Mashaba responds to Cosatu boycott threat: ‘They should go ahead’ – BizNews, 3 August 2015

The Congress of SA Trade Unions (Cosatu) has called for a boycott of Black Like Me products for “pushing back the gains made by the workers in attempting to secure the bargaining rights in the workplaces”.

By Stuart Lowman

Herman Mashaba, the founder of ‘Black Like Me’ is creating a stir amongst trade unions. Following his recent commentary, where he said that Section 32 of the Labour Relations Act creates unemployment and uncompetitive working conditions in product markets, Cosatu called for a boycott of his iconic hair products. Mashaba says the extension of bargaining council agreements to non-parties can force the improvement of conditions of existing employment. But what they cannot do is encourage business and job creation. And in a country with youth unemployment at a staggering 63.1 percent while general unemployment sits at 25 percent, job creation must be front and centre of any agenda. 

by Sara Gon*

The Congress of SA Trade Unions (Cosatu) has called for a boycott of Black Like Me products for “pushing back the gains made by the workers in attempting to secure the bargaining rights in the workplaces”.

Black Like Me is an iconic South African brand of hair care products for black hair founded by Herman Mashaba. He launched BLM in 1985 when apartheid was in its violent death throes. Mashaba’s products are sold in over 30 countries in Africa.

Mashaba was brought up in near-poverty in GaRamotse in Hammanskraal by his sisters while his absent domestic-worker mother worked long hours to provide what little she could.

Today Mashaba is the executive chairman of Lephatsi Investments, a company he formed three years ago. Worth about R1 billion, Lephatsi operates in mining, construction and the logistics sectors.

However, Mashaba is also the chair of the Free Market Foundation (FMF). The FMF is challenging Section 32 of the Labour Relations Act. 66 of 1995 in the Gauteng North High Court on constitutional grounds. The LRA allows for employer and union parties to establish a bargaining council to negotiate terms and conditions of employment between the parties.

Section 32 provides for the obligatory extension of any collective agreement concluded in a bargaining council to “any non-parties to the collective agreement that are within its registered scope and are identified in the request”.

FMF and Mashaba believe Section 32 creates unemployment and uncompetitive conditions in product markets.

By setting wage levels above what some companies would pay and some employees would accept, makes it unprofitable for certain types of firms to operate.

These firms are forced to exit and new firms, which might enter the market under different conditions, do not do so. These new, potentially dynamic, firms are precisely the kind of firms SA needs to create new jobs according to Mashaba.

It is mostly smaller and more labour intensive firms, where wages are generally lower, that extensions become so problematic.

By reducing competition from smaller firms, bargaining councils entrench incumbents and raise the price of goods and services above the market clearing level.

Section 32 provides for the obligatory extension of any collective agreement concluded in a bargaining council to “any non-parties to the collective agreement that are within its registered scope and are identified in the request”.

FMF and Mashaba believe Section 32 creates unemployment and uncompetitive conditions in product markets.

By setting wage levels above what some companies would pay and some employees would accept, makes it unprofitable for certain types of firms to operate.

These firms are forced to exit and new firms, which might enter the market under different conditions, do not do so. These new, potentially dynamic, firms are precisely the kind of firms SA needs to create new jobs according to Mashaba.

It is mostly smaller and more labour intensive firms, where wages are generally lower, that extensions become so problematic.

By reducing competition from smaller firms, bargaining councils entrench incumbents and raise the price of goods and services above the market clearing level.

It is not often enough stated, although it is self-evident, that of the three parties to the “Tripartite Alliance” – government, business and labour, the unions do not and cannot create jobs. They can help or hinder the creation process but they do not create jobs.

It is not their function to do so. Their function is to protect and support people who are already employed. While the power of business may be affected by government, businesses’ power is largely self-generated. Union power in the relationship is almost entirely generated by the power the government allows them to wield.

Job creation is spoken about as if it is what must be created above all. Government and business can create businesses, which leads to the creation of jobs. Without the former, the latter cannot happen. The extension of bargaining council agreements to non-parties can force the improvement conditions of existing employment. What they cannot do is encourage business and job creation. They can render smaller businesses and their jobs vulnerable. The preservation of jobs and the creation of new jobs has to be more important than extending “decency” to existing vulnerable jobs.

As Mashaba himself says: “If Cosatu, as part of the government, thinks boycotting Black Like Me is going to help save small businesses and create jobs in South Africa, they should go ahead.”

*Sara Gon is a Policy Fellow at the Institute of Race Relations

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