of the decision, a New York-based analyst at Wall Street Strategies, commenting in relation to Walmart, has already stated: “In two years it looks like they can go to town on labour costs.”

This fear is exactly what grounded the arguments that we made to the tribunal, and why we will be closely monitoring the situation going forward in conjunction with our affiliate, Saccawu.

While the restriction on derecognition for three years does give Saccawu time to build and further strengthen its union presence in the Walmart stores, we are concerned it creates a countdown clock for Walmart, which may try to break the union as soon as the three years expire.

UNI will be in Johannesburg in July to work with Saccawu to build up the union presence in Massmart in South Africa and in the other countries where the company operates, and we are committed to ensuring that Saccawu remains the representative body for workers.

The condition regarding the merged entity being compelled to give preference to the 503 employees who were laid off during June 2010, while taking into account those employees’ years of services, does go further than the ad hoc offer of the Massmart CEO to commit to “discuss” this with the union.

It also, however, falls very far short of the recommendation by the commission that the workers be reinstated. The enforcement of this condition can only be guaranteed through close co-operation with the union, which we expect the company to agree to.

A show of goodwill from Walmart and Massmart would be the unconditional reinstatement of the more than 500 workers whose jobs were cut in anticipation of the Walmart buyout. This would send a clear message that Walmart is serious about being a good employer and a good global corporate citizen.

If Walmart sits at the table with Saccawu and Cosatu to hammer out a fair deal for workers, it will set a good precedent for the company if it has designs on further expansion in Africa. We have unions throughout the continent that we will work with to ensure they can build their organisations and ensure quality jobs for workers in the commerce sector and the rest of the services economy.

With Walmart’s well-known global reputation we are concerned that, without proper monitoring and enforcement, the conditions mandated by the tribunal are too weak to protect workers and local suppliers to Massmart. If the conditions are not met, it will be harsh retail therapy – Walmart style.

In a statement, the tribunal said its job “is not to make the world a better place, only to prevent it becoming worse as a result of a transaction”. We are not convinced that its decision will meet that laudable goal.

UNI does wish to commend the South African government for trying to develop an inclusive and just society with fair remuneration for workers, as evidenced by its active participation in this process.

Even though we disagree with the tribunal’s decision, we believe that the work of our global coalition with Saccawu and the United Food and Commercial Workers’ International Union (UFCW) of North America pushed Walmart and Massmart to offer voluntary conditions and the tribunal to impose more conditions on the deal than would have been the case had we not been present.

If we look closely at the deal, we can see how much it has changed. Walmart changed its ownership plan from 100 percent to 51 percent; it was forced to deal with a more rigorous process with the Competition Tribunal that took much longer than predicted; and it offered conditions at the 11th hour when it was never clear that they were going to do so. The above four points are clear victories, which would not, in my view, have been possible without the unions and UNI playing the central role.

Perhaps a more lasting legacy of this entire process is the debate that ensued as a result. There is a phrase, “sunlight is the best disinfectant”. It is UNI’s hope that the light shone on Walmart’s practices around the world will assist South Africa as it seeks to limit the destructive impacts that this company can have.

For UNI, our top priority is to support our affiliate unions in South Africa. We have committed to helping them grow their membership and build their power. We will hold our next World Congress in Cape Town in 2014. Walmart is also the world’s largest company and as the global union representing commerce workers, we have our work cut out for us trying to push the company to respect workers’ rights and to go beyond simply its legal obligations but to commit to being a responsible employer.

Besides the plans to help build the union power at the newly merged company, we know that Saccawu is considering what legal options may be at its disposal to put tougher restrictions on the deal.

We are now calling on Walmart to sit down and talk with UNI to agree to a global deal on its labour relations. We are committed to protecting workers’ rights and local communities around the world and we will take that cause up wherever Walmart operates or seeks to operate. However, we believe that the most efficient way to do this is not on a case by case basis, but rather to come to a general agreement on a global level and sign a global agreement with UNI that ensures the company respects basic worker and union rights wherever it operates.

