SUBMISSION ON THE UNEMPLOYMENT INSURANCE BILL
The Black Sash welcomes this opportunity to present submissions to the Portfolio Committee on Labour on the Unemployment Insurance Bill, 2001. Our work is primarily in the area of social security - we are committed to the realisation of access to to this right by everyone, and to the development of a comprehensive social security system for South Africa. It is for thus reason then that we wish to comment on the Bill: As a form of social insurance, unemployment insurance is an important component of social security.
We view the Bill as a necessary and significant step in the development of a system for comprehensive social security coverage. As mentioned in our submission on the draft bill in March last year, we support the principle to address aspects of the current legislation that are discriminatory ion nature. Therefore, we now welcome the initiatives to inter alia, de-link maternity and unemployment benefits and include high income earners into the unemployment insurance Fund.
Our submission will focus on the section dealing with the Bill’s application, namely, section 3 thereof. In terms of section 3, were this Bill to become an Act, it would apply to all employees and employers other than ceratin categories of employees and employers. The Bill then goes on to list these categories. The notable exclusions from the scop of the Bill are: domestic and seasonal workers and their employers (section 3(1)(e)); and employees and the employer in the national and provincial spheres of government.
We wish to deal with the express exclusion of domestic workers. The arguments advanced by us in relation to domestic workers extends to seasonal workers. [We are aware that the non - governmental organisation, Women on Farms, is present today to address the issue of the express exclusion of seasonal workers from the Bill.] As far as the exclusion of public service workers is concerned, their exclusion impacts upon any attempts that may arise in future to include domestic workers into the Bill. This aspect will be discussed later.
2. EXCLUSION OF DOMESTIC WORKERS
2.1 The Context
The primary purpose of the Unemployment Insurance Bill, as stated in section 2 thereof, is to alleviate the harmful economic and social effects of unemployment; an important societal goal indeed. Due to policies of the past, those who were poor and vulnerable, largely as a result of systemic and discriminatory policies, were also not adequately covered by the South African social security system. This exclusionary nature of the social security system applies to unemployment insurance, which, in the main, allows claims for benefits to those who are formally employed, thus excluding those employed in the informal sector. We have inherited this discriminatory and fragmented system. Serious initiatives, such as the Department of Social Developments’ Committee of Inquiry into a Comprehensive Social Security System are now underway to address these challenges of limited and non - coverage during times of economic distress.
Our Constitution, unique in nature, contains social and economic rights which the state is duty bound to realise, especially in relation to the poor, vulnerable and marginalised. This Bill represents one of the ways in which poor people can gain access to their rights and be included in the social security system if and when they become unemployed See "Poverty and Inequality in South Africa" Final Report 1998 pp 81; 82. , fall ill, go on maternity leave or choose to adopt. The problem, of course, is that they have been excluded from the ambit of the Bill. We note that, in principle, there has been no change regarding the position of domestic workers in the draft bill and the bill now tabled.
2.2The Legal Position
It is our submission that the express exclusion of domestic workers from the benefits set out in the Bill is in violation of the Constitution and that this express exclusion contravenes the provisions of the Promotion of Equality and Prevention of Unfair Discrimination Act no 4 of 2000 (hereafter referred to as the "Equality Act.") We also submit that the exclusion of domestic workers is contrary to international law.
2.2.1The Constitution and the Equality Act
Section 27(1)(c) of the Constitution
This section states that "everyone has the right to access to social security..."
The benefits which flow from unemployment insurance, namely, unemployment, illness, maternity and adoption benefits, are categorised as social security, of which social insurance (in the form of contributions form employer and employee administered by the Unemployment Insurance Fund) is an important component. The provisions of the unemployment Insurance Bill are thus inextricable linked to this section in the Constitution.
The Constitution os very clear in its intention that "everyone" should have access to this right. The meaning of the word ‘Everyone" includes domestic workers who have a constitutional right to access to social security. By excluding domestic workers from enjoying these benefits, section 3(1)(e) of the Bill places a limitation on the constitutional right of domestic workers to have access to the right to social security.
