Economics / Notes Grade 10 Nkangala District/2023

NKANGALA DISTRICT
ECONOMICS NOTES
TOPIC 10: LABOUR RELATIONS
GRADE 10
2023

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 Economics / Notes Grade 10 Nkangala District/2023

TOPIC: LABOUR RELATIONS

DEMAND FOR LABOUR:

 Demand for labour is a derived demand, meaning labour is demanded only if there is
demand for goods and services. This means if people buy products e.g. jeans, there
will workers hired to produce those products.
 If the demand for goods and services decrease, the demand for production will
decrease, therefore less labour will be demanded.

 Factors that influence / affect / determine demand for labour

 wage rate: a wage is the price paid for hiring labour. The graph below shows how
wage rate can influence demand for labour

WAGE RATE’ INFLUENCE ON DEMAND FOR LABOUR

R7000
Wage rate

 R3000

50 120

Quantity of labour demanded

.
 At a higher wage rate of R7000, the quantity of labour demanded is only 50.
 As the wage rate decreases to R3000, the quantity demanded of labour increases
to 120. This means the law of demand also applies to demand for labour. The law
of demand says’ at higher price, demand is low and at lower price demand is high.

 Performance of the economy; during high economic growth, more goods and
services are produced and sold. Therefore, the demand for labour is high during
upswing period.
 During the downswing period, the economic growth is low, therefore less labour is
demanded (hired).

 Productivity of labour: productivity is the relationship between the quantity of

goods and services produced and the quantity of resources used.
 Labour is one of the resources (factors of production) used in production of goods
and services. Labour is productive when each worker produce more goods and
services.

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 Economics / Notes Grade 10 Nkangala District/2023

 More workers can be hired if labour productivity is high. This is because the more the
firm produce the more profit it will make.

 Technological improvements: better and faster machines and equipment are

produced from improved technology.
 Better machines leads to increased productivity of labour and therefore higher demand
for labour.

SUPPLY OF LABOUR
 Supply of labour is the quantity of workers who are willing to work at a particular wage
rate.

SUPPLY OF LABOUR
Wage rate
S
R7000

R3000

50 120

Quantity supplied of labour

 The graph indicate that the higher wage of 7000 , more labour is supplied
 At the lower wage rate, less labour will be supplied..

Factors influencing/affecting the supply of labour (Possible essay)

 The wage rate: There is a positive relationship between the wage rate and the
quantity supplied of labour. This means the higher the wage rate, the higher the
quantity supplied of labour (the lower the wage rate, the lower the quantity of labour
supplied).

 Population growth rate: if the number of people in a country increases at a higher

rate more goods and services will need to be produced. Therefore, more labour will
be demanded and supplied.
 Larger population also provide larger labour force.

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 Economics / Notes Grade 10 Nkangala District/2023

 Skills of the worker: skill levels of people in a country can affect the number of people
available to supply labour
 Jobs that need low level of skill often experience higher supply of labour.
 Jobs that require high level of skill often have few people available to apply for such
jobs.
 A labour force (EAP) that lack skills is unemployable.

 Migration: movement of people from one area/ country to another affects the quantity
supply of labour.
 In developing countries, skilled labour often move to developed countries and this
cause a shortage of such labour.
 The term used for the situation where skilled workers move to other countries
permanently is brain drain.
 South Africa experience a large arrival of unskilled illegal migrant workers from other
countries. This contribute to the over- supply of unskilled workers.

 INTERACTION OF DEMAND AND SUPPLY OF LABOUR

 The interaction of demand and supply of labour result in the equilibrium wage rate and
equilibrium quantity supplied and demanded.

Wage rate S
D
R7000

e
R5000

R3000
D
S

80 Quantity of labour

 At the wage rate of R5000, the demand for labour and the supply of labour are
equal. This is called equilibrium wage rate; and 80 is the equilibrium quantity
demanded and supplied of labour.

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 Economics / Notes Grade 10 Nkangala District/2023

OBJECTIVES OF THE LABOUR RELATIONS

 The focus of labour relations is on the relationship between employees and the
employers. The responsibilities of employees and employers are outlined in the
Labour Relations Act of 1996.

 The three basic objectives of the labour relations Act are: self- government,
majorification and consultation
 Self –government: the Act encourages employers and workers unions to engage in
collective bargaining on matters of mutual interest; to establish rules that must govern
the relationships between employers and employees.
 Collective bargaining means negotiations between employer and employees unions
on matters relating to their relationships
 The Labour Relations Act does not force the employers to bargain (negotiate) with
employees (unions) but only encourages them to do so. This means even in situations
where workers have no unions, the Labour Relations Act still applies.
 The Act set out rules and regulations so that employers can manage their businesses
fairly and employees can earn income in a safe and fair environment.
 To promote the objective of self –government, the Act establishes basic rights for
workers, which are:
 The right to belong to a labour union
 The right to fair labour practices
 The right to strike
 The following are some of the rights for workers unions as contained in the Act.
 The right to access (enter) the work place premises
 The right to disclosure of information

 Majorification: the Labour Relations Act favours majorities in regards to workers

unions. Unions that represents a large number of workers often enjoy more rights than
smaller unions.
 A union with more than 100 workers are given the right to extend the collective
agreements to non- union members. This means once the bigger unions reach
agreement with the employers, such agreements applies also to non-union workers.

