SA needs to ease labour policies to attract investors

A winning recipe in achieving economic growth is a streamlined regulatory environment and attractive tax policies for trade and investment.

While we continue to lobby for more attractive tax policies nationally and locally, the elephant in the room often not addressed when considering investment and economic growth is the regulatory framework and how this relates to the labour force.

Experts recommend flexible conditions of employment to assure the success of Special Economic Zones (SEZs) in SA.

This is because labour-intensive companies often have to deal with fluctuating demand and require more flexible labour to remain globally competitive.

Flexibility, in this instance, refers to the employers’ ability to adjust the size of their workforce in response to variations in the market.

It is not a labour need that is limited to SEZs.

It is the reality of many light manufacturers in the Eastern Cape, including players in the automotive sector, and is especially true when considering the seasonality of labour needs in the agricultural sector.

While flexible conditions of employment could be considered controversial in a highly unionised country such as SA, it is an important characteristic associated with labour-intensive industries and an internationally-benchmarked recommendation that cannot simply be ignored because of our sociopolitical environment.

While I will always remain an advocate for fair labour practices and the rights of workers that adhere to the labour laws of the country and International Labour Organisation (ILO), we do need to be aware of how potential investors can be scared off by aggressive labour practices and frequent strikes.

A further aspect of the “flexibility” of labour practices would be adhering to principles of effective interest arbitration, negotiation and collective bargaining.

It involves dialogue, and a trust relationship between investor (employer) and labour (employee), which should be premised on balancing the sustainability of the business with ensuring employees earn a living wage (including conditions of employment).

The Code of Good Practise on Dismissal which is currently out for public comment introduces a relaxation on labour laws and makes specific mention of small businesses and taking into account “the circumstances in which small businesses operate”.

The code further states that small businesses cannot reasonably be expected to engage in “time-consuming investigations or pre-dismissal processes while at the same time keeping the business going”, since many small businesses do not have HR departments staffed with skilled professionals in these processes.

This is a huge step that seeks to ensure economic growth in the small business sector.

The Essential Services Committee of the department of employment & labour are working on promoting interest arbitration as a real alternative to strike action.

A key principle of the code, which was released on January 22 2025 for public comment, is that employers and employees should treat each other with mutual respect.

Since the trust relationship between the employer and employee is often withered through perceptions and other matters, the best solution to keep businesses — and therefore the economy — sustainable is to implement good labour practices of regular negotiations and open dialogues.

The Draft Code of Good Practise on Dismissal is a refreshing piece of legislation and certainly welcomed, in particular since the proposed procedures are simplified and considerate of the operational contexts of small businesses.

Taking this important sector of our economy to heart is imperative, since entrepreneurship and small businesses are strong drivers of growth.

To further add to these steps to improved economic growth, the latest World Bank Group report, Driving Inclusive Growth in SA, recommends “Quick wins with competitive markets and efficient institutions”.

The report provides a clear roadmap for SA to unlock its economic potential.

The World Bank’s two biggest problems with SA are its cumbersome regulatory rules and B-BBEE laws amid poor economic growth.

The report states that SA should end its “excessive” regulatory burden and revamp its black-ownership laws to remove the “signs of paralysis” that plague its economy.

While I don’t agree with the dumping of B-BBEE laws, especially because there remains a need up to today to balance historical disparities in order to build a more prosperous future for South Africans, I do agree with the World Bank Group report that SA needs to consider easing labour policies to make it less demanding for foreign companies to invest in the country.

As with the Code of Good Practise on Dismissal’s shift towards considering the context and operational situations of SMMEs, so too the legislative demands on foreign investors should be taken into account.

This does not mean compromising the Basic Conditions of Employment and fundamentals such as minimum wage, but it means that there needs to be a change when it comes to the onerous laws relating to the discipline, and managing incapacity at work.

Considering the Eastern Cape has the highest unemployment rate in the country, these are some of the solutions we need to embrace to grow the province in a sustainable manner.

Essentially, it has become everyone’s business.

Dr Luvuyo Bono qualified with a doctorate in labour law (LLD) at Nelson Mandela University in 2023, where he also holds the title of adjunct professor of law. He was admitted as an advocate of the high court in 2000 and has contributed to key labour law legislation in SA. He is the board chairperson of the Coega Development Corporation, and writes in his personal capacity.

The Herald