Issue: September-November 2011
Editorials

RETIREMENT REFORM

Union views

Top official lays it on the line. There's clearly a long way, and a tough battle, to go for consensus to be reached.

At the ASISA/Actuarial Society conference late last year, time ran out for a panel discussion that was scheduled to have been held on a new social contract. The questions were nevertheless published (TT June-Aug). Samuel Tsiane, benefits coordinator for the National Union of Metalworkers and representative of Cosatu, answers questions that were to have been put to him.

We are always happy to engage with stakeholders in the pensions industry. We thank TT for the opportunity to do so.

How do you understand what a social contract means?

It means an agreement or an accord negotiated by stakeholders. It may be bilateral between labour and business, or trilateral to include government or even civil society. The outcome of the agreement is determined by power relations.

In the case of SA prior to the 1994 elections, Cosatu approached the ANC with a document called the ‘Reconstruction Accord' to be implemented after the elections. The ANC responded that it didn't see itself negotiating an agreement with an alliance partner, but the ANC adopted the document which it called the Reconstruction & Development Programme (RDP).

The RDP was then adopted by the first democratic parliament of SA in 1994. It became so popular that even business embraced it.

In 1995-96, broadly at the alliance level, each partner investigated economic policy. Cosatu produced a document called ‘Social Equity'. The ANC did not suggest anything. Instead, government adopted the Growth, Employment & Redistribution (GEAR) strategy without consensus within the alliance or at least at the National Economic Development & Labour Council (Nedlac).

Amongst other things, GEAR called for or instigated:

  • Two-tier labour market system, so that some workers' conditions of employment would be regulated and others not;
  • Privatisation, so that parastatals were sold (e.g. Iscor to Arcelor Mittal) or corporatised (e.g. SA Airways), allowing senior executives to enrich themselves at the expense of the nation and causing a huge backlog of artisans;
  • Capital flight, by government allowing businesses to move money in and out of SA. This policy does not encourage foreign direct investment. It encourages investors to put their money into the stock exchange, and remove it within a short space of time, without providing employment security and job creation;
  • Flooding of goods into SA. Tariffs have been reduced faster than required by the Word Trade Organisation. Hence the closure of so many textile and clothing companies.

Needless to say, GEAR was opposed. The then SA president, Thabo Mbeki, said that it was not negotiable. A social contract must have buy-in by the keystakeholders. Otherwise it will not hold.

Tsiane

Tsiane . . . social security is core

How does labour contribute to successful application of a social contract?

Look at social security protection. The Departments of Finance and Social Development have put out separate documents that don't talk to one another on retirement matters. Finance has gone a step further and proposed a wage subsidy for low-income earners.

The papers were supposed to be negotiated at Nedlac but for some reason they were withdrawn. An inter-ministerial task team was established so that government can come with one set of proposals.

Despite many promises by government that it will soon release its paper, nothing has come forth. We suspect that government will impose reforms without any discussion with labour. If it does, we will resist.

What is your position on labour market flexibility?

Current labour policy provides sufficient flexibility. It provides that any Bargaining Council which extends a collective agreement to non-parties must allow exemption.

The turnaround time to deal with exemptions and labour disputes is about 30 days. Perhaps this period should be reduced to 48 hours.

However, labour brokers have proven that they're not complying with the agreements. Sometimes they are just used to enrich individuals, not to assist companies needing labour within a short time.

The problem with businesses in SA is that, as soon as you talk of a flexible labour market, they immediately think of cheap labour, dismissal without warning or hearing, no health and safety conditions etc. They don't think about multi-skilling, multi-tasking, overtime work, short time and exemptions that the bargaining councils are granting to them.

Because long-term savings are critical for the livelihood of our people, would you support compulsion and preservation (of pension savings until retirement age)? If so, under what conditions?

We need a comprehensive social security system, not a piecemeal approach. Currently the labour market does not provide employment security while the unemployment benefits are insufficient to replace income security. The comprehensive system must talk to housing, transport, basic income grant, old age pension, education, disability and unemployment benefits.

What is the view of labour on the choice between defined-contribution and defined-benefit pension funds?

The 2008 world financial meltdown has proven that it is dangerous for fund members to carry the market risk.

Education is essential. How can labour contribute in education and improvement of financial literacy amongst our people?

We have acknowledged that financial literacy was for the chosen few. Even most of our trustees are struggling on this area. We have negotiated with some of the service providers to skill shop stewards and trustees. We will also be using our union newsletters to reach out to members.