Given this limitation on the right, an enquiry as to whether such limitation is justifiable needs to occur. In his regard, the Constitution, in section 36 thereof, lays down criteria to determine whether the limitation is "reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom..."
We cannot see how limiting or denying domestic workers their right to have access to the benefit of section 27(1)(c) of the Constitution can be justified in the manner envisaged in the Constitution
2.2.2Equality and the Law Relating to Discrimination.
(a)Section 9(1) of the Constitution
This section guarantees that everyone is equal before the law and that the law will protect and benefit people equally.
This section provides that the state may not unfairly discriminate directly or indirectly against anyone on one or more grounds including "race, gender, sex, pregnancy, marital status...’ This section contains a prohibition on unfair discrimination on certain grounds, some of which have been stated above and which are known as the listed grounds.
This section presumes that discrimination by the state (or privately) on one or more of the listed grounds is unfair discrimination.
(d)The Equality Act
The Equality Act was introduced to give effect to the equality clause in the Constitution (section 9 of the Constitution). Under this Act, neither the state, no any person may unfairly discriminate against any person or group of persons (see section 6 of the act)
Unfair discrimination on the grounds of race and gender are separately prohibited in sections 7 and 8 of the Act.
Certain sections of the Equality Act have now come into operation. Although sections 7 and 8 are, to our knowledge, not operative as yet, it is a reasonable to assume that they may very well be operative if and when this Bill becomes law. In any event, pending the suspension of these sections from operation the provisions of the Constitution prohibiting unfair discrimination on the grounds of race and gender apply with similar effect.
Discrimination is defined in the Equality Act as:
"Any act or omission, including any policy, law, rule or practice, condition or
situation which directly or indirectly
(a)imposes burdens, obligations or disadvantage; or
(b)withholds benefits, opportunities or advantages from,
any person on one or more of the prohibited grounds;"
It follows thus that were the Unemployment Insurance Bill to become law, the effect thereof would be to withhold benefits from domestic workers as a group. The benefits referred to are the right to claim benefits in terms of section 12 of the Bill.
If this conduct is found to be based on one of the prohibited grounds, such as race and gender, such conduct amounts to discrimination.
(e) Indirect Discrimination CC.
The Bill defines a "domestic worker" as "an employee who performs domestic work in the home of his or her employer, and includes a - (a) gardener; (b) person employed by a household as a driver of a motor vehicle; and (c)person who take care of any person in that home."
The majority of domestic workers in South Africa are black women. This is undisputed. The most recent study by the Central Statistical Service (CSS) (Houses, Sectional Title Units, and Domestic Workers October 1991) reveals that black women comprise 89% of all domestic workers; a further 8.4% are so - called coloured women. To our knowledge, there has been no further survey to date, but figures will not have changed significantly since that time.
The definition of domestic worker in the Bill is seemingly neutral in terms of race and gender, as the Bill does not overtly seem to discriminate on the listed grounds of race and gender. However, it is our submission, given the above, that the Bill is indirectly discriminatory in terms of race and gender in that the exclusion of domestic workers from the Bill is discriminatory in its effect.
Section 8(I) of the Equality Act specifically prohibits systemic inequality of access to opportunities by women as a result of the sexual division of labour. Note that the definition of discrimination in the Equality act envisages
Note that the definition of discrimination in the Equality Act envisages conduct based on one or more of the prohibited grounds, recognising the inter-sectionality of many instances of discrimination. This is particularly so in the cases of systemic discrimination where groups of persons have traditionally been repressed on a number of grounds.
(f)Determination of Fairness
Once a case of discrimination is made out on one or more specified prohibited grounds then there is an onus on the respondent to prove that the discrimination is fair.
At this stage of the enquiry, the reason for the discrimination becomes relevant. To determine whether a form of discrimination is fair, regard must be had to the factors set out in section 14 of the Equality Act.
