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Labor laws killing small businesses, South African president says

Nando Times
6 Feburary 2000

JOHANNESBURG (February 6, 2000 11:14 a.m. EST http://www.nandotimes.com) - "Unreasonable" aspects of South Africa's labor laws are strangling small businesses, President Thabo Mbeki said in an interview published Sunday.

Expanding on comments he made in a state-of-the-nation address to parliament Friday, Mbeki told the Johannesburg Sunday Times that the laws, aimed at overhauling exploitative apartheid-era labor legislation, have had "unexpected consequences."

"The burdens placed on small businessmen to comply with some of these provisions are quite unreasonable," Mbeki acknowledged. "I'm told of instances where they would produce paralysis."

He said many small companies and non-governmental organizations did not have enough money to advise them of the requirements of the laws.

"Some people might have all their revenue for six months swallowed up by hiring a lawyer -- they'll die. And yet the law says that if they don't behave correctly, they will be in violation of the law. It's things such as this that need to be attended to."

Clauses that big business claims have forced enterprises to cut their labor force and resort to mechanization include those relating to probationary employment, notice periods, pay for overtime work and work on Sundays, and procedures surrounding unfair dismissals.

A concession that businesses employing fewer than 10 workers are entitled to pay a lower overtime rate has not resolved the problem.

Labor Minister Membathisi Mdlalana said that he expected amendments to certain provisions of the Labor Relations Act, the Basic Conditions of Employment Act and the Insolvency Act to be completed by August this year.

Business has blamed the legislation for not providing the proper environment to create jobs and for leading to higher labor costs. Unemployment is running at around 30 percent.

Mbeki said in the interview he had begun a new and intensive interaction with trade unions through a presidential working group to bring labor on board on a range of contentious economic policies aimed at attracting investment.