Has the South African government finally acknowledged the need to treat small businesses differently from larger ones when it comes to the country's rigorous labour laws?
Amendments to the country's Labour Relations Act, which come into effect next month and which exempt many small firms from new rules on hiring contract employees suggest that the government may be slowly coming around to the idea that small businesses need to be treated differently.
Employers with under 10 employees as well as those with fewer than 50 employees that have been operating for less than two years have been exempted from new provisions in the act which make it obligatory for employers to convert temporary employees into permanent workers after three consecutive months of service.
The amendments were signed into law by the country's president Jacob Zuma on August 18.
Even though those who own more than one business will not benefit from the exemption, the reprieve for small firms is significant. It was not contained in the original draft of the amendments which first surfaced in 2010 and which had been much criticised by businesses, while a regulatory impact assessment (RIA) projected the provisions would lead to massive job losses.
In 2002 amendments small firms with fewer than 10 employees were exempted from a number of minor areas in the Labour Relations Act (such as scrapping the daily work overtime limit of three hours and allowing conciliation to be followed immediately by arbitration to expedite matters at the CCMA, the country's dispute resolution body).
The new exemptions however signal a change on how the state views small businesses - no longer seen as just street traders or spaza shops (tiny often unregistered grocery stores) but as enterprises with up to 50 employees. This is significant as it's those small firms with over 10 employees that are more likely to create the jobs the country needs. A helping hand to them is much needed.
In addition the annual turnover threshold for white-owned firms past which one will need to have a Black Economic Empowerment (BEE) certificate will double from the present threshold of R5-million a year to R10-million when the new BEE codes of good practice come into effect in May next year. This is evidence that the government may finally be conceding that effects of red tape and legislation on small businesses.
But despite the small concessions by the labour department's labour policy and industrial relations head Thembinkosi Mkalipi (pictured left) and his team, it's not nearly enough.
South Africa isn't stifled by bureaucracy and red tape as much as its fellow Brics countries are (particularly India and Brazil) but its strenuous hiring and firing procedures and its bargaining council system mean it has the worst labour laws among Brics members.
It's why the amendments contained in the Labour Relations Act on bargaining councils are little more than laughable.
Bargaining councils essentially hold small businesses back because they mandate small and large businesses to pay the same wages and benefits. Wage agreements are negotiated between trade unions and large firms who then extend the agreement to non-party firms - most of them small businesses. Like this it is difficult for smaller firms to compete.
And while small firms can apply for exemptions from bargaining councils, many argue that those who decide on whether to grant firms extensions or not are often those same firms very rivals.
In a bid to close this gap, amendments to the act mandate that the exemptions appeal body must be independent from trade union and employer parties to the council. The labour minister will also have to consult with the public when considering whether to extend an agreement where parties are only sufficiently representative.
The latter measure may be a step forward, but trade unions, working together with bargaining councils, have been known in the past to go on massive drives to sign up as many workers as possible just before an agreement is set to lapse.
Agreements are then signed for lengthy periods, effectively forcing non-party members to abide by the agreement - in direct contract to the constitution's clause on freedom of association.
The minister may also request a certificate from a council specifying the level of representativeness of a bargaining council and this may be taken into account for any purpose under the act, including a decision by the labour minister whether or not to extend a collective bargaining agreement or not.
But previous minister have been known to extend agreements even when they fell short of the targeted 50% representivity of an industry, simply because the minister is not under any obligation not to extend an agreement if the target is not reached.
On the surface the amendments appear to address a key argument in the court bid brought against the labour minister last year by policy organisation the Free Market Foundation - namely to allow the minister some discretion to consider the impact on small businesses before opting to extend an agreement or not.
If you only can do two things
If the government really wants to help small businesses it should focus on doing just two things - fix the terrible education system and hiring professional accountable people to work in the public sector. Those working with businesses should preferably have some business experience.
A better educated population will make for better entrepreneurs that don't fail so easily as they do now. It will also help create a more capable public sector, which will be better able to implement key reforms and then carry then out in the most efficient way backed by modern technologies.
Perhaps the labour law concessions are evidence minister of small business development Lindiwe Zulu has honoured an earlier promise she made to host discussions between small businesses and the unions on labour legislation. But it will take more than to boost small businesses - the very foundations are unstable.
Education is the only answer.
For more on the new Labour Relations Act's impact on small firms see Small Business Connect's article.
Stephen Timm is a