Identifier
Created
Classification
Origin
09JOHANNESBURG163
2009-11-18 15:33:00
CONFIDENTIAL
Consulate Johannesburg
Cable title:  

ILO SAYS MORE LABOR LEGISLATION IS NOT THE WAY TO GO

Tags:  ELAB ECON PREL PGOV ILO SF EAID EFIN EINV ETRD 
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P 181533Z NOV 09
FM AMCONSUL JOHANNESBURG
TO SECSTATE WASHDC PRIORITY 6644
INFO DEPT OF LABOR WASHINGTON DC
DEPT OF TREASURY WASHINGTON DC
DEPT OF COMMERCE WASHINGTON DC
AMEMBASSY PRETORIA PRIORITY 
USMISSION GENEVA PRIORITY 
AMCONSUL DURBAN PRIORITY 
AMCONSUL CAPE TOWN PRIORITY 
AMEMBASSY WINDHOEK PRIORITY 
AMEMBASSY MAPUTO PRIORITY 
AMEMBASSY GABORONE PRIORITY 
AMCONSUL JOHANNESBURG
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
-------

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