We will stand with unions and communities wherever Walmart wants to expand, to make sure there is protection for jobs and local industry, and our affiliate unions would expect nothing less.

Walmart is big enough to make a positive difference if it so desired. It can chart a new course for the mother continent. We will be there, with our unions from around the world, to argue that it should.

Jennings is the General Secretary of UNI Global Union, a global federation representing 20 million workers in 900 unions.

http://www.capetimes.co.za/some-valuable-lessons-for-walmart-1.1080938

3.2 Safety cuts don’t heal — they kill

Terry Bell, Business Report, 10 June 2011

The furore surrounding last month’s rail smash in Soweto, in which 857 commuters were injured, has highlighted a dangerous and often deadly problem that rail unions have been warning and complaining about for a decade and more. Because the Soweto accident was only one of a string of similar incidents over the years; in fact, just another accident waiting to happen.

What distinguishes this latest tragedy is not only the number of people injured, but also the fact that the Passenger Rail Agency (Prasa) has publicly accepted responsibility. This has come in the form of an offer of R20 million to compensate the 857 and also the more than 200 hurt in another accident in Pretoria in February.

Hospital expenses will be met by Prasa and those commuters who waive their right to sue for compensation will, dependent on the extent of their injuries, be given either R7 500 or R10 000 as a full settlement. An apparent majority have already accepted this deal which most lawyers regard as inadequate.

But the ongoing accusations about “legal vultures” allegedly waylaying the injured to persuade them to sue smacks of a desperate attempt to deflect attention from the inadequacy of the Prasa offer. A class action court case or a series of public claims for damages could also reveal publicly the extent of possible historical negligence and the parlous state of the South African railway system.

None of this detracts from the sometimes sordid nature of “ambulance chasing” by personal injury attorneys. But it is often only their actions that make it possible for victims to know about, and to win, adequate compensation for injuries that may result in a lifetime of pain and suffering. In any event, the Law Society offered free legal advice, with no apparent touting involved.

So there is an element of scapegoating here and it extends to train drivers, with the driver of the train that crashed into stationary carriages in Soweto being fired on the spot. But, perhaps significantly, no further action was taken against him.

“Here it is always the case that the driver is automatically blamed,” says Jane Barrett, policy research officer of the SA Transport and Allied Workers’ Union. She points out that in other countries such as Britain, the environment — the position of signals, the lighting and other such factors — are always first taken into account.

This week, after a disciplinary hearing, another train crash driver was fired. The sacking was publicised as an example of how Prasa made passenger safety a priority; the implication being that negligent drivers are the main cause of rail accidents.

But if safety and not cost-cutting had been a priority, perhaps all trains would be equipt with the available automatic train stop device. It halts any train passing through red signals. So far, only the Gautrain has this provision, that unions have wanted, but ministers and transport bosses have apparently rejected on the basis of cost.

This gives rise to a widespread perception that only the wealthier and elite sections of society — those using air transport and the Gautrain — warrant the best safety measures.

Eleven years ago, in this column, the then Footplate Staff Association warned about an “eventual rail disaster”. The main danger highlighted was SPAD — Signal Passed At Danger — a problem recognised among railways around the world and accepted here at least 12 years ago.

Among the causes of SPAD are inattention, distraction, fatigue and signal failure. These are all constant dangers for drivers working long hours over repetitive stretches of track. Recognition of this saw the development of the automated stop device.

Despite the Basic Conditions of Employment Act and various agreements struck between managements and unions, many train drivers still work excessive hours, with some on freight trains registering up to 100 hours of overtime a month. “And unlike airline pilots, train drivers can’t just switch to auto-pilot once they get underway,” says Chris de Vos, general secretary of the United Transport and Allied Trade Union that represents the majority of drivers.

Even on the Metro services, drivers operate on 12-hour shifts throughout the month, compared to a maximum of 8.5 hours a day and 100 hours a month for airline pilots. And train drivers operate antiquated, often poorly serviced equipment on lines where Prasa admits that all but 16 per cent of the signalling system has “reached the end of its life”.