One relevant factor included in section 14 is whether the discrimination "reasonably and justifiably differentiates between persons according to objectively determinable criteria," see section 14(2)(c). This is reflection of the general limitation under section 36 of the Constitution as described earlier. It would include a consideration of general policy related factors. Given the comment in the Ministers statement on the release of the Bill a year ago (02 - 03 -2000) that domestic workers are to be brought into the framework of the Bill and the express direction that there should be an investigation into the effect of excluding them is that a policy decision was taken to this effect. We understand from these comments that domestic workers were excluded for reasons of administrative convenience rather than any more compelling reasons.
It is difficult for us to see how reasons of administrative convenience can justify the wholesale exclusion of a constitutional right. Policy factors must be balanced against a number of other factors. Relevant factors are set out below:
(1)Overall Context of the Bill
Given the fact that the Minister has widened the provisions of the Bill to include previously excluded categories, and has given no explanation as to why domestic workers are excluded, their exclusion is unfair.
(2)The Position of the complainant in society and whether she or he suffers from past patterns of disadvantage (section 14(3)(c)) and whether the discrimination is systemic in nature (section 14(3)(e))
These two factors are related and in our view they address the central issue in this case. Their importance can properly be appreciated by reference to the spirit and intention of the Equality Act. The Guiding Principles provide that, when applying the Equality Act, account should be taken of "the existence of systemic discrimination and inequalities, particularly in respect of race, gender and disability in all spheres of life as a result of past and present unfair discrimination, brought about by colonialism, the apartheid system and patriarchy" (s.4(2)(a)). Although not legally binding, the Preamble also refers to "the eradication of social and economic inequalities, especially those that are systemic in nature, which were generated by colonialism, apartheid and patriarchy." We would submit that cases of systemic discrimination of this nature can only be justified in the most exceptional of circumstances and our Constitutional Courts have been rigorous in application of this principle (see, for example, Hugo v President of RSA 1996 6 BCLR 876 D) where it was held that discrimination on the grounds on gender could only be fair "in the narrowest of circumstances").
Applying these factors to the present case, domestic workers have traditionally occupied, almost by definition, a low position in society by reason of their race and gender. It is because many black women have no other means of income that they are forced to work for the "informal sector" and were traditionally excluded from UIF protection. The practice of excluding informal workers from work related benefits amounted to systemic unfair discrimination and this has been addressed by the State in its decision to bring other workers from the informal sector within the ambit of the UIF Bill. This, however, only strengthens the case for inclusion of domestic workers. Their continued exclusion amounts to a perpetuation of a traditional form of systemic discrimination and is clearly the sort of practice which the Equality Act was intended to prohibit.
We do not believe that this a case where the fundamental purpose of the Equality Act can be overridden, particularly as the benefit which is being witheld is a constitutional right.
Furthermore, the State has a positive obligation in terms of section 25 of the Equality Act to take measures to promote equality. We submit that the State has failed to promote the equality of domestic workers.
2.2.3 International law
We would further submit that the exclusion of domestic workers is contrary to international law. The Minister of Labour, in his Statement on the occasion of the release of the UIF Bill, stated that the approach taken in the Bill had been informed by International Labour Organisation studies. He also referred to a task team which conducted a comparative analysis of international precedents and concluded that coverage be extended to all workers. It is unfortunate that neither international law nor the recommendation of the task team has been followed.
References in international law prohibiting this type of practice are numerous. In particular, the practice contravenes the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW), of which South Africa is a signatory. Article 11 of CEDAW provides that
"States Parties shall take all appropriate measures to eliminate discrimination against women in the field of employment, in particular, the right to social security, particularly in cases of ...unemployment, sickness, invalidity, old age and any other incapacity to work" (Article 11(1)(e)).
Furthermore, Article 5 of the Convention on the Elimination of all Forms of Racial Discrimination (CEFRD) (also ratified by South Africa) also protects the equal enjoyment of rights including the right to social security without discrimination on the ground of race.
South Africa has also ratified the ILO Discrimination (Employment and Occupation) Convention 1958 under which each member undertakes to pursue a national policy designed to promote equality of opportunity in the workplace and eliminate any discrimination in respect thereof.
