Chair, the cost of employing people affects whether or not an employer will be inclined to employ additional people. The earnings threshold is a significant factor influencing the labour cost to businesses, with a higher threshold likely to lead to additional costs for employers, especially smaller firms, who have to realign payrolls and benefits like overtime payments.
The ACDP calls on the Minister to be cautious regarding the review of increasing the earnings threshold expenditure. We are not convinced that the Employment Conditions Commission is helpful at this time.
In regard to labour broking, it is the ACDP's hope that South Africa will be rational and follow the International Labour Organisation convention on labour broking. This allows the industry to exist, develop and grow, while effectively banning exploitative and abusive practices.
Employment has increased among higher income groups in South Africa, while lower income earners have lost jobs. Despite legislative gains for workers' rights, social inequality has grown, with most South Africans perceiving the gap between rich and poor as being the country's most divisive fault line.
Hon Minister, does the budget adequately address the ever-increasing possibility of mass retrenchments, which could be a catalyst for violent, uncontrolled action?
Immigrants to South Africa have been perceived as having higher standards of literacy and education than their South African counterparts, are deemed to have a better work ethic, are typically happy to work for a lower wage, and are less likely to join a trade union. All of these factors have made the immigrants increasingly attractive to employers, but a mixed blessing, of course, as this has also made them targets of many local communities' dissatisfaction and anger.
Like South Africa, Hong Kong had to accommodate many thousands of refugees in the 1960s, people fleeing from China and Vietnam. To overcome the unemployment problem, Hong Kong made a deliberate effort to remove the government's heavy hand from economic activity, and to allow entrepreneurs to innovate and employ the country's human and material resources to the best advantage of all.
The results were spectacular and absorbed the refugees at such a rate that by the 1980s employers were complaining of a shortage of labour! In 1960 the average per capita income in Hong Kong was 28% of that in Britain, and by 1996 the situation had been reversed and had risen to 137% of that in Britain. The difference was credited to socialism in England and free enterprise and free markets in Hong Kong.
The World Economic Forum ranks South Africa as the seventh worst country out of 139 countries in the world in regard to its labour laws and regulations. To boost employment and raise economic growth rates, the ACDP believes South Africa requires changes to labour laws and regulations that would promote high labour productivity and a link between productivity and remuneration.
When most people are employed, exploitation is less of an issue, as workers can leave bad employers without the risk of unemployment. The ACDP will, however, be supporting this Budget Vote. [Applause.]