Chapter 6: Labour Relations

Chapter 6: Labour Relations

6.1 Labour Relations

Points of note regarding the labour situation in South Africa are:

- There is an abundant supply of unskilled labour

- South Africa currently has a shortage of skilled labour

- There is an active and highly politicised trade union movement

- No comprehensive social security scheme exists at present

- Most retirement benefits are provided through self- administered funds

- There are no restrictions on the number of foreign personnel employed

6.1.1 Availability of Labour

South Africa presently has a population of some 43 million people of whom approximately 23% are economically active. In KwaZulu-Natal about 21% of the Province’s 8,7 million people are economically active (SSA, 2001).

6.1.2 Categories of Employmentm (1996)

Agriculture, forestry, fishing:
2,0% in South Africa
1,4% in KZN Mining, quarrying:
1,3% in South Africa
0,2% in KZN Manufacturing 2,8% in South Africa
3,2% in KZN Electricity, gas, water 0,3% in South Africa
0,2% in KZN Construction 1,4% in South Africa
1,0% in KZN Wholesale, retail, catering, accommodation 2,7% in South Africa
2,0% in KZN Transport, communication 1,2% in South Africa
1,0% in KZN Finance, insurance, real estate, business services 1,7% in South Africa
1,2% in KZN Community, social, personal services 3,9% in South Africa
3,0% in KZN Not adequately defined 2,7% in South Africa
3,4% in KZN TOTAL ECONOMICALLY ACTIVE 22,4% in South Africa
20,0% in KZN Source: SSA 2001

6.1.3 Skills Profile

There is a very low level of unemployment amongst South Africa’s skilled labour force. Unskilled labour is freely available in both the non-metropolitan industrial areas and in urban industrial zones, but there is a severe shortage of housing. This issue remains inadequately dealt with despite the attempts of the RDP to increase the number of houses substantially. As there is currently a skilled worker shortage, prospective investors should be aware of the potential work force when surveying the labour market for the particular skills they will require.

The skills profile is illustrated in the table below.

SKILLS PROFILE: Professional, semi-professional, technical 2,2% in South Africa
2,2% in KZN Managerial, executive, administrative 0,5% in South Africa
0,7% in KZN Clerical, sales 4,8% in South Africa
3,9% in KZN Transport, delivery, communications 1,1% in South Africa
1,4% in KZN Service 5,3% in South Africa
4,6% in KZN Farming and related occupations 3,2% in South Africa
2,7% in KZN Artisan, apprentice, related occupations 2,2% in South Africa
2,0% in KZN Production supervisor, miner, quarry and related work 7,4% in South Africa
5,6% in KZN Occupation unspecified 6,4% in South Africa
7,2% in KZN TOTAL 33,1% in South Africa
30,3% in KZN

6.1.4 Employee Training Programmes

Education and industrial training facilities are being expanded. For training in the catering and accommodation sectors of the industry, courses are available at a variety of tertiary institutions. The ML Sultan Technikon, for example, has a Hotelier and Caterer course and is about to embark upon offering a BTech in Ecotourism Management. The University of Natal, Durban campus, is presently instituting degree courses in tourism. The Pietermaritzburg campus of the University already has several under and post- graduate courses in tourism within the Geography Department. The University of Durban-Westville has recently instituted courses at several levels in Heritage Tourism and the program goes as far as PhD level. The University of Zululand has an entire institute aimed at offering tourism- related programmes and courses. The Technikon Natal is presently instituting a BTech in Tourism Management. Several local colleges, such as Damelin, have available courses on Travel and Tourism, aimed for the most part at tour operators.

6.2 Labour Legislation

The new Labour Relations Act aims to establish the fundamental environmental regulating the relationship between employers and labour.

KwaZulu-Natal has comprehensive legislation relating to the environmental, training and social security conditions of employment. A summary of the principal enactments is provided below:

1. Basic Conditions of Employment Act:
Sets out all conditions of employment, except for the hours and days on which shops may be open, which fall within the jurisdiction of the provincial administration.

2. Machinery and Occupational Safety Act:
Provides for the registration of factories, the regulation of hours and the health and conditions of work, as well as the supervision and use of machinery including precautions against accidents.

