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Failings in enforcing labour laws, poor working conditions, low wages and discrimination among risks for companies operating in South Africa, finds Maplecroft’s Labour Standards Report for South Africa.

The labour market is characterised by generally low wages, poor government inspections, and frequent violations of international working standards. Violations are more prevalent in the growing informal sector which accounts for 36% of total employment. In August 2012, the deaths of 34 miners at the hands of state police at the Lonmin Marikana mine attracted widespread media attention, caused a dramatic drop in share price for the mine owners, and demonstrated the potential consequences of high levels of dissatisfaction among the workforce.

Pervasive discrimination stemming from the former apartheid regime remains entrenched, with measures to achieve racial equality widely criticised as being ineffective. Throughout the South African economy, there are also the implicit risks of association with forced labour, human trafficking and child labour. 

In spite of a fairly strong legal framework for the protection of labour rights, the failure of the government to enforce laws and respect international standards, creates major risks for business. Upholding health and safety laws is one area of major concern. Companies also face legal and reputational risks stemming from the weak enforcement of an ambiguous set of environmental regulations.

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