Mittal Steel South Africa has reached an agreement with its three main unions to extend a no forced retrenchment agreement by a further year, until December 2007, it said late on Monday.

The agreement between the company and the National Union of Metalworkers of South Africa, Solidarity and the United Association of South Africa was reached in late December.

The agreement was first implemented in 2004 and was extended in February 2005 for a further year until December 2006.

In terms of this agreement, the company will focus on the principles of natural attrition and voluntary separation packages to achieve its labour cost targets. The agreement also provides for restructuring and redeployment of employees to achieve business efficiencies and better optimisation of its employees.

No employees at any of the company's operations will be forcibly retrenched during the period of the agreement.

CEO Rick Reato said that the signing of the agreement, which followed from the one successfully implemented in 2004, established a stable and conducive organisational climate for Mittal Steel South Africa and its employees.

He added that the agreement provided employees with security of employment and eliminated anxiety, which often results in a consequent drop in productivity caused by the uncertainty during forced retrenchments.

“This agreement has, over the last two years, been of benefit to both the company and its employees while still providing those who want to pursue other opportunities an avenue to exit the company voluntarily.”

To subscribe to Engineering News's print magazine email subscriptions@creamermedia.co.za or buy now.