Bloomberg News

South Africa Needs ‘Less Onerous’ Labor Laws, Planning Body Says

June 09, 2011

June 9 (Bloomberg) -- South Africa needs “better and less onerous” labor laws to promote employment in Africa’s biggest economy, the National Planning Commission said in a report to lawmakers in Cape Town today.

Labor laws entrench high salaries and make it difficult to punish poor workplace performance, causing employers to avoid hiring inexperienced workers, the report said. President Jacob Zuma has pledged to create 5 million jobs in the next decade to slash unemployment to 15 percent from 25 percent.

The commission, chaired by former Finance Minister Trevor Manuel, identified unemployment as one of nine challenges facing the country, which will be addressed in a plan to be submitted to the government on Nov. 11. The commission’s mandate from President Zuma is to produce a long-term development plan for the country.

“While labor regulations have had several positive effects, there have also been negative unintended consequences,” the report said. “Relatively high starting salaries in some sectors and the disincentive to hire inexperienced workers are at least part of the explanation for high youth unemployment.”

Other challenges include uneven public services, low investment in infrastructure, corruption and poor education and health systems, Manuel told reporters in Cape Town before the release of the report.

‘Lousy’ Service

“There are parts of the public service that are actually quite lousy,” Manuel said.

Political appointments to senior positions in the public service, together with undue political influence over government administration, corruption and weak financial management were among factors undermining service delivery, the report said.

Low levels of investment and efficiency in state-owned companies also needed to be addressed, the commission said. Private investment may be needed to improve efficiency at Transnet Ltd., the state-owned transport company, the report said.

An energy procurement agency independent from Eskom Holdings Ltd., the state-owned electricity company, should be a “critical element” of energy policy, the report said.

Eskom today appointed Zola Tsotsi as chairman as the government moved to reshuffle boards at the companies it controls.

Tsotsi was named among board members in a list given to reporters by Cabinet spokesman Jimmy Manyi in Cape Town. Chief Executive Officer Brian Dames and Finance Director Paul O’Flaherty, listed among board directors on Eskom’s website, weren’t included.

--Editors: Philip Sanders, Andrew Barden

To contact the reporter on this story: Robert Brand in Cape Town at rbrand9@bloomberg.net.

To contact the editors responsible for this story: Ana Monteiro at amonteiro4@bloomberg.net; Andrew J. Barden at barden@bloomberg.net.


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