Documente Academic
Documente Profesional
Documente Cultură
UNSKILLED LABOUR
SECTOR
REPORT
REPORT
OF
THE
EMPLOYMENT
CONDITIONS
COMMISSION
ON
THE
CHAPTER ONE........................................................................................................................................4
1.
1.1.
1.2.
INTRODUCTION.......................................................................................................................4
BACKGROUND TO THIS INVESTIGATION.......................................................................4
TERMS OF REFERENCE........................................................................................................5
1.3.
METHODOLOGY.....................................................................................................................6
1.3.1.
1.3.2.
1.3.3.
1.4.
CHAPTER TWO.....................................................................................................................................12
2.1.
2.2.
2.2.1.
2.2.2.
2.2.3.
2.2.4.
2.2.5.
2.2.6.
2.2.7.
2.2.8.
2.3.
CHAPTER THREE.................................................................................................................................19
3.1.
3.1.1.
3.1.2.
3.1.2.1.
3.1.2.2.
3.1.2.3.
3.1.2.4.
3.1.3.
3.1.3.1.
3.1.3.2.
3.1.3.3.
3.1.3.4.
3.1.4.
3.1.4.1.
3.1.4.2.
3.1.4.3.
3.1.4.4.
3.1.5.
3.1.5.1.
3.1.5.2.
3.1.5.3.
3.1.5.4.
3.1.6.
3.1.6.1.
3.1.6.2.
3.1.6.3.
3.1.6.4.
Views of Employers....................................................................................................................23
Departmental Recommendations.............................................................................................23
ECC Recommendation..............................................................................................................24
Manufacturing of bone meal....................................................................................................24
Views of Employees....................................................................................................................24
Views of Employers....................................................................................................................24
Departmental Recommendation...............................................................................................24
ECC Recommendation..............................................................................................................24
Manufacturing of food for domestic animals.........................................................................24
Views of Employees....................................................................................................................25
Views of Employers....................................................................................................................25
Departmental Recommendations.............................................................................................25
ECC Recommendations.............................................................................................................25
CHAPTER FOUR....................................................................................................................................26
EVALUATION IN TERMS OF ECC CRITERIA................................................................................26
The alleviation of poverty........................................................................................................................26
Cost of living.............................................................................................................................................28
Other information that could be relevant to the ECC..........................................................................28
Conclusions...............................................................................................................................................30
Tables
Table 1: Schedule of Information Sharing Sessions: Dates, Venues & Attendance....................................8
Table 2: Organisation Visited: Province, City or Town, Trade, Name of Organisation...............................8
Table 3: Schedule of Public Hearings: Province, City or Town, Dates, Venue and Attendance...............10
Table 4: The 24 trades reviewed................................................................................................................12
Table 5: A brief description of the trades and the economic sectors in which they are located................12
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Unskilled Labour Sector ECC Report
CHAPTER ONE
1.
INTRODUCTION
In accordance with Section 54(3) and (4) of the Basic Conditions of Employment, Act 75 of 1997
(BCEA), the Employment Conditions Commission (ECC) presents you with a report on the
investigation into the Unskilled Labour sector.
1.1.
When the Basic Conditions of Employment Act (BCEA) of 1997 came into effect, one of the already
existing wage determinations was the Unskilled Labour Wage Determination. This determination
automatically became a sectoral determination, but was not subsequently amended. As a result, some of
the conditions in the determination were inferior to those provided for in the BCEA. Further, with no
amendments to the prescribed minimum wages, there was a serious decrease in the real value of the
wages.
The Employment Conditions Commission (ECC) recognised, however, that some form of protection was
still necessary in the unskilled labour sector. In respect of the sector and/or trades covered by the
Unskilled Labour Determination, the ECC recognized the need for an investigation to determine whether
any of these sectors/trades were accommodated or covered through other means and whether any of
them still required protection by means of specific sectoral determinations.
As a result, a preliminary investigation was commissioned by the Department of Labour (DoL), which
found that the complete cancellation of some of the wage determinations would adversely affect
employees in certain sectors. The results of the preliminary investigation commissioned by the DoL
found that complete cancellation of some of the unskilled labour wage determinations would adversely
affect employees in these sectors:
Unskilled Labour (WD 467) determination cuts across many labour-intensive sectors
employing some of the most vulnerable employees. The view was expressed because this
determination covers the largest number of unskilled workers, to cancel it without replacing
it with a new sector determination would leave a large number of those workers without any
wage protection.
