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Opinion: It's about the extension of agreements, stupid

21st September 2017

     

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In this opinion piece, National Employers Association of South Africa CEO Gerhard Papenfus argues that protecting the current collective bargaining dispensation will ensure its complete downfall.

During a recent Metals and Engineering Indaba, numerous reasons were advanced why collective bargaining in South Africa is in trouble. One of the narratives advanced is the so-called ‘post-Marikana syndrome’, another is the endeavour to entrench the super exploitation of workers. In the case of the metals industry, there is some talk about the rivalry among employer organisations for control of the bargaining council, the Metal and Engineering Industry Bargaining Council (MEIBC).

The defenders of the current troubled dispensation are all pining for the days of collegiality and unity of the 'old boys club' which once existed. It may still exist in some or other format, but has become powerless. However, they are all, deliberately, denying the underlying cause for the turmoil in the MEIBC, the extension of agreements to nonparties and, more so, the unlawful extension of these agreements – with the MEIBC being the main destructive force.

Although collective bargaining in South Africa has many shortcomings, they are not the issues that are about to cause the imminent downfall of the MEIBC; it is rather the unlawful extension of agreements between the Steel and Engineering Industries Federation of South Africa (Seifsa) and primarily the National Union of Metalworkers of South Africa (Numsa) that will - it’s about enforcing a self-serving arrangement on the rest of the industry, with devastating consequences. The small, medium-sized and microenterprises (SMMEs) in the metals industry are not opposed to collective bargaining; they are, however, opposed to being bullied by the Seifsa/Numsa/Department of Labour cartel. They are protesting against being put out of business by role-players with absolutely no sensitivity for the plight of SMMEs. 

As resources are depleting in a declining economy, as the competition for limited resources intensifies, the bargaining council dispensation – and not necessarily collective bargaining as such – will be subject to ever increasing scrutiny, to the point where the system will gradually collapse. The collapse of bargaining councils is however not imminent in all industries. This is, however, indeed the case in the metals industry, where wages are on average double those which exist in other industries and where a jobs and business closure massacre is occurring.

The current labour relations dispensation in South Africa enables larger businesses, situated in the economic hubs, and with a wage component as a percentage of production below 5%, to extend their agreements to small businesses outside of the economic dense areas, and with a wage component as a percentage of production as high as 50%.

In the case of larger businesses, which in all likelihood are very sensitive to strike action, a high percentage increase may in reality have very little effect on production and profitability. To the contrary, however, SMMEs are less sensitive to strike action, but in turn are extremely prejudiced by high increases forced upon them. Against this background, it is nonsensical to have a collective bargaining dispensation where larger businesses can easily be coerced into wage deals, out of fear for a strike, and then to have these deals extended to SMMEs.

In the metals industry, all agreements, since 2011, have either been set aside by the courts or, as a result of administrative noncompliance, prevented from even reaching the Minister of Labour for purposes of extension. The unlawful extension of agreements probably even occurred before 2011, but the perpetrators were only brought to book in 2011. To suggest that legal challenges were merely on technical and procedural grounds, is disingenuous. The reasons for the successful court challenges were primarily the lack of representativity, the misleading of the Minister of Labour, even fraud, and serious administrative oversights.

Notwithstanding their past failures, Seifsa and Numsa have made their intentions to have their recent agreement extended to nonparties clear. Should they go ahead with their plans, they will do so notwithstanding the following:

*that Seifsa-affiliated organisations only occupy 4 out of 21 seats on the management committee (Manco) of the MEIBC, where any decision for the purposes of extension is taken. Seifsa as such has no role whatsoever to play in the affairs of the council and the rest of the Seifsa employer membership does not qualify for a seat on Manco or at the annual general meeting;

*these 4 Seifsa affiliates collectively have as their employer membership less than 10% of employers in the industry, employing about 25% of employees in the Industry;

*the nonsignatories to this agreement currently occupy 17 seats on Manco, collectively having about 4 000 employers as members, which collectively employ close to 50% of employees in the Industry.

If the Seifsa/Numsa/Department of Labour cartel continues with their attempts to extend their agreements by unlawful means, since they no longer have the representativity to do it legally, it will cause the downfall of the MEIBC – it is simply a matter of time. The industry has recently witnessed the gradual decline of the council. Its sudden demise might be imminent.

Even government’s envisaged changes to labour legislation – if that is intended to counter the National Employers Association of South Africa's approach of challenging the current SMME-hostile dispensation, and which, thereby, would be greasing the wheels of the cartel – won’t save the MEIBC. The ground swell among SMMEs will eventually completely overwhelm it.

The perpetrators suggest that the collapse of the current model will result in instability, uncertainty and industrial relations chaos. The opposite is true; suppressing business and consequently increasing unemployment will have all of these consequences. Also, protecting the current dispensation will ensure its complete downfall. There is simply no scenario under which this dispensation, which bullies employers in each and every way imaginable, will be tolerated by employers who have no alternative but to make a living in this Industry.

Edited by Creamer Media Reporter

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