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Maplecroft South Africa Labour Standards Report shows racial inequality still rife in the workplace

16/09/2010

Maplecroft's new South Africa Labour Standards Report highlights continued inequalities amongst the country's historically disadvantaged labour force. The report finds that present labour conditions have improved little since the early 2000's, despite implementation of Broad-Based Black Economic Empowerment (B-BBEE) government policy. This is illustrated in Maplecroft's report, for example, by additional hours spent at work by Asian workers (2.5 hours), when statistics are broken down by racial group. The B-BBEE was first initiated in 2003 to redress the inequalities of Apartheid. The programme aims to assist historically disadvantaged groups (black, Asian, mixed-race, women, those with disabilities etc.) by providing economic opportunities that were previously inaccessible.

South Africa remains appealing to foreign investors due to improved scores for judicial independence. According to the Maplecroft report, impunity related to high levels of corruption have diminished and political stability is moderate. Despite global economic turmoil, South Africa's financial markets have fared well. However, 2,065 businesses have closed in the first six months of 2010 and unemployment stands at 23.5%, which is 1.7% up on the previous quarter. The rise in unemployment is despite the economy's slow but continual recovery from last year's recession. September will see South Africa's ruling African National Congress discuss and debate solutions for the current unemployment issues and currency gains, which seem to be negatively affecting business, including the manufacturing sector.

The government has supplemented shortfalls in living wages through a mandatory wage increase for farm workers, which puts the rates above the levels of inflation. Exemptions from school fees and improved access to healthcare have also been implemented. However, wages and work conditions in the agricultural sector are still found to be particularly poor, due to an implementation deficit of the labour laws in this domain, as well as a lack of comprehensive governmental oversight. Child labour is also widespread in both the informal and agricultural sectors. Labour brokers have also been found to exploit their workers, which potentially can cause human rights issues for businesses with a presence in South Africa. Illegal foreigners are also being hired by labour brokers. Membathsi Mdladlana, the Labour Minister, described labour brokering as "a form of trafficking". It is worth noting that enforcement institutions lack the capacity to separate data on trafficking cases from broader fraud cases, making reporting difficult.

Localised labour rights and protection risk profile

Safety in the workplace is also still a cause of concern, especially in the mining and construction sectors. On 25 June 2010, The Wall Street Journal reported that "three mine workers investigating a possible fire were killed and two others seriously injured in an underground explosion at one of Harmony Gold Mining Co.'s mines in South Africa", according to the company. HIV/AIDS is still having an impact of business. Anglo American has been reported to have been reasonably successful in mitigating HIV/AIDS risk by making anti-retroviral drugs available to their entire workforce, regardless of the cost. Stigma, fear and distrust surrounding the disease is still a big hurdle to overcome as employees are concerned that they might lose their jobs if found to be HIV-positive. High HIV/AIDS prevalence amongst young working parents, especially mothers has had an impact on the number of child workers, especially girls, having to forego school to support their families, which in turn makes them susceptible to labour violations - especially in the informal sector.

Maplecroft also reports that companies relying heavily on water must be aware that South Africa's available fresh water resources are almost fully utilized and under stress. According to allafrica.com, "Development priorities may have to be re-evaluated after a new study revealed that SA had 4% less water than previously believed. Several sectors, including agriculture, forestry, electricity generation, industry, groundwater developers and municipalities may need to revisit water use strategies in the light of these findings." Professor Alyson Warhurst, CEO of Maplecroft said: "South Africa still offers abundant investment opportunities. Business needs to assess a full range of risks carefully and particularly ensure health and safety and labour standards are respected and monitored to benefit from this growth environment and gateway into Southern Africa".

The Maplecroft South Africa Labour Standards Report is a valuable tool for businesses to address specific risks and opportunities in South Africa. Maplecroft offers a wide range of reports which use up to 500 indices across 196 countries in areas such as political risk, legal and regulatory, human rights and climate change.

For further information or to purchase a copy of the South Africa Labour Standards Report contact Maplecroft at info@maplecroft.com