1. Social Change – Concepts & Impact of such on Forest Management Address by Roger Godsmark, Operations Director, FSA to SAIF / NCT Field Day, Baynesfield November 24 th 2011

2. Presentation Outline Introduction Proposed New Labour Legislative Environment Proposed New Land Legislative Environment Conclusion

3. Section 1 Introduction

4. A Brief History Before we can analyse how social issues will impact on future forest management, we first need to know from whence we came. I believe that there are four phases in recent forestry history that will set the scene. These are….

5. Phase 1 – up to late 1980’s  No Government interference  Own operations  Extensive social infrastructural support provided by employer  In terms of social issues, employers generally provided social infrastructure (e.g. housing, clinics, schools, rations etc.) but it was not a core business imperative. Characterised by: Concentrated on managing plantations only Concentrated on managing plantations only Implications for Forest Management

6. Phase 2 – late 1980’s to 1994  No Government interference  Move from own ops to outsourcing  Responsibility for social infrastructural support moved from employer to contractor  Move towards “clean wage”, generally at behest of unions Characterised by: Management focus shifted from managing plantations to managing contractors Management focus shifted from managing plantations to managing contractors Implications for Forest Management

7. Phase 3 – 1994 to date  Huge increase in Government interference (regulations) in all aspects of business including introduction of Sectoral Determination for forestry workers  Move from own ops to outsourcing consolidated  Decrease in productive area  Land claims Characterised by: Management more and more focused on issues other than those related to either forestry or contractors Management more and more focused on issues other than those related to either forestry or contractors Implications for Forest Management

8. Phase 4 – The Future  Even more Government interference (particularly in the areas of labour law and land reform)  Huge change in land ownership & management pattern (due to land reform)  Increased focus on rights given to residents on farms  Increased bureaucracy & shift to joint responsibility / liability Characterised by: Management focus on plantation management per se really diluted as focus diverted to more social related issues Management focus on plantation management per se really diluted as focus diverted to more social related issues Implications for Forest Management

9. Driver of Social Change Whether we like it or not, it is Government rather than Industry that sets the Agenda. Regarding the social aspect of this environment and how it will possibly affect the way we manage forests in the future, for the purpose of this address, I shall focus on only two areas, namely: Proposed new Labour Legislative Environment Proposed new Labour Legislative Environment Proposed new Land Legislative Environment Proposed new Land Legislative Environment FSA has made detailed submissions to DoL and DRDLR on what is contained in this presentation; let’s hope they listen! FSA has made detailed submissions to DoL and DRDLR on what is contained in this presentation; let’s hope they listen!

10. Section 2 Proposed New Labour Legislative Environment

11. Labour Relations Amendment Bill Labour Relations Amendment Bill Basic Conditions of Employment Amendment Bill Employment Equity Amendment Bill Employment Services Bill On 17 th December 2010 the DoL published 3 employment related Amendment Bills and one new Bill for public comment, namely; Should these Bills be passed in their current form, it will change the employment environment dramatically Should these Bills be passed in their current form, it will change the employment environment dramatically

12. Proposed New Labour Laws (main provisions) 1 Obligation to hire temporary employees on permanent basis (unless can justify to DoL of use of fixed term contracts) Obligation to hire temporary employees on permanent basis (unless can justify to DoL of use of fixed term contracts) Outlawing of labour broking - in effect their employees become yours. Employers to be held jointly liable for any unfair labour practice between contractor and contractor’s employee Makes it easier for employee to take employer to CCMA i.r.o. dismissal as a result of operational requirements Non-compliance with certain sections will be a criminal offence (penalties vary between R10 000 & 2 years jail) A: Labour Relations Amendment Bill

13. Proposed New Labour Laws (main provisions) 2 B: Basic Conditions of Employment Amendment Bill Payment of benefits of to be equal value between those hired on fixed term contracts & on permanent basis Calculation of wages of those remunerated on basis “other than time” (i.e. task based) to be based on average wage paid over preceeding 13 weeks Minister given power to set wages not just minimum wages Minister given power to set Union threshold i.r.o. organisational rights Contravention will be a criminal offence & employers have no opportunity to rectify non-compliance through compliance order process (penalties R10 000 to 6 years in jail)

14. Proposed New Labour Laws (main provisions) 3 All designated employers have to submit EE reports annually (previously only those who employed more than 150 people) The pool of qualified people and regional demographics will no longer be criteria in determining “representivity” compliance Employers have to report on steps taken to reduce income differentials and measures to reduce unfair discrimination i.r.o. conditions of employment It is proposed that penalties be based on turnover (2% to 10%) C: Employment Equity Amendment Bill

15. Proposed New Labour Laws (main provisions) 4 Creation of Public Employment Services (PES) Creation of Productivity South Africa Licensing of all private employment agencies Employers forced to use PES when recruiting – onerous obligations on reporting on job vacancies and filling thereof Extreme hurdles put in place regarding employment of foreign skills Contravention will be a criminal offence – penalties range from a minimum of R10 000 to 12 months jail (could be more if so determined by a court) D: Employment Services Bill

16. Implications for Forest Management Make certain contractors employed are “independent” and do not engage in any unfair labour practices. Apply to DoL i.r.o. workers on fixed term contracts and ensure paid same benefits as those permanently employed. Introduce new “task based” pay system. Submit Employment Equity reports annually. Don’t hire foreign workers if at all possible. Ensure workforce demographics match national one. Notify PES of any vacancy and filling thereof within 14 days. Bottom line: more admin & cost of doing business Bottom line: more admin & cost of doing business My advice: Hire an excellent labour lawyer & mechanise!

