Labour pact could help avert a credit downgrade | Fin24
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Labour pact could help avert a credit downgrade

Nov 20 2016 18:08
Lameez Omarjee

Johannesburg – Government will be informing ratings agencies on the “tremendous progress” made on labour stability issues in an effort to avoid a credit downgrade, said Deputy President Cyril Ramaphosa.

Ramaphosa was speaking at a press briefing at the National Economic and Development and Labour Council (Nedlac) offices in Johannesburg on Sunday. Ramaphosa said that he would highlight the findings of the National Minimum Wage (NMW) report, when he meets with ratings agencies this week.

Among the findings by a panel of experts which compiled the research is a proposal of  a NMW of R3500 per month or R20 per hour.

READ: Proposed new minimum wage is R3 500 per month

“We have made a lot of progress and reached agreement on key issues,” he said. “We are being positive, very forward looking.”

Ratings agencies Moody’s, Standard and Poor’s (S&P) and Fitch are to make their announcements on the country’s credit rating in the next few weeks. “I am glad some of them are here because they can see how serious social partners in South Africa are, meeting on a Sunday trying to this resolve matter,” said Ramaphosa. “This demonstrates a level of seriousness by government and the country to put things in order.”

Dennis George, general secretary at the Federation of Unions of South Africa (Fedusa) shared these views. “The fact that we are meeting on a Sunday, for a whole day, must be clear that we are serious.”

George had met with ratings agencies to “show evidence” of the progress made in labour relations. “We are not doing it for their sake. We are doing it for our country, we have to do this for the economy to grow faster,” he added.

Among the agreements reached, include the recognition of strike balloting, explained Ramaphosa. “We have also reached agreement on how best we can try and prevent long strikes from having a negative impact on economy, on workers and businesses,” he said.

Further a public interest clause will be amended to the Labour Relations Act (LRA), to allow for a number of arbitration processes in labour matters.

An agreement on the process to follow in determining a NMW has also been reached, explained Ramaphosa. “We now have a figure to structure debates and discussions around. We believe it is a figure all of us can work with,” he said.

“Clearly this is not a living wage, but it is a starting point to take the process forward,” said George. Unions will meet with their members to engage on the report and will give feedback to Nedlac at another meeting.

SOE reforms

Ramaphosa added that progress was made in implementing reforms in state-owned enterprises (SOEs).

Among the measures introduced include the “streamlining” of board architecture. This involves the appointments of boards, strengthening of governance systems and ensuring uniformity. The remuneration of executives have also been discussed, said Ramaphosa. “We have embarked on a process, part of reform, to better regulate the remuneration processes.”

Government is “wrapping arms” around SOEs, said Ramaphosa. This is to ensure they function effectively and within the interests of South Africa.

“We are going to engage the private sector and bring in private sector to invest alongside government.”

Ramaphosa said this information was communicated to ratings agencies he met with and that “they seemed to be nodding their heads”. “This is progress, steps in the right direction.”

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