South Africa (Hansard, 15 February 1979)

§ Mr. John Smith

Following is the information:

Number of Reports Received

Following publication of the White Paper on the new Code of Conduct (Cmnd. 7233)^* on 25 May 1978 my predecessor wrote to those companies believed to have interests in South Africa. A total of 173 reports were received by 31 January 1979 and the details are given below.

One hundred and thirty-one reports were made by companies holding 50 per cent. or more of the equity of a South African company employing 20 or more black Africans; they are listed at Annex A. Such companies (designated category A) were asked to publish a full report under the Code of Conduct. Companies (designated category B) holding from 10 to 49 per cent. of the equity of a South African company employing 20 or more black Africans were asked to publish as much information as possible under the Code. The 13 category B companies which have published information under the Code are listed at Annex B. In addition information was published by 21 other companies (listed at Annex C) with a South African affiliate employing less than 20 black Africans. A further 8 companies have published information in accordance with the superseded UK Code of Practice rather than the Code of Conduct, but they have indicated that they will report under the new Code in future years; they are listed in Annex D.

Two companies (Gallaher Ltd. Marley Ltd) have declined to publish a report under the Code. Forty-five companies which received my predecessor's letter but which had not adequately reported by 31 January 1979 are listed at Annex E.

Summary of Reports

The 109 reports from companies in Category A which had been received by 10 November 1978 have been analysed and information about the extent to which these companies are implementing sections 1 to 6 of the Code has been summarised in the following paragraphs.

Section 1: Relations within the Undertaking

Section 1 of the Code asks that "companies should ensure that all their employees irrespective of racial or other distinction are allowed to choose freely … the type of organisation to represent them" and that, "should black African employees decide that their representative body should be in the form of a trade union, the company should accept this decision." Companies were therefore asked in the 648W reporting format to state their policy towards consultation and collective bargaining with organisations, including trade unions, freely chosen and representative of employees, including black African employees, to state progress in implementing that policy and to state what negotiating machinery is established to conclude collective agreements on pay and working conditions on behalf of black African employees.

In their statements of policy many companies showed a willingness to recognise a trade union which is representative of black African employees, if black African employees so decide. However, in a majority of these cases, this was conditional on requirements such as the registration of black trade unions, the existence of multi-racial unions inclusive of black Africans, participation of such unions in the Industrial Council system or majority representation by the trade union concerned in a "common interest group". Many of these requirements are either not possible under present South African legislation or are unlikely to be achieved in present circumstances.

The organisation of black African employees within the trade union movement in South Africa is still at an early stage of development and only 8 companies reported that they had recognised trade unions representative of their black African employees, one of which is an in-house union. (The 8 companies are Barclays Bank International Ltd., BAT Industries Ltd., Thomas French and Sons Ltd., Lindustries Ltd., Lucas Industries Ltd., Smith and Nephew Associated Companies Ltd., Standard Chartered Bank Ltd., and Cadbury Schweppes Ltd: the last-named has recognised an in-house union). In addition, 10 companies out of 56 which provided information on this point reported that a union had requested facilities to organise their Black African employees.

The majority of companies showed a marked preference for in-house consultative systems, with 59 using liaison committees, 6 works committees, and 7 reporting works and liaison committees in their various plants or subsidiary companies. Seven companies reported in-house, multi-racial consultative committees on which black Africans were represented. Four companies reported that they used informal methods and 6 that they had no forms of representation. Twelve did not state the form of representation in use.

Reports by 40 companies indicated that black African wages and conditions were negotiated within Industrial Councils by trade unions not representative of black African employees. Forty-two other companies said that wages and conditions were not determined by negotiation. In 15 cases, liaison/works committees did negotiate within companies. In the 8 companies which had recognised trade unions, the unions concerned negotiated either directly within the company or within the industry.

Section 2: Migrant Labour

Section 2 of the Code draws attention to the grave social and family problems caused by the system of migrant labour and asks employers to alleviate these problems as much as possible.

