While the Steel and Engineering Industries Federation of Southern Africa (Seifsa) believed the recent wage deal struck with the National Union of Metalworkers of South Africa (Numsa) secured peace, certainty and stability for the next three years, political analyst Aubrey Matshiqi warned there were no guarantees.

The employer body and the union in July inked a final wage settlement up to June 2017 following a damaging Numsa-led month-long strike in the metals and engineering sector that cost the industry R6-billion in lost production.

The medium-term impact on employment, exports and the ability to rebuild confidence remained to be seen, Seifsa president Ufikile Khumalo said at a breakfast discussion in Rosebank earlier this month.

While there was “serious” volatility within industrial relations and long periods of disrupted production, the agreed wage increases for the next three years were clear and were not dependent on any further negotiations.

“Therefore, strike action [over wage] increases is not possible and there are no other changes to employment conditions over these [three] years,” he said.

Matshiqi pointed out, however, that, while the wage agreement provided a breather for the industry, a trust deficit between government and the general public, business and employees, and business and the ruling party, as well as a crisis of confidence and a volatile economy, could spill over into labour relations.

Peace and stability in the sector might not hold if the economy worsened.

Unions could come under pressure from members demanding changes to the agree-ment, as it no longer matched workers’ living requirements under a buckling economy, Matshiqi commented.

“We are not in a good place at all,” he said, adding that stakeholders needed to undertake long, hard conversations to find solutions to the impasse.

“We are one notch above junk status and the consequences are dire,” he warned.

If the trust deficit and erosion of confidence were not dealt with, politicians, labour and business would continue to protect their “narrow interests”, as opposed to widening the net and investing, and would continue to stifle much-needed growth.

Khumalo said that the metals and engineering sector was in a “state of flux” and was faced with “too many challenges”, including a deteriorating socioeconomic, political and regulatory environ-ment and an unfavourable business landscape.

“Although we have every reason to be relieved that we do not face another round of negotiations, challenges of different kinds remain,” he said, citing the country’s lackluster economic performance, the flood of imports and the manufacturing sector’s inability to be internationally competitive.

The most recent official employ-ment data highlighted the fact that the South African labour market was “probably in for a particularly rough time” in future, with very few jobs created in the formal sector during the second quarter.

“These challenges will continue to stare us in the face, if not worsen, until such time that South Africa Inc – government, business and labour – gets together to discuss things openly and constructively, putting the country’s interest above all else,” Khumalo noted.