Cement Products Industry (WD 448) has no bargaining council or agreement applicable
and inclusion with the Unskilled Labour determination could be considered to protect
vulnerable workers, lest employees be left open to exploitation.
As a result of these findings, the Department of Labour has commissioned a research to examine
conditions of employment and wages in respect of unskilled workers in 24 trades spread among specific
economic sectors
1.2.
TERMS OF REFERENCE
The Department published a notice in the Government Gazette No 32933 of 05 February 2010 under
Government Notice No 69. The notice called upon interested parties to send written representations to
the Department within 90 days of publication of the notice. The terms of reference for the investigation
into the Unskilled Labour sector were set out as follows:
(a)
(b)
(ii)
(iii)
To establish the feasibility of grouping them together in a single determination for the
Unskilled Labour;
(c)
To determine how best to group all classes of employees in the under-mentioned sectors
in the Republic of South Africa:
1.
2.
Bunkering
3.
Cement products.
4.
5.
6.
Demolition of buildings.
7.
8.
Garden services.
9.
(d)
10.
11.
Manufacturing of carpets.
12.
13.
Manufacturing of fertilizer.
14.
15.
16.
17.
18.
29.
20.
21.
Shipping agencies
22.
Tending of racehorses
23.
24.
Funeral undertaking
1.3.
METHODOLOGY
the publication of a notice in the government gazette as required by section 52(3) of the BCEA,
the processes to ensure that the appropriate legislation was complied with in respect of the
investigation of the unskilled labour sector,
As an addition the Department commissioned a preliminary study into the unskilled labour sector to
report on the gap that has been left by the cancellation of Wage Determination 467, Unskilled Labour,
published under Government Notice R.259 of 30 March 2007. The study found that Wage Determination
467 was applicable to unskilled workers in 39 trades and was made to specifically address the question
of wages for the most vulnerable workers, i.e. those employed as unskilled workers in the lowest
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Unskilled Labour Sector ECC Report
category of employment such as general workers not covered or subject to any other wage determination
or bargaining council agreement.
The cancellation of 18 wage determinations from 1 June 2007, left thousands of employees without the
protection of a minimum wage. These exclude workers that are covered by a BC. The preliminary study
recommended that by providing a minimum wage for the unskilled labour sector would address
vulnerability in respect of the unskilled labour sector.
As a result of the findings of the preliminary study the department commissioned research. The research
had to address the criterion set out in the BCEA and in addition provides the following information.
1.
(ii)
Conditions of employment
(iii) Wages
2.
During the first phase of the research process, the researchers developed a literature review (secondary
research) which included:
Analysis of data
The second phase of the research process was the primary research which included:
Stakeholder interviews
(including employers organisations) and employees (including labour unions) were invited to be part of
these sessions.
Information sharing sessions were conducted nationally in all provinces. The table below shows the
information sharing sessions together with sites visits schedule and attendance figures:
Table 1: Schedule of Information Sharing Sessions: Dates, Venues & Attendance
Province
City or
Town
Eastern Cape
Port Elizabeth
2010/08/16 10:00
Gauteng
Pretoria
2010/08/16 10:00
Limpopo
Polokwane
Mpumalanga
Nelspruit
Number of
Employees
Number of
Employers
2010/09/09 10:00
Site Visit
30
2010/09/10 10:00
Provincial Boardroom
2010/09/15 10:00
2010/09/16 10:00
Site Visit
2010/09/07 10:00
Site Visit
21
2010/09/08 10:00
18
2010/09/16 10:00
Site Visit
22
11
2010/09/17 10:00
Provincial Boardroom
12
2010/09/20 10:00
Provincial Boardroom
2010/09/21 10:00
Site Visit
2010/10/05 10:00
Sites Visit
15
2010/10/06 10:00
10
99
31
38
26
Total
137
57
North West
Northern Cape
Western Cape
Free State
Rustenburg
Kimberley
Cape Town
Bloemfontein
Venue
Subsequent to both information sharing sessions and public hearings, site visits were arranged which
was another effort to interact with employees and employers in their workplaces and issuing them with
questionnaires to complete. The questionnaire required information regarding the current status
conditions of employment and wages paid in the sector. In compiling this report, inputs received through
the questionnaires were incorporated. The following table reflects the organisations visited during the
site visits.
