South Africa's labour market

The South African labour market is characterised by an oversupply of unskilled workers and a shortage of skilled ones. High population growth constantly exceeds the growth in employment demands. This is compounded by the consistent loss of jobs in the formal sector, as the country’s economy moves away from labour-intensive to capital-intensive operations.

As a result of increasing pressure from the business community, amendments to the LRA, BCEA and the Insolvency Act have been proposed to counteract the perception that South Africa has an inflexible labour market and to create a more enabling environment for the creation of jobs.

SA's unemployment rate stands at about 30%, a significant increase from 26,4% in February 2000. The increase in unemployment is ascribed to a decrease in the number of workers in the subsistence and small-scale agricultural sectors, as well as fewer people working in the informal sector. Employment in the formal sector (including commercial agriculture) has, however, remained stable.

Economists believe that South Africa's economy needs to grow by at least 5% – 6% a year to absorb job seekers. Economic growth will stimulate investment and make it worthwhile for companies to employ people.

Trade unions play an important role in South Africa's labour relations but are expected to experience an erosion of membership due to falling employment levels. There are three major union federations in SA, whose affiliates represent a broad spectrum of industry: The Congress of South African Trade Unions (Cosatu), the Federation of Trade Unions of South Africa (Fedusa) and the National Council of Trade Unions (Nactu). These three federations form the labour constituency at the National Economic Development and Labour Council (Nedlac), together with members representing the state and business interests.

• National Economic Development and Labour Council
• Congress of South African Trade Unions
• Federation of Trade Unions of South Africa
• National Council of Trade Unions

South Africa also has a number of employers' organisations. Business South Africa represents the collective interests of business in South Africa in the context of the Nedlac forum.

Labour disputes are dealt with on several levels: either through bargaining councils, the Commission for Conciliation, Mediation and Arbitration (CCMA), the Labour Court or by private arbitration.

The CCMA was established in 1996, to resolve labour disputes. CCMA arbitration awards that are contested or disputes that cannot be resolved by conciliation may be taken to the Labour Court in certain cases.

Since its inception in 1996, the CCMA has dealt with over 400 000 cases and receives on average 414 cases per day. The majority of disputes referred to the CCMA relate to individual dismissal and are settled at the conciliation stage.

The overall level of wage settlement in 2001 was 7,5%, ranging from 5% in the chemical sector to 9,3% in the retail sector.

The Employment Equity Act requires designated employers to compile and implement an Employment Equity Plan aimed at promoting equal opportunities and affirmative action, while eliminating unfair discrimination.

Designated employers include those who employ more than 50 people, or have an annual turnover of a certain amount.

The Act is intended to redress the employment disadvantages of black people, women and those with disabilities ("designated groups"). A designated employer is required to implement affirmative action measures for designated groups in order to achieve employment equity.

This will be subject to regular reviews. Employers who do not comply with the Act may be subject to fines. The Act, which came into effect in various stages during 2000, impacts directly on recruitment practices and the composition of the workforce.

Source: South Africa Business Guidebook 2002-2003 (7th Edition), WriteStuff Publishing