July 25, 2010

OECD job ideas hit brick wall at Cosatu

Trade union Cosatu will not be swayed by measures proposed by the Organisation for Economic Co-operation and Development (OECD) to address unemployment in South Africa - including giving the government a say in ensuring wage increases within the target inflation range. A lower minimum wage for young people, who suffer the highest unemployment rate; the expansion of learnerships into wage subsidies; a simplified arbitration process for dismissals, and the maintenance of liberal arrangements for temporary employment labour brokers are some of the proposals in the OECD report on South Africa's economy.

Cosatu spokesman Patrick Craven said the union was planning to release its own economic strategy framework soon, with proposals on how to address unemployment. The union would not budge on issues such as wage subsidies, labour brokers and differences in minimum wages, he said. "We certainly will oppose a two-tier wage system," Craven said. Cosatu is against wage subsidies. "We are opposed to any system that allows employers to hire young workers at cheap rates until they reach cut-off age, then retrench them and hire more young workers at low wages." Furthermore, Cosatu rejects labour broking and wants it banned.

The OECD said low employment was the overriding policy challenge for the economy. "Few, if any, countries have seen such sustained levels of open unemployment," the report states. More than 30% of the working age population is out of work if discouraged jobseekers are included, it adds. In other middle-income, emerging-market economies about 80% of youth in the labour force were employed in 2007, whereas the figure was only 53% in South Africa, the report found.

The OECD suggested changes to wage negotiations. Social partners should be brought together annually to set guidelines for increases that year - preferably within the target inflation range, the report states. Actual bargaining would then continue in the same way as at present, but against the background of such guidelines. "Government involvement in the process could help to make the trade-offs between wages, employment and unemployment clearer to social partners," the OECD said.
"Weakening the legal extension of sectoral bargains would likely also help with wage moderation ... partners would know that agreed wage levels could be undercut..." (The Times, South Africa)

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