3. Apprenticeship Act:
Provides for the registration, training and employment of persons in certain trades that require a high degree of skill, and the protection of minors in certain trades.

4. Wage Act:
Provides for the establishment of wage boards to lay down conditions of employment in fields not covered by the above-mentioned Acts.

5. Labour Relations Act:
This is the major Act governing labour relations and it has essentially two purposes: the establishment of collective bargaining machinery for employers and employees, and the orderly resolution of disputes. Provision is made for collective bargaining with registered trade unions at industry level through the voluntary establishment of industrial councils. Registered employer and employee bodies are equally represented on industrial councils, which provide a platform for industrial self-government through collective bargaining regarding wages and conditions of employment.

Agreement once reached is published in the Government Gazette and as such has statutory force and is binding on all parties.

6.3 Trade Unions
There is an active and growing trade union movement in South Africa, but only in national terms. The estimated number of trade union members was 2,9 million in 1996, belonging to some 300 unions with more than a dozen federations. The most powerful at present is the Congress of South African Trade Unions (COSATU) which has 1,3 million members. However, in industrial terms, membership has been falling since the early 1990s. Increasing membership has been the case in the public sector. Likewise, the number of days lost to strike action has dropped over the years, with the emphasis moving from the private to the public sector.

6.4 Profit Sharing
There are few profit-sharing schemes in operation in South Africa except for those for top executives, and these schemes vary considerably.

6.5 Working Conditions
Minimum wage rates are laid down for certain industries and occupations in terms of industrial council agreements or other labour legislation. Wages and salaries in the more densely industrialised areas are generally higher than the minimum rates and higher than the rates in less densely industrialised areas. Salaries in the greater Johannesburg area, for example, are generally some 9% higher than those in the Durban or Cape Town regions.

6.5.1 Wages and Salaries
Wages and salaries in the tourism industry can be divided according to category of work. The average weekly wages of hourly paid workers excluding overtime are presently:

Skilled/qualified tradesmen: R800 - 1 200
Semi-skilled workers: R300 - 700
Unskilled workers: R250 - 400

Experienced clerical and administrative workers in the Durban City area, monthly salaries:
Clerks R 1 700 - 3 000
Private secretaries R 2 500 - 3 500
Chartered accountants R 10 000 - 12 000

Certain employers also pay employees an annual bonus, usually between 4% and 10% of the annual salary or wage earned. More specifically, salaries within the tourism industry, according to hotel star gradings, in the Durban area are categorised as follows:

1 Star Hotels R35-40 000
3 Star Hotels R50-80 000
5 Star Hotels R74-120 000

F&B Man.
1 Star Hotels R20-25 000
3 Star Hotels R32-45 000
5 Star Hotels R45-60 000

1 Star Hotels R20-25 000
3 Star Hotels R25-40 000
5 Star Hotels R40-55 000

1 Star Hotels R25-30 000
3 Star Hotels R45-65 000
5 Star Hotels R57-110 000

Sous Chef 1 Star Hotels R12-16 000
3 Star Hotels R32-45 000
5 Star Hotels R35-50 000

1 Star Hotels R15-20 000
3 Star Hotels R25-40 000
5 Star Hotels R30-50 000

Source: Fast Food and Family Restaurant, Restaurant guild

Waiters in such hotels earn in the region of R700-R1200 per month plus tips.

Restaurants in the Durban area show a similar picture with regard to salaries:

Manager p.a.
A la Carte R26-45 000
Family Restaurants R20-35 000

Head Chef/Cook p.a.
A la Carte R28-40 000
Family Restaurants R10-15 000

Waiter p.m.
A la Carte R600-700 + tips
Family Restaurants R700-900 + tips
Source: Fast Food and Family Restaurant, Restaurant guild

Waiting staff take-home salaries are typically three times higher than the amounts expressed in the table above when gratuities are included.

Of note here are the low levels of education amongst restaurant staff with only some 5% having hotel school or technikon training, 1% having university education and an average of 42% having a matric. Over half the staff (52%) in restaurants, pubs and quick service outlets throughout the country have less than a matric level of education (Fast Food & Family Restaurant).

6.5.2 Fringe Benefits

In many cases workers in the tourism industry receive benefits as well as their salaries. Such benefits take the form of meals provided while at work, uniforms, transport, and in some cases, staff housing. These benefits are in addition to pension, medical aid and unemployment insurance.