Table 2: Organisation Visited: Province, City or Town, Trade, Name of Organisation
Province
City or Town
Trade
Name of Organisation
Eastern Cape
Port Elizabeth
Courier
Courier it
Talisman Plant & Tool hire
Gauteng
Johannesburg
Tending of Racehorses
Limpopo
Polokwane
Cement
Cement
Concrete Image
Funeral Undertaking
Northern funerals
Rockcotta Crete
Kwano Bricks
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Unskilled Labour Sector ECC Report
Mpumalanga
Witbank
Anti waste
Lafarge Cement
Funeral Undertaking
AVBOB
Funeral Undertaking
Doves funeral co
Funeral Undertaking
Northern funerals
Funeral Undertaking
Bopape funerals
Funeral Undertaking
Capricorn funerals
Funeral Undertaking
SAB
Quma Plastic CC
North West
Northern Cape
Western Cape
Rustenburg
Kimberley
Cape Town
Kudu Granite
Pest Control
Funeral Undertaking
Motsisi funerals
Funeral Undertaking
Everest Funerals
Pest Control
Kill-A-Bug
Funeral Undertaking
Family Friends
Funeral Undertaking
Galeshewe Funerals
Funeral Undertaking
Funeral Undertaking
AVBOB
Funeral Undertaking
Courier
THWI Trading
Mineral Waters
Water @ waterworks co
Courier
Time Freight
Courier
Debonaire Lawns
Garden Service
SKYNET corrier
Courier
Keipoletse Funerals
Cement
Cement
Cement
Funeral Undertaking
Avbob Bellville
Funeral Undertaking
On the Dot
George
Free State
Kwa-Zulu Natal
Bloemfontein
Durban
Cement
Lafarge Quarry
Funeral Undertaking
AVBOB
Funeral Undertaking
Funeral Undertaking
Garden Service
Funeral Undertaking
Richards Bay
Garden Services
Cement
Quary Lafarge
Funeral Undertaking
Funeral Undertaking
Funeral Undertaking
Funeral Undertaking
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Unskilled Labour Sector ECC Report
Subsequent to the information sharing sessions, public hearings were conducted in all provinces. The
table below shows both public hearing together with sites visits schedule and attendance figures:
Table 3: Schedule of Public Hearings: Province, City or Town, Dates, Venue and Attendance
Province
City or Town
Date and
Venue
Number of
Time
Employees
Eastern Cape
Free State
Gauteng
Kwazulu Natal
Limpopo
Mpumalanga
North West
Northern Cape
Western Cape
Port Elizabeth
Number of
Employers
27
15
East London
11
13
Mthatha
25
15
Bloemfontein
4
0
2
0
Bethlehem
11
Welkom
12
Pretoria
19
13
Alberton
11
Boksburg
10
Randfontein
2010/10/07 10:00
Vanderbijlpark
2010/10/1110:00
14
Durban
17
20
Richard's Bay
14
10
Newcastle
Polokwane
Thohoyando
10
30
Tzaneen
27
Polokwane
12
Witbank
21
Nelspruit
Ermelo
Witbank
12
Rustenburg
Mafikeng
12
4
6
2
6
9
Klerksdorp
Upington
Upington
Kimberley
Cape Town
George
13
16
72
242
241
Total
314
250
The hearings thus provided information from a total of 250 employers and 314 employees. This brings a
total number of 309 employers and 451 employees consulted. It should further be noted that the
representation was both from individual employees and employers as well as those representing
organised business and labour.
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Unskilled Labour Sector ECC Report
As part of the information gathering process, the Department was invited by the Funeral Undertaking
Sector employers to come and make a presentation during their seminar which took place in Louis
Trichard (Makhado) wherein 100 employers attended the session of which they later submitted their
inputs in relation to the investigation.
1.3.3. PHASE THREE ECC PROCESS
During this phase the Department presented its findings and proposals to the ECC for its consideration.
The findings and proposals of the Department are discussed in the chapters dealing with the discussion
on conditions of employment and wages, followed by the ECCs recommendations.