This was a situation inherited by the passenger rail agency when it was established just over two years ago. Prasa’s group chief executive, Tsepo — “Lucky” — Montana has conceded that 83 per cent of the rail fleet is “driven by 1956 technology”.

More than 30 years of under-investment has meant that the passenger rail service is constantly on the verge of collapse. “So the most affordable, environmentally friendly and safe long-distance transport system is shrinking,” says Barrett.

In recent months, she notes, there have been no passenger rail services between Bloemfontein and Durban or between Johannesburg and Polokwane and Musina. The reason: not enough rolling stock.

There are also issues of training and of staff shortages. “There are 1 300 vacancies on the freight rail side,” says De Vos.

Over the past decade there has also been little change in working conditions. In May 2001, this column noted: “One of the unwritten but essential requirements for a train driver.....is good bladder and bowel control.”

That was because the draughty steel boxes that are train control rooms had no toilet facilities. And drivers were only allowed a break after five hours of work. “The same still applies,” admits De Vos.

“And at a time when we want to reduce harmful emissions, congestion on the roads and create jobs, we should be expanding and improving our rail network,” says Barrett.

Following the publicity surrounding the Soweto accident the unions hope that rail — “one of the most important public transport facilities we have” — will be prioritised. Above all, they warn: “Cuts in safety don’t heal — they kill.”

Less state intervention is the solution to the jobs crisis

Brian Kantor, Business Day, 10 June 2011

THE long-heralded subsidy for job creation has become a reality. The Jobs Fund will make available R9bn over the next three years as a subsidy for jobs to be created, with R2bn available this financial year. The fund will be administered by the Development Bank of Southern Africa . It will be "targeted at established companies with a good track record and plans to expand existing programmes or pilot innovative approaches to employment creation, with a special focus on … young people", according to answers at a parliamentary media briefing this week.

The four areas of focus are enterprise development, infrastructure investment, support for work seekers and institutional capacity building — including internship and mentorship programmes. The focus seems broad enough to cover almost every aspect of business activity.

The approved programmes will be "cost and risk shared by participants … to ensure real ownership". That is, private-sector participants will have to provide matching funds on a one-to-one ratio. A reduced "own contribution" is intended for "non-private sector applicants". These would include municipalities and public enterprises.

The scheme will clearly create jobs for consultants advising businesses how to succeed in the competition for subsidies. It should prove particularly welcome to firms with well-established training programmes.

It will prove a boon to the well-established and much-maligned labour brokers under pressure in Parliament because they, unlike the unions and in competition with them, have proved so effective in finding work for their clients.

The government is trading off a significant proportion of its corporate tax base for new industrial projects and subsidies for employment. In addition to the R9bn Jobs Fund, the newly defined I2i Tax Incentives are backed by a 2011-12 budget allocation of R20bn. These are by no means trivial amounts in absolute terms, or relative to all the tax collected from SA’s companies.

In the 2010-11 budget, estimated revenue from companies was R150bn, or 24% of all estimated tax revenue of R643bn. The government’s dependence on income from companies is unusually large. In many other tax regimes, the corporate tax rate may be comparable to the rates levied on company profits in SA. But when taxes actually paid are reduced by investment and the many other allowances or tax exemptions, the effective (economic) tax rate becomes much lower than the nominal company tax rate.

The economic tax rate is found by adjusting investment and depreciation allowances for real or economic depreciation actually incurred by the owners of plant and equipment. When the investment allowance for income tax purposes exceeds true or economic depreciation, the effective tax rate is lower than the nominal tax rate.

SA is following this route. Providing more subsidies and allowances for companies leads to less tax paid and a lower effective tax on particular business profits.

If, however, the path of government spending will be unaffected by the extra subsidies, as would appear likely, the taxes saved or the subsidies provided to companies that benefit would have to be made up by taxes collected from other taxpayers. This means increased taxes on consumption spending or on individual incomes. Or companies outside the sectors favoured by industrial policy will be forced to pay up for the benefits provided to favoured industries.