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Only 27 of the 109 companies reported that they employed migrant labour. Of these 27 companies, 6 provided advisory services to migrants; 3 provided additional paid leave; 4 provided facilities for families. Six reported using the 'calling-in card' to expedite re-engagement of migrant workers after the compulsory return to their homes, but this figure could be higher as other companies reported that certain migrants had been in their employment for several years. Five companies gave financiai assistance to migrants for leave transport, but under the influx control system this is compulsory for employers on recruitment and at the end of the period of employment. Two companies reported efforts, through outside organisations, to contribute to improved hostel accommodation.

Section 3: Pay

The Code calls for a 'minimum wage which should initially exceed by at least 50 per cent. the minimum level estimated to satisfy the basic needs of an employee and his family'. Paragraph 6 of the Explanatory Guidance in Cmnd. 7233 equates the level of minimum wages advocated by the Code with the higher datum levels for families of five or six published (together with lower datum levels from which the higher levels are projected) by three bodies—the University of Port Elizabeth (UPE), the University of South Africa (UNISA) and the Johannesburg Chamber of Commerce (JCC).

The 109 companies employed approximately 98,000 black African employees. Of these, 87 per cent. (some 85,000) were paid rates in excess of the higher datum levels used. This encouraging result was achieved despite comparatively high inflation in recent years. In addition a timetable to achieve the higher level in respect of all black employees was set by some companies and job evaluation methods were introduced in others. Eighty per cent. of companies reviewed black African wages annually and a further 15 per cent. more frequently, often in relation to the biannual publication of source data.

Over 12,000 black African employees (approximately 13 per cent.) were however paid at rates below the higher datum level used and of these up to 2,505 (approximately 2.5 per cent.) employed by the 18 companies listed in Annex F may be paid at rates below the lower datum level. Certain of these 18 reports, although stating that no black Africans were employed at rates below the lower level, indicated an incorrect use of source data. For example, indices for single employees or small families were used in place of the average family size defined in Cmnd. 7233; in some cases benefits in kind have apparently been over-valued.

Section 4: Wage Structure and Black African Advancement

Section 4 of the Code states the principle of "equal pay for equal work", stresses the importance also of equality of job opportunities, and urges companies both to provide training for black African employees and to reduce their dependence on immigrant white labour.

Of the 109 companies, 79 showed a clear acceptance of the principle of equal pay for 650W equal work; 16 provided answers which were less specific and 14 did not state company policy on this matter. Equality of job opportunities was specifically accepted by 58 companies, 34 provided qualified or less than specific answers; 17 did not state the company policy

Because of differences in presentation and content, it has not been possible to quantify the information provided about progress in the provision of job opportunities and advancement for black African employees. The majority of reports indicated that a high percentage of black employees filled unskilled or semi-skilled jobs, with relatively few doing more specialised work as, for example, clerks, laboratory assistants, survey assistants, vehicle drivers, industrial equipment drivers. Few occupy supervisory or managerial positions.

Nearly all companies provided some training for black African employees. This ranged from orientation/literacy courses to (in a few cases) management training but it was difficult to assess its extent or quality. Most training was "on the job", supplemented in some cases by courses in company training centres or at Government sponsored or private centres. Much of the training was for semi-skilled operatives, with specialised training for appropriate grades. A substantial number of companies provided either internal or external training in supervision, whilst very few provided managerial training.

The majority of companies reported that they either did not recruit overseas or did so only to the extent of recruiting specialised skills not available in South Africa. The reports indicated very little recruitment of this type during the past year.

Section 5: Fringe Benefits

Section 5 of the Code urges companies to concern themselves with the living conditions of their employees and families and lists certain types of fringe benefit which might be adopted.

Of the 109 companies, 105 companies provided fringe benefits to varying degrees. Fifty-two companies had housing schemes (some by direct housing, some by direct loans and others through third parties). Twenty-two companies provided transport to and from the place of work or gave a transport allowance. Twenty-six companies offered indoor or outdoor leisure or sporting facilities. Advice on problems encountered by black African employees over their employment, residential qualification and freedom of movement was given by 20 companies. Pension schemes for black Africans were widespread, with 104 companies operating them. Education schemes for black African employees or their families were reported by 53 companies. Insurance schemes covering life, injury, medical aid or funeral expenses were reported by 69 companies. Various other forms of fringe benefits such as free or subsidised canteens, bonus systems, paid leave or sick leave in excess of statutory requirements, were reported by 81 companies.