1.3.4. PHASE
FOUR-
PUBLICATION
OF
THE
SECTORAL
DETERMINATION
AMENDMENT
This phase will see the publication of the sectoral determination or ministerial report, once approved by
the Minister, in the Government Gazette and subsequent awareness raising.
1.4.
The report consists of 4 chapters; Chapter 2 of this report outlines the sector profile and current status
of the South African Unskilled Labour sector. Chapter 3 is the discussion on application and scope of
the sectoral determination, wages and remunerations, demarcation, regulated hours of work, and other
conditions of employment, and this is followed by Chapter 4 containing the ECC evaluation criteria.
CHAPTER TWO
2.1.
According to the Terms of reference, the research had to look at the following 24 trades in order to
provide information in relation to the current status of conditions of employment. Table 4 below reflects
a list of the trades that the research had to focus on.
Table 4: The 24 trades reviewed
Brewing or bottling beer/mineral water
Bunkering
Manufacturing of fertilizers
Manufacturing of glucose, dextrose, cornflower, starch
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Unskilled Labour Sector ECC Report
Cement Products
Construction plant hire services
Delivery services, including messenger services
Demolition of buildings
Excavating, levelling and pumping sand, soil, gravel
Garden services
Maintenance agricultural/industrial show grounds
Manufacturing of bone meal
Manufacturing of carpets
Manufacturing of food for domestic animals
The table below provides a list and brief description of the 24 trades reviewed, the economic sector in
which they are located and the various occupations as per the Organising Framework for Occupations 1
(OFO).
Table 5: A brief description of the trades and the economic sectors in which they are located
A brief description of trade/s that fall within
Sector
the sector
Chemicals
materials
non-organic
materials
to
processing
areas,
are
Food
beverages
&
Manufacture
of
bone
meal
the
products.
Mill Worker (Skill Level 1)
feed.
The OFO is disaggregated into five (5) skill levels, with level 5 representing the highest skill level required for any occupation. For the purposes of this
study, skill level one (1) occupations is used to represent the unskilled workers throughout. Note that the list of occupations is only an extract from the OFO
and does not represent all the occupations surveyed.
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Unskilled Labour Sector ECC Report
glucose,
dextrose,
Beer Brewer
products
of
glucose,
dextrose,
a)
of
Bottling Attendant
employees
of
collectors
and
interest
general
are
garbage
maintenance
grounds.
Brewery Worker
gardens.
Services
Applies
pest
or
weed
management
weeds
in
domestic,
commercial
and
public lands.
Fumigator
racehorses.
Level 1)
Construction
plant-hire
services
hire
various
employees
to
hired.
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Unskilled Labour Sector ECC Report
buildings.
irrigation channels.
repairing
structures
and
facilities
on
components.
Textiles
completed garments.
materials.
Transport
Delivery
messenger
services,
services
including
involves the
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Unskilled Labour Sector ECC Report
of
goods
that
are
transported by ship.
in a specified area.
Waterside Worker (Skill Level 1)
Transfers cargo between ships and other
forms of transport or storage facilities.
Other Job Titles
Boat and Ship Cargo Loader
Docker Wharf
Longshoreman
Wharf Labourer
Recycling or Rubbish Collector (Skill
Level 1)
Collects
household,
commercial
and
Mining
minerals
&
surface quarry.
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Unskilled Labour Sector ECC Report
2.2.
Out of the 24 trades the research revealed that most of these trades are covered by either a Bargaining
Council agreement, sectoral determination or collective agreements. The following trades have been
identified as having such coverage:
2.2.1.
The National Bargaining Council for the Chemical Industry has a jurisdiction in these trades and it is
bound to be extended to all the activities mentioned in this sector.
2.2.2. The manufacture of fertiliser, Purification, grinding or packing of salt (sodium chlorite), and
Waste glass recovery
Presently the manufacture of fertilizers is subject to the National Bargaining Council for the Chemical
Industry. The unskilled workers are generally not regarded as vulnerable due to the activities of four
effective trade unions actively engaged in the Chemical Industry.
2.2.3. Construction plant hire service, Demolition of buildings, Excavating, levelling and pumping
sand, soil and gravel, and preparing sites for building or other purposes.
