Topic 1 Macro environment: impact of
recent legislation on business
(Answers to questions are at the end of the term’s revision.)
Overview
This topic deals with the effects of the following legislation on South African businesses:
• Skills Development Act No. 97 of 1998
• Labour Relations Act No. 66 of 1995
• Employment Equity Act No. 55 of 1998
• Basic Conditions of Employment Act No.75 of 1997
• Broad Based Black Economic Empowerment Act No. 53 of
2003
• National Credit Act No.34 of 2005
• Consumer Protection Act No.68 of 2008
1. Meaning of macro environment
The macro environment means the factors that influence the decision-making of a business,
and affect its performance, but which are outside of its control. These factors include
economic factors; demographics; legal, political, and social conditions; technological changes;
and natural forces.
The economic state of a country affects each business. For example, if the economy is not
doing well, less people are employed, people have less money to spend and therefore it is
harder for businesses to make a profit.
Demographic factors include rural-to-urban migration. For example, shops in rural areas may
have fewer customers buying certain products, whilst there may be a shortage of some
products in urban areas.
Laws are an important part of the business world. The legal system is very complicated and
people who run businesses need to have a good understanding of it. You will need to be able
to explain each of the laws mentioned in the box above.
During the apartheid era, apartheid legislation determined where people were allowed to
live and work. Foreign countries that had invested in South Africa disinvested in protest
against apartheid policies and legislation. This is an example of political factors.
1
,(Disinvestment is when businesses or countries remove all of their investments from a
country to create an economic incentive for that country to change its policies.
Disinvestment in South Africa resulted in capital flight. Capital flight happens when money
flows out of a country’s economy very quickly as a response to a political event.)
After 1994, many of South Africa’s laws, especially in the field of labour and the consumer,
were revised to create fair employment and trade conditions for all South Africans.
Every business must make sure it complies with South African laws. If a business does not
comply, this can lead to serious consequences such as:
• Criminal or financial penalties
• Make members of a close corporation or directors of a company personally liable for
the business’s actions
• Give the business a bad reputation.
Contemporary legislation challenges businesses in South Africa by increasing their
operational costs and creating compliance demands.
Social conditions, for example, lack of housing or road congestion, are outside the control of
the individual business but can affect it.
Technological changes mean that new machinery and methods of working can make some
firms more competitive than others. Individual firms will have to compete to survive.
Sometimes technological changes mean that some products are no longer needed; for
example firms no longer use typewriters; they use computers and printers.
Natural forces such as floods or droughts are challenges that businesses must face and deal
with.
2 The Skills Development Act 97 of 1998 and the Skills Development Levies
Act of 1999
2.1 Nature and purpose
After the 1994 elections and the end of Apartheid, South Africa did not have the skills it
needed for economic growth, social development and sustainable employment growth.
The National Skills Authority was established through the Skills Development Act of 1998
and was made up of representatives from business, labour, government and other bodies
that reflected South African society.
The National Skills Development Strategy aims to:
• Develop the skills and learning capacity of employees
• Make it possible for employers to become more productive and competitive
2
, • Reverse apartheid imbalances
• Create a more inclusive and cohesive society.
Skills Development Levies
Employers must pay 1% of their workers’ pay to the Skills Development Levy. The money
goes to Sector Education and Training Authorities (SETAs) and the Skills Development Fund
to pay for training.
The Skills Development Levies Act applies to all employers except:
• The public service
• Religious or charity organisations
• Public entities that get more than 80% of their money from Parliament; and
• Employers –
o Whose total pay to all its workers is less than R 250 000 per year; and
o Who do not have to register according to the Income Tax Act.
What the SETAs do:
SETAs
• Develop sector skills plans in line with the National Skills Development Strategy
• Approve the workplace skills plans submitted by businesses in their sectors
• Promote and establish learnerships
• Pay grants to participating businesses, provided that those businesses have
submitted workplace skills plans and implementation reports to their SETA.