 Consultations:
 The Labour Relations Act encourages employers and employees to jointly solve the
work place problems.
 Work place forums and unions allows workers to participate in matters that affect them
in their jobs.
 The purposes of work place forums is to encourage consultations before official
procedures and changes in the work place are implemented.

 LABOUR RIGHTS AND CONVENTIONS

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 Economics / Notes Grade 10 Nkangala District/2023

 International Labour Organisation (ILO) is a body that promote standard labour

practices across the world.
 The International Labour Organisation meet once per year and draw up conventions
(agreements) for the member countries.
 Examples of the ILO conventions/ agreements are:
 Child labour and minimum age
 Hours of work
 Freedom of association

 Labour rights in South Africa

 Section 23 of the South African constitution contains labour rights.
 Labour rights are a set of rights that protect workers in the work place
 Examples of labour rights are:
 The right to dignified working conditions
 The right to adequate remuneration
 The right to equal pay for work of equal value
 The right to equal treatment
 The right to join a union

 Various Acts affect labour in the work place in South Africa, and they are: 1. the Labour
Relations Act, 2. Basic Conditions of Employment Act and the 3. Compensation for
Occupational Injuries and Disease Act

1. The Labour Relations Act :its purposes includes :

 to promote orderly collective bargaining/negotiations
 to promote effective resolution of labour disputes/disagreements

2. The Basic Conditions of Employment Act: its main objective is to ensure workers’
rights and fair labour practices.
 Examples of labour practices are:
 Working time ( e.g. hours per day, time for meals,)
 Leave ( annual leave, maternity, family responsibilities leave)
 Remuneration (written record, deductions)
 Termination of employment (notice period, severance pay)

3. The Compensation for Occupational Injuries and Disease Act

 It applies to all employees (casual & permanent) and employers who suffer injury as
a result of work place accidents
 Compensation/payments should is paid to those workers and employers who
suffered injuries. It should also be paid to relatives of workers and employers who
died due to work place accidents.

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 Economics / Notes Grade 10 Nkangala District/2023

 Workers or their relatives should apply within 12 months of the accident that caused
injury or death to the Compensation Commissioner.
 Domestic workers, military and the police are excluded.

COLLECTIVE BARGANING AND DISPUTE RESOLUTION

 Collective bargaining and dispute resolutions process takes place through labour
unions, work place forums, bargaining councils and the Commissions for Conciliations
and Mediation and Arbitration (CCMA).

 Labour unions: In South Africa workers are free to join a workers union and
employers cannot dismiss them for doing so.
 Labour unions represent the interests of member workers.
 Membership of a union is voluntary for workers.
 Office bearers (e.g. chairpersons, secretary etc.) are elected democratically.

 Work place forums: it provides an opportunity for all employees whether they are
union members or not, to participate in managerial decisions that affect them.
 Functions of work place forum are:
 To promote the interest of all employees
 To promote consultation by the employer when dealing with issues
affecting employees

 Bargaining councils: are organisations that consists of a group of employers and

unions. Each industry has its Bargaining council.
 Employers and unions negotiate wages and other conditions of employment in the
bargaining council.
 When there is labour dispute/disagreement, the bargaining council‘s duty is to solve
it, but if the dispute cannot be solved it can be referred to the Commission for
Conciliation, Mediation and Arbitration (CCMA).

 The Commission for Conciliation, Mediation and Arbitration (CCMA)

 The CCMA consists of the representatives from organised labour (labour unions),
organised employers and government.
 They bring disputing (disagreeing) labour and employer together to help them settle
the disagreement, and this is called conciliation. There is no judgement passed in
conciliation.
 If conciliation fails, the matter can be taken to the next stage which is arbitration.
 Arbitration is when the labour dispute is presented before commissioners who makes
final judgement on the matter. The judgement is binding and legal.
 Example, a case of unfair dismissal can be referred to the CCMA, first for conciliation,
if not resolved then for arbitration.

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Economics / Notes Grade 10 Nkangala District/2023

 THE LABOUR COURTs

 The Labour Court and the Labour Appeal Court are established in terms of the
Labour Relations Act of 1995.

 Labour Court
 The powers/ functions of the labour courts
 Orders parties to comply with the Labour Relations Act.
 Make an order for a party to comply with the judgement of arbitration.
 Grant interdicts (orders) e.g. an employer can apply for interdict against a strike by
workers.
 Award compensation for damages, e.g. for unfair dismissal, an employer can be
ordered to pay employees wages backdated from the time of such dismissal.

 The Labour Appeal Court

 It has the status of the High Court of South Africa.
 If parties are not satisfied with the judgement of the Labour Court, it can take the
matter to the Labour Appeal Court.
 The Labour Appeal Court will revisit the case and then pass judgement.
 The judgement of the Labour Appeal Court is final and binds the Labour Court and
the parties involved in the case.

 Representation in Labour courts

 A party to the matter brought before the court, may appear in person, or be
represented by:
 Lawyer or advocates
 A registered union representative
 Official of the Department of Labour