Traditionally this trade has been regarded as a trade in its own right. However, employers and employees
in the Civil Engineering Sector who excavate, level, prepare the site for foundations etc are subject to
Sectoral Determination 2. In cases where an employers business is only to prepare a site, then it is
contended that such activity does not fall within the scope of the Civil Engineering Sector. The numbers
of unskilled workers are few in relation to plant operators who are regarded as semi-skilled or skilled
workers. Due to the wages prescribed in Sectoral Determination 2 they have a ripple effect on the hiring
of construction plant employees and unskilled workers are usually paid on a comparable level.
2.2.4. Carpets and Mending of hessian, other bags
In 2009, the collective agreement that was concluded in the National Textile Bargaining Council was
declared as binding on the parties which concluded the agreement as well as on the other employers and
employees in this Industry with effect from 2 February 2009. In this regard the textile industry was
defined as an enterprise in which the employers and the employees are associated, either in whole or in
part, for any activity relating to the processing or manufacture of fibres, filaments or yarns, natural or
man-made and the processing or manufacture of products obtained there from, including all activities
incidental thereto or consequent thereon. Due to bargaining council intervention many unskilled workers
in the trade have been replaced by semi-skilled workers in a highly mechanised industry.
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Unskilled Labour Sector ECC Report
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Unskilled Labour Sector ECC Report
Out of the 24 trades which were focused on eighteen trades have protection, however the report will
focus on six trades without protection which include the following trades:
1.
Garden services
2.
Tending of racehorses
3.
Funeral undertaking
4.
Pest Control
5.
6.
CHAPTER THREE
In line with the discussions in Chapter two this chapter will focus on the six trades that are not covered
in terms of a bargaining council agreement, sectoral determination or collective agreement, furthermore
the chapter will also discuss the feasibility of establishing a sectoral determination for the unskilled
labour sector.
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Unskilled Labour Sector ECC Report
3.1.
3.1.1.
Garden Services
When Wage Determination 467 was investigated in 1993 by the Wage Board this sector was found to
pay the lowest wages. Now that Determination 467 has been cancelled there is no wage regulating
measure applicable to this sector. The number of employers providing gardening services has increased
due to the publication of Sectoral Determination 7, Domestic Workers. Employers rendering gardening
services usually employ 4 to 5 unskilled workers per unit who do gardening in the place of domestic
employees who are subject to Sectoral Determination 7. Apart from that there are employers who
perform garden service for both household premises and industrial premises on a fixed term contract
basis.
3.1.1.1. Views of Employees
In terms of the questionnaire analysis the majority of employees support the establishment of a sectoral
determination. The main reason why garden service employees supported the need for sectoral
determination was because of the current level of wages being paid in the sector which ranges from R50
to R60 per day.
3.1.1.2. Views of Employers
The employers support the need for a sectoral determination in order to regulate the sector. They
however argued that a sectoral determination should not include all trades under one umbrella since each
trade operates differently. The employers further indicated that the Department should take into
consideration the current economic climate when pegging a minimum wage, business operational cost,
productivity of the worker.
The majority of employers were not in support of a single minimum wage in the unskilled labour sector
and asked the department to check the difference when in comes to the cost of living at each province
for an example, comparing Johannesburg and Bloemfontein.
3.1.1.3. Departmental recommendation.
The Department considered the research findings, views of various stakeholders and wish to concur with
the view that protection is indeed needed for the garden service trade. The Department however would
suggest a different approach in terms of dealing with this trade. The Department proposes that the trade
should be aligned to Contract Cleaning Sectoral Determination no 1 if it is performed on a contract
cleaning basis.
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Unskilled Labour Sector ECC Report
workers who are employed are only seasonal so they mainly use casual workers to complete the task.
Taking that into consideration the Department propose that if regulation of this trade is needed as called
for by employers the Department would suggest that they aligned to Chemical Industry Bargaining
Council.
3.1.2.4. ECC Recommendation
After considering all the different proposals and information provided, the ECC recommends that the
process should be establish to look at the viability of extending the scope of the Chemical Industry
Bargaining Council to cover this trade.
