ILO SAYS MORE LABOR LEGISLATION IS NOT THE WAY TO GO

C O N F I D E N T I A L JOHANNESBURG 000163 STATE FOR AF/S STATE FOR DRL - M MITTLEHAUSER AND T DANG DOL FOR S HALEY AND P WHITE GENEVA FOR ILO OFFICE E.O. 12958: DECL: 11/18/2019 TAGS: ELAB ECON PREL PGOV ILO SF EAID EFIN EINV ETRD SUBJECT: ILO SAYS MORE LABOR LEGISLATION IS NOT THE WAY TO GO REF: A) 2008 JOHANNESBURG 154 B) 2009 CAPE TOWN 194 C) 2009 JOHANNESBURG 161 CLASSIFIED BY: Doron Bard, Acting Consul General. REASON: 1.4 (b),(d) Summary -------------- ¶1. (C) The International Labor Organization (ILO) believes that South African attempts to tighten labor laws and ban labor brokering are misguided and will decrease South Africa's investment appeal. The ILO said that current South African labor law offers adequate protections but is not enforced because of a feckless and politicized Department of Labor (SADOL). Business attempts to skirt existing labor laws had fueled an already emotional quest by labor for additional worker protections. The ILO hopes that a project to boost South Africa's woeful labor inspectorate would curb unscrupulous labor brokers while preserving an industry that responds to the modern economy and employs more than 500,000 South Africans daily. End summary. Labor Law: Leftwards? -------------- ¶2. (C) Regional Labor Officer met with ILO Southern Africa (Regional) Director Vic van Vuuren on November 13. Van Vuuren praised most policies of the Zuma government but said he was concerned over proposed amendments to South African labor law. Van Vuuren believed that policy changes advocated by SADOL would raise the already uncompetitive cost of labor in South Africa. SADOL was determined to tighten the labor market by changing employment equity law, heavily regulating or banning third party contracted labor (known as labor brokering),and further regulating temporary employment. The Minister Staked his Future on This Issue -------------- ¶3. (C) Van Vuuren said he had been `shocked' that South African Minister of Labor Mbethesi Mdladlana had retained his job under President Zuma. Mdladlana was an ardent backer of former President Mbeki who had only shifted allegiances when Zuma's victory was clear. When Mdladlana's political affiliations were coupled with `the worst performing Ministry in South Africa' it was `obvious' that he should have resigned. Van Vuuren said the Minister made a shrewd ploy to retain his job by radically and publicly pledging to ban labor brokers in March, 2008. The Congress of South African Trade Unions (COSATU) had backed that decision and begun to fight for Mdladlana. Van Vuuren opined that unlike most other ANC ministers, Mdlandlana was a former schoolteacher who had few income-earning opportunities outside of government. Labor Broker Ban will Further New DG's Agenda -------------- ¶4. (C) Van Vuuren expressed concern that the Minister had courted Jimmy Manyi as SADOL Director General (DG). Van Vuuren respected the fact that Manyi -- unlike previous SADOL DG's -- had an ambitious agenda and wanted to reform the chronically ill Department. That said, Van Vuuren believed Manyi was as radical and uninformed as the Minister. Manyi had reached the limit of his talents in the private sector and had `job-hopped' from one corporation to another. His skills were `stretched' during his last job as Director of Corporate Affairs at Tiger Brands and he had been justifiably passed over for promotions. This had fueled Manyi's populist and racist statements despite the fact that he was typically passed over in favor of another black candidate. Manyi had taken on a vocal role advocating transformation [above skills] at all costs in the Black Management Forum, a division of Business Unity South Africa (BUSA),and had made himself persona non grata in the corporate world. Manyi and the Minister both needed to hang onto their jobs and Van Vuuren suspected their agendas would quickly merge. ¶5. (C) Van Vuuren was dismayed that Manyi had not resigned from his role as director of the Black Management Forum. On that fourm, akin to a trade union for black middle and upper management, Manyi battled for the advancement of its members. Now, Manyi was Director General of the Department that was charged with implementing employment equity. Manyi saw little contradiction in his dual roles and had publicly said SADOL would enforce harsher penalties for companies that did not comply with