Section 6: Desegregation at places of work

Section 6 of the Code urges employers to do everything possible to abolish any practice of segregation, notably at the workplace and 651W in canteens, sports activities, education and training.

Of the 109 companies, 75 companies reported that they had a policy on desegregation although in some cases this was not defined in specific terms. Workplace integration was reported by 57 companies, 26 reported partial integration in canteens (on a job grade basis rather than a racial one) and offices (as contrasted with factory premises). Two companies mentioned desegregated training centres, 6 reported multi-racial social functions. Three reported the removal from facilities of signs of a racial character. One company (Rank Xerox Ltd.) reported integration of the workplace and all their amenities.

The law was cited by 47 companies as a factor preventing integration, particularly of lavatories, changing rooms, rest rooms and canteens. Seven others referred to the constraints imposed by social attitudes and customs. No information is available as to the number of black African employees sharing or partly sharing amenities with other races.

Comment

The number of reports received under the new Code in its first year of operation was encouraging. The reporting format recommended in Cmnd. 7233 was very widely used, although in some cases more precise information was needed for an accurate assessment of company performance.

On industrial relations, the reports reflect the very limited degree of recognition accorded by employers to trade unions which are representative of their black African employees. Thus, few black African employees directly negotiate their own terms of service through independent organisations. The organisation of black African employees within the South African trade union movement is still at a formative stage. Nevertheless Section 1 A of the Code urges companies to ensure that all their employees are allowed complete freedom of choice in deciding on the organisation to represent them. Although many companies accept this in principle, most of them set conditions which in practice severely curtail this freedom. As Cmnd. 7233 pointed out, freedom of choice, in accordance with internationally accepted principles, may involve an employer in relationships with non-registered trade unions representative of black African employees and such unions are not unlawful in South Africa.

On pay, it is encouraging that 87 per cent. of employees covered by the reports analysed appear to be paid above the higher datum levels recommended in Cmnd. 7233. Nevertheless, the failure of some companies to attain the cash wage levels set by the lower datum indices is disturbing.

The fact that the majority of companies have accepted job evaluation as the basis for ensuring, as between differing racial groups (and sexes), the principle of equal pay for equal work' is welcome, as is the provision by the majority of some training facilities for black African employees. However, reports indicate that most black Africans are still employed in the lower ranges of occupations 652W that few are yet in supervisory or decision-taking positions and that, where they are, their responsibilities are usually limited to other black African employees. It is recognised that present conditions in South Africa place considerable handicaps on employers in this area, but there is scope for further progress.

Reports indicate a wide range of fringe benefits and an increasing awareness by companies of their social responsibilities, especially in those measures (such as housing, pensions and medical insurance schemes) which provide black Africans with a greater degree of social security, and in the provision of educational facilities which cater for adult workers and their families. Among the small number of companies employing migrant labour, several provided benefits to cater for their special needs, although this was often in response to legal requirements.

Whilst a majority of companies reported a policy of desegregation, specific progress reported was very limited. Although integration at the workplace is widespread, there is scope for greater effort to desegregate amenities on a pragmatic basis within South African law as recommended in Cmnd 7233.

In their response to the 1974 UK Code of Practice, and now the Code of Conduct of the nine Member States of the European Community, British companies with interests in South Africa have demonstrated an awareness of the concern in the United Kingdom over the conditions under which black Africans are employed in South Africa, and a willingness to make improvements. The Government's object in calling for the publication of company reports is that Parliament, the public, and company shareholders should have access to information allowing judgments to be made on the progress so far achieved by companies on what remains to be done and at what pace.

Copies of the reports are available from the companies themselves and full sets of the reports received up to 31 January 1979 have been placed in the libraries of both Houses, and may be consulted at the Department's headquarters library. Copies of this answer will be sent to all companies listed. In addition, as preparation for the next round of reports, I shall be writing to companies pointing out those matters which generally require attention to ensure fuller compliance with the Code."