3.1.3. Tending of racehorses
There is no bargaining council for the tending of racehorses. This sector comprises mainly of unskilled
workers and although termed the sport of kings they are not always paid handsomely. In some cases the
only major financial benefits is if a horse wins or is placed in the top three a bonus is paid. In the
absence of a trade union specifically for this sector it is doubtful that any collective agreements exist. As
far as the breeding of racehorses on farms is concerned such activity falls within the scope of Sectoral
Determination 13, Farm Worker Sector. Unskilled workers, other than farm workers, who tender
racehorses, are regarded as farm workers. During the current investigation it was revealed that wages
paid in this sector for the emerging racehorse tenders are similar to those paid in Farm Workers sector,
whereas for bigger racehorse tenders pay a minimum of R1800, 00 per month with benefits like free
accommodation, provident fund and 13th cheque.
3.1.3.1. Views of Employees
During the site visit employees in this sector indicated that they dont think it is necessary to establish
sectoral determination for this trade as they are currently receiving most of the benefits as stipulated in
the Basic Conditions of Employment Act. They further indicated that they are currently receiving
benefits like provident fund and they are also getting accommodation free of charge. The employees
concur with the fact that their activities in the trades are familiar with those in farm workers. Most of the
employees stay in hostels which are provided by the employers and they are not restricted who to bring
along.
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Unskilled Labour Sector ECC Report
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Unskilled Labour Sector ECC Report
very few areas. The unskilled workers in this trade are protected by Basic Conditions of Employment
Act which does not regulate wage.
3.1.5.1. Views of Employees
No inputs received from employees on this matter.
3.1.5.2. Views of Employers
No inputs received from employers on this matter.
3.1.5.3. Departmental Recommendation
The Department is of the view that this trade needs a further investigation to determine whether it is
feasible to align it to either bargaining council, or sectoral determination or collective agreement.
3.1.5.4. ECC Recommendation
The ECC believes that manufacturing of bone meal and manufacturing of food for domestic animals is
the same thing and would recommends that they should be checked and if viable group them together.
3.1.6. Manufacturing of food for domestic animals
This trade has been limited by the exclusion of employers whose undertaking is in conjunction with the
grinding, gristing or crushing of cereals or the production of any raw cereal products by grinding,
gristing or crushing. There appears to be no compelling reason for the said exclusions. However, the
main reason for the exclusion appears to be that some employees are subject to the Bargaining Council
agreement for the Grain Co-operative Trade. This trade does employ a small labour corps which is
considered to be unskilled. The unskilled workers in this trade most of them are covered by the
Bargaining Council Agreement. Employers who do not form a part of bargaining council have indicated
that they comply with the BCEA in terms of conditions of employment and in terms of wages they pay
R50, 00. Through the extension of the bargaining council agreement to these employees the elements of
vulnerability could be alleviated.
3.1.6.1. Views of Employees
There was no proposal from the employee received from this trade.
3.1.6.2. Views of Employers
Employers in this trade indicated that there is a need for a sectoral determination that will regulate
wages and conditions in the sector. They requested that general workers must be covered as the use or
24
Unskilled Labour Sector ECC Report
employ casual staff for packaging food in their containers. They also indicated that this workers start by
packaging food including loading in the trucks then afterwards they clean their work stations as well as
the entire building. Employers also indicated that its no feasible for them to have each employee
delegated to do a specific task e.g. because they package food then the floor and/ or work stations
becomes dirty and they cant clean as they go instead they have to do the same work first then after they
all clean. Employers suggested a provincial based minimum wage and further indicated that it should be
demarcated or categorized into Area A and Area B.
3.1.6.3. Departmental Recommendations
Considering the fact that there is an existing bargaining council for Grain Co-operative Trade, the
Department is of the view that through the extension of the bargaining council agreement to these
employees the elements of vulnerability could be alleviated.
3.1.6.4. ECC Recommendations
The ECC recommends that the two trades manufacturing of bone meal and manufacturing of food for
domestic animals should be aligned to the bargaining council for Grain Co-operative.
3.2.
The study found that most of conditions of employment in the investigated trades are aligned to the
Basic Conditions of Employment Act. The majority of employers are complying with such conditions of
employment as ordinary hours of work, meal intervals, Sunday work and contributions to UIF. The
majority of employees reported not getting any medical benefits, bonuses or 13 th cheques and any
pension or provident funds.