2.2 Implications for small and large businesses
• All business can benefit from the skills development initiatives
• A motivated and well-trained work force adds value to the business
• HR managers, line managers and staff managers must know the requirements and
implications of the legislation
• The 1% Skills Development Levy must be paid within seven days after the end of the
month
• To create a learnership a formal learnership agreement has to be entered into by
both parties
• The employer has the following responsibilities: to employ the learner for the period
specified in the agreement, to provide the learner with practical experience, and to
give the learner time to attend the education and training specified in the agreement
• Employers can be fined or even imprisoned (for a period not exceeding one year) if
they commit an offence under the Skills Levy Act
3
, • The Income Tax Act (also applicable to SLA), requires all employers to keep a record
of all the remuneration paid to every employee, as well as the Employees’ Tax
deducted from the employees’ remuneration and levies paid.
2.3 National Skills Development Strategy and the Human Resources Development Strategy
The aim of the National Skills Development Strategy is:
• To improve the skills development system so as to be more responsive to labour market
needs and social equity requirements
• To integrate workplace training and theoretical learning
• To improve the skills level of graduates of secondary and tertiary education
• To address skills shortages in artisanal, technical and professional fields
• To reduce the over-emphasis on NQF level 1-3 learnerships
• To equip those in the workforce with sufficient technological skills
• To improve co-operation between universities, further education and training colleges and
sector education and training authorities (SETA)
• To support economic growth and development through viable skills development
• To develop sufficient skills for rural development.
Co-operation and co-ordination from key stakeholders, such as government, the SETAs and
employers, is essential for the NSDS goals to be achieved. The Department of Higher
Education and Training (DHET), the SETAs and the National Skills Fund are the key drivers of
NSDS.
3 Labour Relations Act (LRA) 66 of 1995
3.1 Nature and purpose
The Labour Relations Act (LRA), Act 66 of 1995, aims to promote economic development,
social justice, labour peace and democracy in the workplace.
The Labour Relations Act applies to all employers, workers, trade unions and employers’
organisations, but does not apply to members of the:
• National Defence Force
• National Intelligence Agency
• South African Secret Service.
Trade unions are recognised under the 1996 Constitution of South Africa, which protects the
rights of individuals to join trade unions, and for unions to collectively bargain and strike.
Industrial action is any collective step taken by workers to pressure an employer into
resolving a dispute over pay, hours, or working conditions. The two most common types of
industrial action are strikes and go-slow. Go-slow is when workers follow safety rules so strictly
they work at a slow rate.
4
recent legislation on business
(Answers to questions are at the end of the term’s revision.)
Overview
This topic deals with the effects of the following legislation on South African businesses:
• Skills Development Act No. 97 of 1998
• Labour Relations Act No. 66 of 1995
• Employment Equity Act No. 55 of 1998
• Basic Conditions of Employment Act No.75 of 1997
• Broad Based Black Economic Empowerment Act No. 53 of
2003
• National Credit Act No.34 of 2005
• Consumer Protection Act No.68 of 2008
1. Meaning of macro environment
The macro environment means the factors that influence the decision-making of a business,
and affect its performance, but which are outside of its control. These factors include
economic factors; demographics; legal, political, and social conditions; technological changes;
and natural forces.
The economic state of a country affects each business. For example, if the economy is not
doing well, less people are employed, people have less money to spend and therefore it is
harder for businesses to make a profit.
Demographic factors include rural-to-urban migration. For example, shops in rural areas may
have fewer customers buying certain products, whilst there may be a shortage of some
products in urban areas.
Laws are an important part of the business world. The legal system is very complicated and
people who run businesses need to have a good understanding of it. You will need to be able
to explain each of the laws mentioned in the box above.
During the apartheid era, apartheid legislation determined where people were allowed to
live and work. Foreign countries that had invested in South Africa disinvested in protest
against apartheid policies and legislation. This is an example of political factors.
1
,(Disinvestment is when businesses or countries remove all of their investments from a
country to create an economic incentive for that country to change its policies.
Disinvestment in South Africa resulted in capital flight. Capital flight happens when money
flows out of a country’s economy very quickly as a response to a political event.)
After 1994, many of South Africa’s laws, especially in the field of labour and the consumer,
were revised to create fair employment and trade conditions for all South Africans.
Every business must make sure it complies with South African laws. If a business does not
comply, this can lead to serious consequences such as:
• Criminal or financial penalties
• Make members of a close corporation or directors of a company personally liable for
the business’s actions
• Give the business a bad reputation.
Contemporary legislation challenges businesses in South Africa by increasing their
operational costs and creating compliance demands.