The government clearly thinks it can do more than simply providing an encouraging tax and regulation environment for business in general. It clearly believes it can pick the winners in the industrial space rather than leaving the investment and employment decisions to participants in the marketplace on a field levelled by equally generous tax treatment, irrespective of the designated activity and location in which it takes place.

It would promote economic growth if more generous investment or depreciation allowances were offered to business in general rather than those judged worthy by bureaucrats. This would encourage all companies to save and invest more of their after-tax earnings and to employ more workers. It would have to mean higher taxes on consumption expenditure. The government has proved itself more capable at raising tax revenue than spending it effectively. The subsidies will surely add to industrial output and employment. But we will never know how much better the economy might have done had less discretion been exercised over tax concessions or subsidies. As the saying goes: if you want more of something, subsidise it; if you want less, tax it. SA is doing both — extracting more tax from some employers, employees and consumers while subsidising other businesses and their employment decisions more generously.

The government shows a regrettable lack of respect for the creative powers of private businesses. The simple recipe for economic growth is one that relies on businesses, directed by their owners and senior managers, to pursue their self-interest, constrained by the competition provided by other businesses for their customers and workers and providers of capital. Economic history has proved the recipe works.

But governing best by governing least does not serve the interest of ambitious policy makers. There is a constant flow of new regulations that businesses have to manage, which adds to their costs and reduces their competitiveness with imported goods. There appears, moreover, to be no ground swell of support for activist economic policies increasingly being foisted, at great cost, on business. The impetus seems to come directly from officials and their consultants.

Business, unlike the government, delivers very effectively. It would deliver more jobs if the labour market was less heavily regulated to encourage it to do so. Formal business, constrained as it is by the regulation of the labour market, has become labour shy — and profitably so. The solution is to remove the constraints to encourage entrepreneurs to compete with established business using more, rather than less, labour-intensive methods of production and distribution.

Industrial policy and the Jobs Fund have become expensive and counterproductive alternatives to deregulation of the labour market. The employment problem in SA is one of the government’s own making, acting as it has done to entrench the rights of established workers at the expense of potential (usually) young entrants to the ranks of the formally employed. The fact is that gross domestic product (GDP) has grown since 1995, while formal employment has not increased at all.

This breakdown in the GDP-employment ratio is more than coincident with the introduction of a much more intrusive regulation of hiring and firing and employment benefits imposed since 1995 that began with, but is not limited to, the Labour Relations Act of 1995. It has been caused by these interventions that have been helpful in improving the benefits of those in employment, who have increasingly clung on to their jobs — a further force discouraging the efficient use of scarce human capital.

The government and its officials will, in the future, no doubt point to the jobs gained through the provision of an employment- related subsidy and the other incentives provided to industry. Perhaps government departments and publicly owned enterprises will also be compelled to employ more labour — funded by the taxpayer. The jobs lost because of higher taxes and job-destroying regulation will be never become obvious.

The solution to the failures of SA’s economy, or rather its formal businesses to provide more jobs, would however seem obvious to all but those with an interest in the status quo — the trade unions and the officials who write and implement interventions in the labour and other markets of the economy.

That solution is to rely less on government and its regulatory and taxing and subsidy powers and more on private business to deliver the essential goods and services and the employment opportunities demanded in a modern economy.

And to make sure that the process by which business bids for any increasing flow of work subcontracted by the government to private enterprise is conducted honestly and transparently.

• Kantor is Chief Economist and Strategist at Investec Wealth & Investment, and Professor Emeritus of Economics at the University of Cape Town.

http://www.businessday.co.za/articles/Content.aspx?id=145458

Patrick Craven (National Spokesperson)

Congress of South African Trade Unions

1-5 Leyds Cnr Biccard Streets

Braamfontein

2017

P.O.Box 1019

Johannesburg

South Africa

Tel: +27 11 339-4911/24

Fax: +27 11 339-5080 / 6940