South Africa's complex equity laws. (Note: Manyi has been harshly criticized for stating that skills shortages are a myth used by South African business to justify hiring white applicants over qualified blacks. Most sectors of the South African economy are hindered by a severe shortage of skilled applicants. His organization also came out with spurious racism innuendo against Board Chair Bobby Godsell in the recent Eskom management shakeup. End note.) Stop with More Laws; Enough Already -------------- ¶6. (C) Van Vuuren said South Africa already had a comprehensive and enforceable labor law that is the strongest in the developing world. The law needed no further amendments. Van Vuuren told DG Manyi that SADOL could eliminate labor brokering abuses by revitalizing the labor inspectorate and enforcing existing law. Van Vuuren believed that Manyi privately agreed but would be forced to go along with Minister Mdladlana's wishes if he wanted to achieve employment equity reform. The Minister had told both the DG and SADOL's contracted attorney (Paul Benjamin) to draft a ban on labor brokers. Benjamin was hedging that a ban could be unconstitutional but the Minister `did not want to hear it.' ILO Assistance? -------------- ¶7. (C) Van Vuuren shared an ILO proposal to boost South Africa's labor inspectorate and reorganize SADOL. The proposal would give SADOL the teeth to enforce its existing labor laws and would `hopefully' show that SADOL did not need to pile on additional legislation to compensate for a `complete lack of capacity.' Van Vuuren cautioned that the ILO was moving slowly to avoid political agendas. The Minister and DG had asked for ILO assistance, but were using it as an attempt to hang onto control of the powerful National Economic Development and Labor Council (NEDLAC) and lucrative multi-billion dollar skills training programs. Training programs had already been shifted to the Department of Higher Education (ref B). NEDLAC was expected to move to the Department of Economic Development (led by COSATU intellectual heavyweight Ibrahim Patel) in 2010. Never an Educated Debate -------------- ¶8. (C) Van Vuuren harshly criticized labor and business for fostering an uneducated and emotional debate. SADOL had not completed an impact analysis on changes it was proposing to labor legislation. The business community had worsened the debate by fighting SADOL in the media and not realizing that public opinion was on SADOL's side. Business had sensationalized the `grave consequences' of a ban on labor brokers without offering any facts of its own. Van Vuuren wryly quipped that someone should point out that COSATU used a labor broker to fill multiple positions in its policy research unit. The trade union had been unable to afford and/or locate permanent staff. ¶9. (C) Van Vuuren acknowledged that South Africa had a number of smaller and unscrupulous labor brokers termed the `bakkie (pickup) brigade.' These fly-by-night operators had given the industry a bad name. That said, the ILO still believed that most brokers met a critical need for atypical employment and linked both skilled and unskilled labor to the job market. Van Vuuren said that atypical employment had never `gone down well' with COSATU because they equated all atypical employment with the retail sector. The South African retail sector had unscrupulously used brokers to keep some workers on `lifelong' monthly contracts. Those workers were paid less than permanent employees and were nearly impossible for COSATU to unionize. (Note: Short-term labor does not carry the same protections under SAG labor law. Currently, a labor broker that loses a contract may lay off a worker without providing full unemployment benefits. Any changes in the law would, at a minimum, make labor brokers liable to pay workers until they are placed in another job. End note.) Comment -------------- ¶10. (C) Van Vuuren is one of the few South Africans who is widely respected by (and moves comfortably between) business, government, and labor. Regional Labor Officer expects that he will continue to tweak and lobby for donors to fund programs that reform South Africa's labor inspectorate. Those programs have the potential to eliminate violations in the atypical employment sector. Nevertheless, it remains unclear if SADOL or the labor movement would back down from numerous political pledges to create additional legislation (ref C). BARD