6.5.3 Hours Worked

The number of working hours varies, but the average working week is 42 hours in industry and 38 hours in commerce. Workers usually receive a shift allowance if they are required to work shifts that differ from normal working hours. Maximum working hours are laid down by labour legislation.

6.5.4 Paid Holidays and Vacations

South Africa has 13 official public holidays. Also, an annual paid vacation of at least two weeks must be granted to employees, although the norm is three weeks.

6.5.5 Termination of Employment

Employers and employees wishing to terminate employment must give notice of their intention to do so, although the time periods for such termination vary with both position and company. On termination of employment employees are entitled to payment in cash for any vacation earned but not taken. Under the new Labour Relations Act severance pay is compulsory in certain circumstances.

6.6 Social Security
South Africa presently has no comprehensive social security scheme. Workmen's Compensation and Unemployment insurance contributions are payable in respect of certain categories of employees.

6.6.1 Pensions

The government provides minimal pensions to retired persons, subject to a means test. These are presently R700 per month. Most businesses in South Africa provide pension benefits for their employees through either self- administered pension funds or through schemes administered by insurance companies. Membership of a pension scheme is frequently a condition of employment and contributions are generally shared between the employer and the employee with the employee’s contribution equal to approximately 5% of his gross salary. All pension schemes are subject to government control through the Pension Act.

6.6.2 Unemployment

Unemployment insurance for lower-paid employees is provided by the state-controlled Unemployment Insurance Fund, which is funded by government grants and a compulsory contribution by employers and employees. Contributions are payable only in respect of permanent employees earning less than R97 188 per annum. Contributions are 1% of basic earnings from employer and employee.

In 2003 it became compulsory to register as an employee of domestic workers also and to pay UIF contributions for such workers as worked more than 24 hours per month. The amount was calculated as 1% of the workers salary to be paid by the employer and a further 1% to be paid by the employee.

6.6.3 Health and Medical Care

Medical and health insurance coverage is provided by most employers for all employees. Coverage is either through non- contributory insurance schemes or more often through membership in non- profit medical aid societies to which both employer and employee contribute equally on a sliding scale, depending on the employee's income and number of dependants.

6.6.4 Sickness Benefits

The employer is liable under the various Acts governing labour conditions to grant an employee full pay should illness result in the employee being unable to work. The maximum number of days for which such benefits must be given is usually limited to 10 working days per annum.

6.7 Foreign Personnel
Foreigners seeking employment in South Africa should visit the South African Embassy or Consulate-General in their own country as all applications must be submitted from outside South Africa. Additional information can be obtained from the Department of Home Affairs, Private Bag X54311, Durban, 4000.

6.7.1 Work and Residence Permits

Foreigners need to obtain a temporary work permit or a permanent residence permit to work in South Africa. If an employee expects to work for a period of more than six months, it is advisable that he apply for permanent residence, although temporary permits can be extended for four further periods of six months each.

The temporary resident, permanent resident or his employer will be required to provide the cash equivalent or a bank guarantee equal to the cost of a two-way air ticket to his homeland for repatriation purposes. The funds are refundable on departure from South Africa.

If a temporary resident is unable to pay his costs of repatriation, the employer will be held liable for such costs.

Holders of permanent residence permits are considered immigrants. No customs deposits are necessary on furniture and personal effects, and the immigrant is allowed to import one car per family free of duty, although VAT will be payable.

A foreign driver’s license is valid in South Africa for a period of six months, provided the license is in English and contains a photograph of the license holder. The holder of a foreign license may within the six-month period exchange it for a South African driver’s license.

6.7.2 Restrictions on Employment

Foreign personnel may be employed subject to the following main criteria:

1. There is no South African citizen available capable of performing the position's tasks
2. The foreign person has the required qualifications and experience
3. The foreign person's skill shall be transferred to local personnel and the foreign person shall thereafter (and within two years) depart South Africa.
No restrictions exist on the number of foreign personnel employed on a company's payroll.

Costs of Work Permits and Permanent Residence (as of April 2003):

„h Work Permit - R 1 520-00 (or US$ 169) „h Permanent Residence - R 1 520-00