In most of the trades, written contracts are widely used. The research further revealed that most
employees work 40 to 45 hours which is in line with the maximum ordinary hours prescribed in BCEA
regulations.
In terms of wages the research indicated that 51% of unskilled workers in 24 trades earned more than
R2,000 per month. The standardised analysis shows that in most trades, more than 50% of unskilled
workers reported that their salaries meet their basic needs. The research concludes that while a small
majority of employees in the trades under review earn more than R2, 000 per month, most of them have
large households (more than five members), do not have medical benefits and do not earn bonuses or
13th cheques.
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Unskilled Labour Sector ECC Report
CHAPTER FOUR
EVALUATION IN TERMS OF ECC CRITERIA
The alleviation of poverty
The introduction of social protection measures in the form of social grants has played an important role
in bringing much sought-after relief to people living in poverty, however, accelerated economic growth
is still a necessary ingredient to assist in the battle against poverty in conjunction with strengthened
labour market policies and an improved education system.
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Unskilled Labour Sector ECC Report
South African business leaders have always argued that the need of unskilled employees to have the
alleviation of poverty addressed should be considered against the backdrop of the need for more
relaxation of current labour laws. However, Barnard (2009) has found that overall, employment
protection legislation (EPL) in South Africa appears to be relatively flexible, with respect both to the
average of OECD countries and to those other non-OECD member economies (Brazil, Chile, China, and
India), and that South Africas labour legislation seems to live up to its creators aim of providing for
regulated flexibility. He does point out that it is true that ease of firing is one area where South Africa
shows up as being less flexible, but that even in this case, South Africa scores below the average for
OECD economies in this regard.
This finding suggests that the perception of business that the South African labour market is
overburdened by regulation is distorted and that compared to developed and developing countries, South
Africas employment protection legislation is relatively flexible.
The majority (71.4%) of elementary workers in the different sectors studied indicated that their salaries
do not cover their basic needs. This 71.4% spans both the group that earned more than R2,000 per month
(51%) and the group that earns under this amount (49%). This suggests that unskilled workers feel that
they are living in poverty. That even the group earning over R2,000 monthly felt that their salaries do
not cover their basic needs emphasises the deprivation experienced by the group earning less.
The report argues that this must be balanced with what the poverty line in South Africa is. If the lower
bound poverty line, which provides for essential food and non-food consumption and amounts to R322
per capita per month in 2000 prices is used, then only 32.4% of the study sample can be said to be living
below the poverty line. This corroborates the finding by Armstrong et al (2008) that the consumption
levels of 33.2% of all households were below the "lower-bound" poverty line.
Armstrong et al used two absolute poverty lines that they indicate were proposed by Statistics South
Africa. The lower bound poverty line, which provides for essential food and non-food consumption,
amounts to R322 per capita per month in 2000 prices. The upper bound poverty line, which includes
an additional R271 for non-essential non-food items, amounts to R593 per capita per month.
They found that the consumption levels of 33.2% of all households were below the "lower-bound"
poverty line, while 53.3% of households consumed less than the "upper-bound" poverty line. Poorer
households were bigger, on average, than richer ones; hence, there was even more poverty when
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measured in terms of the proportion of individuals rather than the proportion of households who were
poor. The proportions of the population that consumed less than the "lower-bound" and the "upperbound" poverty lines were 47.1% and 67.6% respectively.
The income earned from employment will be important, particularly since the aim is to reduce
unemployment and poverty. Strengthening broad-based economic participation can be the best way to
ensure a more equal distribution of income. This requires, not only low rates of unemployment, but also
rising income earned from work. In other words, some path is needed that would create jobs and also
enable real wage growth in a way that is supportive of long run economic expansion.
In South Africa, earnings from employment and self-employment are low relative to the cost of living.
The Labour Force Survey shows that about 65% of all workers earned less than R2, 500 per month, and
39% earned less than R1, 000 per month. Low earners are not only found in the informal sector: just
over half of formal sector workers earned less than R 2,500 per month. Low earners in the formal sector
are not only found in low level jobs: about two-thirds of craft workers and plant and machinery
operators earned R2, 500 per month or less. What does this mean for poverty? There is no official
poverty line, but the National Treasury recently released a discussion paper suggesting that it might
initially be set at the equivalent of R 430 per person per month in 2006 Rand. About 50% of the
population would fall below this level. What if the unemployment problem were virtually resolved and
fell from about 25% to 13% to 6.5%? Most of us assume that this would dig deeply into the poverty
problem.