17. Section 3 Proposed New Land Legislative Environment

18. Policy Driving Land Legislative Changes Green Paper on Land Reform Land Tenure Security Bill Communal Property Associations Amendment Bill Although more, there are three main policies which will shape the environment surrounding land issues in the immediate future, namely: From a social perspective, I shall focus only on the Land Tenure Security Bill which will form part of the Government’s new Land Reform initiative

19. Draft Land Tenure Security Bill  Expanded definition of “residents”  Extensive rights given to “residents”  Expanded definition of what constitutes an “eviction”  Excessive penalty for contravention Should this Bill be passed in its current form, it will have MAJOR implications (and unintended consequences) for the Industry. FSA’s major concerns relate to..........

20. Definition of “Residents” (1) Given that “residents” on farms are to be given extensive rights, the expanded definition of those who qualify is alarming. These include not only those who actually work on farms but also “persons associated with persons residing or working on farms”. These include the following:  Spouses  Children  Nephews  Nieces  Parents  Brother and Sisters A: Major Concerns Fair enough Problematic

21. Definition of “Residents” (2) B: Implications The number of people, many of whom may have no direct connection to the farm, will have the right to residence on the farm in question. A landowner will not be able to control the number of people living on his or her property.

22. Rights Granted to Residents (1) 18 rights granted to “each” resident as opposed to only 4 to landowners – total imbalance. Rights unlimited / unconditional. Most concerning of these relate to:  Ownership of livestock  Grazing rights  Cropping rights  Erection of homesteads / residential buildings  Right to practice “commercial agriculture” No indication as to who is to pay for the provision of these rights No regard to sustainability in respect of biological resources of farm or practicality of management of commercial farming A: Major Concerns

23. Rights Granted to Residents (2) In effect, landowners will have to “share” their land asset with the residents living on their farms. Residents will have unfettered rights to use landowners’ land thereby hindering the ability of landowners to manage their farms to their maximum economic potential. Productive areas on farms will decrease and non-commercial areas increase. Commercial production will, inevitably fall. Landowners may be faced with responsibility of paying for the provision of these rights. B: Implications

24. Expanded Definition of “Eviction” (1) The “conventional” definition of what constitutes an “eviction” has been expanded dramatically to include such things as the following:  closure of schools;  interference with performance of cultural practices;  denial or prevention of access to water and electricity;  refusal to allow burial on the farm;  unilateral reduction of rights protected in this Act;  not being allowed to own livestock in circumstances where you have previously owned livestock on the same farm or another farm of the same owner;  demolishing of a home;  forcing different families to live together;  forced relocation of a homestead. A: Major Concerns

25. Expanded Definition of “Eviction” (2) Does not take into account circumstance of current farming resources vis à vis biological resources (e.g. in respect of owning livestock) or services provided (e.g. electricity) Does not take into account the fact that some decisions (e.g. burials or closing of schools) may be out of the control of the landowner. Does not take into account the adopted policy of establishing “agri-villages” (e.g. in respect of “forcing different families to live together”) Does not take into account operational safety requirements (e.g. electricity provision to residents living in high fire risk forestry areas). A: Major Concerns (continued)

26. Expanded Definition of “Eviction” (3) Many “normal” operational decisions will become illegal and subject to draconian penalties. A landowner may be found liable for an infringement for which he or she is not directly responsible. Combined with the proposed eviction procedures, it will be virtually impossible for legal evictions to take place. B: Implications

27. Offences (1) Section 46 (2) of the Bill states the following: “Any person who contravenes a provision of this Act is on conviction liable to imprisonment for a period not exceeding five years ” A: Major Concern B: Implication Landowners will be held criminally liable for any contravention of the Act which are numerous and, in many cases, ill defined due to the ambiguous nature of certain provisions (especially those related to the provision of rights and what constitutes an eviction)

28. Implications for Forest Management of New Land Law Environment Farm owners will have to share their asset with residents on their farms Their ability to manage their farms unhindered and for the maximum economic benefit will be compromised Productive areas on commercial farms will drop and non- commercial areas increase An increased amount of time will have to be spent dealing with social issues (e.g. “conflict of use” matters, provision of services etc.) Bottom line: Management will become more complicated and more focus will have to be placed on conflict resolution Bottom line: Management will become more complicated and more focus will have to be placed on conflict resolution

29. Section 4 Conclusion

30. Conclusion (1) The way we manage forest enterprises will have to change dramatically in order to comply with the requirements of the new environment that is being created The way we manage forest enterprises will have to change dramatically in order to comply with the requirements of the new environment that is being created The Government’s emphasis on the creation of “decent jobs” and enhanced rural development are being articulated through their labour and land policies. These policies will dramatically change the way we conduct our business. The Government’s emphasis on the creation of “decent jobs” and enhanced rural development are being articulated through their labour and land policies. These policies will dramatically change the way we conduct our business. We need to apply innovative ideas

31. Conclusion (2) Because if we don’t …… we’ll end up like this lady. Because if we don’t …… we’ll end up like this lady. If she hasn’t already …… believe me she will soon! If she hasn’t already …… believe me she will soon!

32. Thank You