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S. Africa Approves Labor Law Changes That May Curb Hiring

South African lawmakers approved changes to labor laws that seek to improve conditions of work for contract employees, and that business groups say will deter hiring in a country with a 25.6 percent unemployment rate.

The Labor Relations Amendment Bill was passed in the National Assembly in Cape Town today with 248 votes, while 81 lawmakers opposed it.

The laws give temporary workers the same rights as permanent staff if they’ve been on the job for more than three months. That may force up costs for companies such as Cape Town-based grocer Pick n Pay Stores Ltd. and gold producer AngloGold Ashanti Ltd. (ANG), which will be required to raise pay and extend pension and medical benefits to those workers.

Earlier versions of the law provided for temporary workers to be treated as permanent after six months and required unions to ballot members before embarking on strikes, a provision that was scrapped in the final draft. The Congress of South African Trade Unions, the country’s largest labor grouping and an ally of the ruling African National Congress, is pushing for a total ban on companies that provide temporary workers, known as labor brokers.

The National Assembly debated the bill two months ago, yet failed to get a quorum to vote on it after the opposition Democratic Alliance walked out before voting was due to take place.

The latest version of the law negates three years of negotiations between government, business and union representatives within the National Economic Development and Labor Council, according to Business Unity South Africa.

‘Fragile Economy’

“There will be significant job losses,” Busa, as the country’s main business grouping is known, said in a June 7 statement. “Not only does this create further destabilization in the current fragile economy but also makes a mockery of the Nedlac process.”

South Africa is ranked the lowest of 144 countries on the World Economic Forum’s index that measures cooperation in labor-employer relations. It has the second-most rigid hiring-and-firing practices, according to the survey of business executives conducted by the Geneva-based forum.

“Our opposition to labor brokering is that it treats workers as commodities, who can be traded to generate a profit,” Zingiswa Losi, Cosatu deputy president, told reporters in Johannesburg at a June 20 briefing. “Cosatu will continue to fight for the total banning of labor brokering,” because the three-month window allows companies to rotate temporary workers.

The ANC-led government has pledged to create 5 million jobs and slash the unemployment rate to 14 percent by 2020.

To contact the reporters on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net;

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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