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Collective Bargaining In South Africa

May 3, 2016


in South Africa


During an interview about the state of the South African economy (to watch the full interview click here), I asked the Governor of the Reserve Bank, Mr Lesetja Kganyago, a question about the structure of the South African labour market. He responded by saying the following about the current collective bargaining model in South Africa:

"One of the constraints of the South African Economy is the insider-outsider problem. We talk a lot about small to medium sized enterprises, and then you've got to be asking 'what does conduct of policing mean for small to medium sized enterprises?'. It becomes a very important thing.

In 2006 the OECD did a study of structural constraints in South African markets. It has actually established that the problem of labour markets and the problem of wages in the South African economy, stems from product market problems. What does that mean? What it means is that big business and big labour are able to reach a collective bargaining agreement, extend it to the other players, and thus by so doing, inhibit competition.

Now the notion that says that we are just creating jobs, or we must be creating jobs – actually we would like to turn it on its head. I wouldn't ask anyone here in business, 'who amongst you wakes up in the morning and say that I'm going to my office to create jobs?'. You create businesses, and because you have created businesses, jobs get created." (To view this clip, click here.)

Spot on, Governor! We agree! That’s why NEASA does what it does.

Kind regards


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