Cost of living
Absolute earnings for African workers are still quite low relative to living costs, with 28.5% of workers
earning less than R1,000 per month in 2004, and 64.7% earning less than R2,500 per month (Altman,
2006). Great inequality persists. As discussed earlier in this report, wage differentials by race continue to
be significant and it has been shown that there is no room to reduce real wages, all things being equal.
As discussed elsewhere in this report, the option of increasing the social wage to reduce the pressure on
private wages for firms and households through a widened social security net has already been exercised
to arguably the point where further widening could be unsustainable in the long run.
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In these circumstances, other forms of ensuring that the consumption levels of low paid workers are at
least maintained or improved need to be examined taking into account their potential impact on
inflation.
Inflation in terms of household expenditures particularly affects the poor. Those who are worst affected
by rising inflation are the poor because they spend the bulk of their household income on basic
necessities such as food, transport, education and medical care (NALEDI, 2008).
The NALEDI report further observes that on average, low income groups experience higher rates of
inflation in comparison with those in the middle- and high-income brackets. Importantly, people in the
very low- to low-income groups spend the bulk of their household income on necessities, such as food,
transport, medical care and education among others. So when compared with those in the middle- and
higher-income groups, the higher rates of food inflation and other basic necessities affect them
disproportionately.
With the majority of workers earning less than R2,500 per month, increasing inflation and very high
food prices, it is safe to suggest that between 2006 and 2007, wages have not kept pace with inflation.
Consequently, the purchasing power of the majority of workers has continuously been eroded.
Other information that could be relevant to the ECC
A significant proportion (65%) companies indicated that were moving towards a 50-50 labour-capitalintensive split in their mode of production, suggesting that companies are generally not looking towards
major investments in transforming their modes of production to more capital-intensive and automated
modes. This could mean that the number of current jobs is not generally or imminently in danger due to
a shift in the mode of production, however, it could have an impact on the availability of jobs and wages
earned particularly by unskilled workers in that these workers rely on labour-intensive jobs that do not
require much skills and if the mode of production required more skilled workers, these workers would
be negatively affected.
The findings revealed that in small and medium-sized organisations, wage agreements were primarily
made on a one-on-one basis with the majority of employers surveyed reporting that they recruited a
large number of unskilled workers through walk-ins and informal referrals. In large organisations, these
agreements were equally negotiated at industry-level and on a one-one-one basis.
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The study also found that although sectoral and wage determinations for unskilled labour were cancelled
in 2007, certain sectors continue to have Bargaining Councils which meet annually to negotiate wages,
conditions of employment and other related issues. A number of substantive wage agreements were
reached within these sectors and industries in 2009 and a summary of agreements that are relevant to the
trades under review in this study is provided below.
Fast Moving Consumer Goods sector
The following trades were included:
Manufacture of glucose, dextrose, cornflower, starch.
Brewing or bottling beer/mineral water.
Industrial Chemicals Sector
The following trades were included:
Manufacturing of fertilizers
Civil Engineering Industry
The following trades were included:
Construction plant hire services
Demolition of buildings
Excavating, levelling and pumping sand, soil and gravel
Preparing sites for building or other purposes
Textiles
This sector had binding agreements to 31 December 2009, subsequent to which only the clothing
manufacturers reached an agreement binding between 2009 and 2010. A textiles sector agreement was
reached in 2009 binding until 31 August 2010 but it only covered clothing and excluded the textile
trades under review in this study, which now renders these trades vulnerable.
However, there are still a significant number of trades and sectors that have not negotiated any
agreements which, according to this study, can be classified as being vulnerable and could need a
determination to ease their vulnerability. These trades and sectors are listed below:
Services
Garden services
Maintenance of agricultural/industrial show grounds
Pest control services
Tending of racehorses
Food and beverages
Manufacturing of bone meal
Manufacturing of food for domestic animals
Textiles
Manufacturing of carpets
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The research suggests that the ECC considers a wage determination for unskilled workers across the
trades identified as vulnerable by this study and taking into account that these workers do not have any
other financial benefits other than their salaries.
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