Social conditions, for example, lack of housing or road congestion, are outside the control of
the individual business but can affect it.
Technological changes mean that new machinery and methods of working can make some
firms more competitive than others. Individual firms will have to compete to survive.
Sometimes technological changes mean that some products are no longer needed; for
example firms no longer use typewriters; they use computers and printers.
Natural forces such as floods or droughts are challenges that businesses must face and deal
with.
2 The Skills Development Act 97 of 1998 and the Skills Development Levies
Act of 1999
2.1 Nature and purpose
After the 1994 elections and the end of Apartheid, South Africa did not have the skills it
needed for economic growth, social development and sustainable employment growth.
The National Skills Authority was established through the Skills Development Act of 1998
and was made up of representatives from business, labour, government and other bodies
that reflected South African society.
The National Skills Development Strategy aims to:
• Develop the skills and learning capacity of employees
• Make it possible for employers to become more productive and competitive
2
, • Reverse apartheid imbalances
• Create a more inclusive and cohesive society.
Skills Development Levies
Employers must pay 1% of their workers’ pay to the Skills Development Levy. The money
goes to Sector Education and Training Authorities (SETAs) and the Skills Development Fund
to pay for training.
The Skills Development Levies Act applies to all employers except:
• The public service
• Religious or charity organisations
• Public entities that get more than 80% of their money from Parliament; and
• Employers –
o Whose total pay to all its workers is less than R 250 000 per year; and
o Who do not have to register according to the Income Tax Act.
What the SETAs do:
SETAs
• Develop sector skills plans in line with the National Skills Development Strategy
• Approve the workplace skills plans submitted by businesses in their sectors
• Promote and establish learnerships
• Pay grants to participating businesses, provided that those businesses have
submitted workplace skills plans and implementation reports to their SETA.
2.2 Implications for small and large businesses
• All business can benefit from the skills development initiatives
• A motivated and well-trained work force adds value to the business
• HR managers, line managers and staff managers must know the requirements and
implications of the legislation
• The 1% Skills Development Levy must be paid within seven days after the end of the
month
• To create a learnership a formal learnership agreement has to be entered into by
both parties
• The employer has the following responsibilities: to employ the learner for the period
specified in the agreement, to provide the learner with practical experience, and to
give the learner time to attend the education and training specified in the agreement
• Employers can be fined or even imprisoned (for a period not exceeding one year) if
they commit an offence under the Skills Levy Act
3
, • The Income Tax Act (also applicable to SLA), requires all employers to keep a record
of all the remuneration paid to every employee, as well as the Employees’ Tax
deducted from the employees’ remuneration and levies paid.
2.3 National Skills Development Strategy and the Human Resources Development Strategy
The aim of the National Skills Development Strategy is:
• To improve the skills development system so as to be more responsive to labour market
needs and social equity requirements
• To integrate workplace training and theoretical learning
• To improve the skills level of graduates of secondary and tertiary education
• To address skills shortages in artisanal, technical and professional fields
• To reduce the over-emphasis on NQF level 1-3 learnerships
• To equip those in the workforce with sufficient technological skills
• To improve co-operation between universities, further education and training colleges and
sector education and training authorities (SETA)
• To support economic growth and development through viable skills development
• To develop sufficient skills for rural development.
Co-operation and co-ordination from key stakeholders, such as government, the SETAs and
employers, is essential for the NSDS goals to be achieved. The Department of Higher
Education and Training (DHET), the SETAs and the National Skills Fund are the key drivers of
NSDS.
3 Labour Relations Act (LRA) 66 of 1995
3.1 Nature and purpose
The Labour Relations Act (LRA), Act 66 of 1995, aims to promote economic development,
social justice, labour peace and democracy in the workplace.
The Labour Relations Act applies to all employers, workers, trade unions and employers’
organisations, but does not apply to members of the:
• National Defence Force
• National Intelligence Agency
• South African Secret Service.
Trade unions are recognised under the 1996 Constitution of South Africa, which protects the
rights of individuals to join trade unions, and for unions to collectively bargain and strike.
Industrial action is any collective step taken by workers to pressure an employer into
resolving a dispute over pay, hours, or working conditions. The two most common types of
industrial action are strikes and go-slow. Go-slow is when workers follow safety rules so strictly
they work at a slow rate.
4