There has been a clear trend in recent years amongst international jurisdictions to bring casual workers and workers in informal sectors within the ambit of more formal employment legislation. This trend has been brought about in recognition of the principle established under international law that to exclude them amounts to unfair discrimination. We submit that the exclusion of domestic workers from UIF benefits is in clear contravention of international law, is at odds with accepted international practice and for all these reasons, aswell as the reasons outlined above, is unfair discrimination.
3. Section 3(2)(a); (b) and (c) of the Bill: Appointment of a body to investigate and make recommendations regarding the inclusionof domestic workers
Section 3(2)(a) states that the Minister must, as soon as possible after the section takes effect, appoint a body to investigate and make recommendations regarding the inclusion of domestic workers (and seasonal workers.) Further, the investigation is to be concluded within 18 months from the date that this section takes effect.
It is clear that given the manner in which the time - frame for this investigation and its mandate has been crafted, there is at this stage no certainty as to when it would be reasonable to expect domestic workers to be included in the Bill as the appointed body is not mandated to come up with clear proposals for the inclusion of domestic workers within the 18 months referred to. It may happen that the appointed body has to go back to the drawing board thereafter. We are also unsure as to when section 3 may reasonably be expected to become operative, thus potentially delaying further the appointment of the body referred to.
We submit that this approach is contrary to the progressive realisation of the right to social security. Section 27(2) of the Constitution states that the state must take "reasonable legislative and other..." measures to achieve the "progressive realisation" of the right. The approach adopted in the Bill appears to ignore the fact that two comprehensive investigations have already been carried out into the feasibility of including domestic workers in the Bill. This will be discussed below. Given the history of these investigations, as will be shown, and the manner in which the Bill now deals with the issue of domestic workers, there does not appear to be a reasonable attempt to progressively realise the rights of domestic workers to access to social security.
In the recent, landmark Constitutional Court decision of Government of the Republic of South Africa v Grootboom, the Court, in distilling the meaning of the term "progressive realisation," stated that "accessibility [to rights] should be progressively facilitated: legal, administrative, operational and financial hurdles should be examined and ...lowered over time." The Court also cited, with approval, from Article 2.1 of the International Covenant on Economic, Social and Cultural Rights, to which South Africa is a signatory the following: " ...It [thus] imposes an obligation to move as expeditiously and effectively as possible towards that goal..."
Turning to the two investigations carried out already: The first of these was prepared by John Limbrick and Associates and presented to then Department of Manpower in July 1993 (the "Limbrick Report"). This Report recommended that domestic workers should, in principle, be included within the protection of the Unemployment Insurance Fund and put forward a number of options as to how the administrative issues this raised may be addressed.
In October 1996 the Task Team also submitted a report on Unemployment Insurance and related coverage issues (the "Task Team Report") endorsing the recommendations in the Limbrick Report and again recommending that domestic workers be included in the framework of the Bill. Furthermore, this report quite clearly stated support for this proposal from, inter-alia, The International Labour Organisation, The Labour Market Commission, The Labour Movement and Community Groups in South Africa (paragraph 4.6.2 of the Report). The Task Team concluded that near unanimity exits on the question of the desirability of extending unemployment benefits to domestic workers: "Domestic workers, of course, should be included because it is inequitable to exclude them" (p.104). What the Report did not articulate is that domestic workers have a legal right to be included in this legislation. We have dealt with the legal arguments in this regard above.
The Report goes on to conclude that the major obstacle in the way of inclusion of domestic workers within the UIF scheme is administrative and the comments of the Minister at the release of the UIF Bill support this conclusion.
The Reports both identify the same difficulties :
The Limbrick report concluded that the annual cost of administering the Fund between 1990 - 1992 was under 5% of the Fund’s annual income for each year. This is low when compared with the standards of other countries in both Africa and Europe and suggests that there is capacity for a limited increase in administrative costs.
Both the Task Team Report and the Limbrick Report recommend that coverage of domestic workers should be staggered and this would control the administrative costs of registering domestic workers. The Task Team Report also concludes that benefit costs, not administration costs, are the major difficulty in respect of the inclusion of domestic workers.
