South Africa’s automotive manufacturing sector and the National Union of Metalworkers of South Africa (Numsa) have concluded their negotiations in Port Elizabeth for a new three-year wage agreement.

The agreement will be in force until 2019.

Employers have agreed to a 10% wage increase this year and 8% for the following two years.

The previous three-year settlement, negotiated in 2013, was accompanied by a strike that lasted almost three weeks.

The Automotive Manufacturing Employers Organisation (Ameo) says the new agreement holds “the promise of a longer-term and stable investment planning horizon for South Africa’s seven vehicle manufacturers”. It also offers “a further enhanced and competitive wage structure and benefits for the automotive industry’s hourly paid workers”.

One of the main points of the agreement is the provision of increased access to housing for employees at the various manufacturing plants.

Ameo says the new three-year agreement marks the first time since 2007 – and only the fifth time in the history of the sector’s collective bargaining process – that there was no disruption or work stoppages flowing from wage negotiations.

“The signing of our new agreement is testament to the value of proactive negotiations between Ameo and Numsa,” comments National Association of Automobile Manufacturers of South Africa (Naamsa) president and Nissan South Africa CEO Mike Whitfield.

“Formal negotiations were preceded by several consultative industry indabas, as well as a fact-finding mission to the Australian automotive industry by Naamsa, Numsa, the Department of Trade and Industry, the Department of Labour and others. Preparations also started earlier this year, giving both parties ample time to prepare and consult their constituents.”

The main themes of the fact-finding mission to Australia were increased global competition and the impact of an unstable planning environment.

Once a large vehicle manufacturer and exporter, Australia’s vehicle manufacturing industry has all but shut down.

Ameo says this year’s negotiations were held amid “very trying times for the local automotive industry”.

New-vehicle sales in South Africa have declined by around 10% since the start of the year and global export contracts remain exposed to a volatile rand and increasing competition from manufacturing hubs across Europe, the US, Asia and Africa.

“The importance of the automotive manufacturing sector in South Africa cannot be overstated,” says Naamsa executive director Nico Vermeulen.

“Apart from being the largest manufacturing sector in the country, the broader industry also contributes over 7.5% of the country’s gross domestic product and an estimated 3.4% of the national wage bill.

“The automotive manufacturing sector is recognised as one of the best-paying formal employers in South Africa and it remains an important driver in the development of the South African economy.”

“The new wage agreement gives us a platform on which we can plan further investment in the sector,” adds Whitfield.

“It sends a clear signal to our international parent companies of our serious intent to nurture and grow the automotive manufacturing industry in South Africa.”

Retail, Components Negotiations Still Ongoing
Wage negotiations within the automotive retail and components manufacturing sectors have already started, says National Association of Automotive Component and Allied Manufacturers executive director Renai Moothilal.

The 2013 strike on South Africa’s assembly lines was followed by labour action in the components sector, leading to a cumulative 34 days of strikes within the industry that year.