Both the Limbrick report and the Task Team report recommend that workers be phased in starting with full-time workers (namely, those who work a five day week or more, regardless of the number of employers) in order to control the additional costs to the Benefit Fund. We support this recommendation provided that all domestic workers are included within a prescribed time frame. We have already argued that it is unfair discrimination to exclude part-time workers (those who work less than five days a week for one or more employer) from the ambit of the legislation completely but we would accept that it would be reasonable to stagger the entry of domestic workers to cope with the additional costs.
Other suggestions to cope with the additional costs include the introduction of flat-rates for domestic workers which would be based on average wage levels. This could take the form, for example, of a flat-rate benefit of 50% of the median wage of domestic workers with an appropriate scale of monthly contributions (see the Limbrick Report). This proposal is sensible because the contributions of domestic workers will be relatively low and so administratively it would be far easier to impose a flat-rate.
Both the Limbrick report and the Task Team positively recommend that the State should contribute to the Fund. State funding was withdrawn in 1977 but international studies show that in many jurisdictions the State either contributes to the Fund or undertakes to make up any shortfall in the Fund. We strongly support this recommendation as the State has a responsibility to ensure that domestic workers are given their constitutional rights and by contributing to the Unemployment Insurance Fund it would be acting in accordance with this responsibility and the duty to progressively realise the right. State support could either take the form of a fixed annual grant for the first three years or an undertaking to make up any deficit in the Fund.
3.3. Compliance (Registration)
1997 October Household Survey (SSA) estimates that there are approximately 990 000 workers in South Africa working for over 1,000,000 households.
Potential for abuse of the system is identified by the Task Team report as a major difficulty with bringing domestic workers into the scheme. The real issue is how to ensure that each and every employer is registered and pays contributions.
One suggestion is to register all employees rather than employers on the basis that there are fewer employees. However, we do not support this suggestion as, in any event, domestic workers will need to provide details of their employers whose support is needed if the scheme is to work. We believe that the employers should be brought in positively from the start in the following ways :
3.3.2Receiver of Revenue
The Task Team suggests that the Receiver of Revenue tax returns could be used to collect contributions from employers who pay PAYE.
For those employers who do not pay PAYE we support the recommendations of both the Limbrick Report and the Task Team that the most efficient method of administration is through the municipalities by using the regular monthly municipal accounts to collect contributions from households that employ domestic workers. This would work by households indicating in advance to the municipalities the details of any domestic workers employed in that household and the municipalities would automatically add specified contributions and premiums to the monthly account of each householder which engages a domestic worker. Monies collected and details of domestic workers would be passed on to the Fund.
Given that municipalities are now representative they are more likely to be willing to undertake this role. They would, however, need to be carefully monitored to ensure that the system runs smoothly. The proposal will also inevitably require legislation to give formal sanction to the municipalities.
We have had no comment from the Minister on why this is not a viable alternative. The scheme has the attraction of simplicity for all concerned and has the added advantage that the municipalities could then serve as a central point to institute training and placement services for domestic workers. We believe it represents a simple and workable method of administering contributions paid in respect of domestic workers.
It is our view that two very comprehensive reports have already been carried out into the feasibility and desirability of extending UIF coverage to domestic workers. Both reports echo the widespread view that domestic workers should be included. Both reports take the matter even further by making positive and innovative proposals to address the difficulties raised by their inclusion. We cannot see that a further investigation will take the matter very much further.
It is also clear from the above that we believe the exclusion of domestic workers from UIF benefits to be indirectly discriminatory and unconstitutional. We also believe this discrimination to be unfair. We strongly urge the Minister to reconsider his decision to exclude domestic workers. We urge him to include them in the ambit of the Bill thus ensuring that they are treated in accordance with their rights under international law and the Constitution.
If the Minister wants time to consider further how to implement the procedure then we propose the following : domestic workers should be removed from the express exclusion clause and a proviso should be added that regulations will follow which will deal with the administrative matters relating to their inclusion. We propose that the regulations be finalised within the time period of no more than one year, which we believe to be a reasonable time period for their effective inclusion into the system. This will allow the Minister sufficient time for consultation on procedure and these workers can be included by further regulations.