Spotlight on SA’s clothing industry as factories hope for a new wage model
Comment from The Redress Consultancy:
Will the Minister of labour, Minister Patel, the clothing union and other officials who have the power to find a solution hear the voices of the workers?
The split within the New Castle clothing industry community is extremely unfortunate. The ReDress Consultancy has indicated to the parties concerned that the union and the bargaining council will use this split to their advantage. This is further evidence that there is a lack of cohesion within South Africa’s clothing sector and it is this fragmentation that makes the industry lack any substantial strength when it comes to negotiations with the clothing union and the bargaining council and even with the State.
A further interesting point, this article highlights, of which, The ReDress Consultancy has written on, is the fact that formal retailers are using companies that are either non-compliant or are under investigation by the bargaining council, and on the “watch-list” of the union. From the beginning of this current wage debate, the ReDress Consultancy has advocated for intelligent, enlightened visionaries to find an equable solution. South Africa can ill afford to have clothing companies shut and relocate elsewhere.
Clothing and textiles - Newcastle factories
Newcastle: wages too low?
Thursday, 25 Nov 2010
About 8000 people are employed in 60 clothing factories in Newcastle, a quiet town in KwaZulu Natal, where unemployment stands at 60%. Most of the employees are sole breadwinners, single mothers with children .
To supplement average basic wages of between R200 and R350 a week, they work extra hours a day and extra days a week. There are neither benefits nor end- of-year bonuses.
“It makes me sad because I have a skill and work hard,” says Carol Zwane, a machinist at one of the cut, make and trim (CMT) factories. “I’m sewing the suits you’re wearing but I have no extra money to save.”
Zwane has three children, and says her salary has increased 20c a year for the five years she has been working for her employer. “We don’t want to feel embarrassed about our jobs; we would also like to give our children a better education.” Her basic salary is R300 a week. The minimum wage for her labour category is R479. But like all the workers, she would rather work for that than be unemployed. “If this factory closes, I will have nowhere to go. We sometimes see that [our boss] is also struggling.” Her plea is for government to support the factory owners so they can pay their workers more.
Zwane’s request may come true.
Of the 1058 factories that have been investigated by the National Bargaining Council for the clothing manufacturing industry, 558 were found to be non compliant with minimum wage laws. And 200 “compliant” factories are exempt from having to pay minimum wages.
In December the council, which serves as the centrali sed bargaining platform and represents 52% of employers and 81% of employees in the industry, must come to an agreement .
It is not as simple as forcing compliance on factories. On average, wages account for 50%-60% of the factory costs of CMT , which supply to retailers including Edgars, Mr Price, Jet and Woolworths at 7%-10% of the shelf price.
David Yen, factory owner and president of the Newcastle Clothing & Textile Industrial Association, says suppliers (who supply the retailers) are not prepared to budge on prices, but electricity and rent have increased substantially . Many factories are battling to stay open.
If December’s outcome forces factories to pay higher wages, there are three possible scenarios. Some will scale down; some will close down; and some will relocate to Swaziland or Lesotho (where wages of R140 and R160 are paid respectively). The other option, a lowering of the minimum wage, would have to be accompanied by a subsidy, as the SA Clothing & Textile Workers’ Union (Sactwu) is unlikely to back down on wage demands.
Tensions between the council and clothing factories have been an issue since its inception in 2003, and reached boiling point after it targeted 55 factories for closure, calling them the “worst offenders” . Of these, 14 were in Newcastle.
When two Chinese-owned factories were closed in Newcastle on August 24 , other factories in the area closed their doors in sympathy and called for government intervention.
In September the provincial government agreed to a 30-day moratorium on closures , in which time all non compliant factories had to produce a written wage proposal. This was extended to December after an intervention from economic development minister Ebrahim Patel.
The call for proposals, in the meantime, has revealed a split in Newcastle employers’ viewpoints, which illustrates starkly different stances on what some sort of equilibrium would look like for the industry.
The Chinese Chamber of Commerce under Alex Liu, together with factories from the Free State and KwaZulu Natal, submitted a wage proposal of R220 to R280 (according to skills levels). Yen and his Newcastle association proposed wages of R250 to R350 . The Coastal Clothing Manufacturers Association (CCMA) proposed 70% of the current minimum wage , and the CCMA and Yen’s association want a one-year phase- in period .
Liu argues that minimum wages should be lowered to the extent that all companies could afford to be legal. From here, individual factories could incentivise workers by offering higher wages for productivity and overtime.
Yen’s association believes wages can be pushed only to a certain minimum before workers move to other industries. “Though high wage demands are destroying the industry, I don’t agree with [Liu’s] low proposal, because we need to attract workers,” says Yen.
Sactwu spokesman Andre Kriel says minimum wages in the clothing industry are already the lowest in SA’s manufacturing sector.
“[We] are very concerned about job losses, but employment creation in the clothing industry cannot be based on slave wages,” says Kriel.
The real debate is more about productivity and SA’s global competitiveness, especially against China, than about wages. SA’s Achilles heel is its inability to link wage hikes to proportionate increases in productivity.
Yen and Liu agree that the solution would be to adopt a system where payment is linked to production . Yen says this is the key to China’s success , and that employers would be able to afford higher wages if workers produced the output to justify it. However, if the current minimum wages are imposed, the outlook for the industry and for factories such as Yen’s in Newcastle will be dire. And there is no doubt there will be job losses .
By: Lise Pretorius
FM: online
2 comments:
The financial aspect in being a single mother is enormous and the demand and pressure of that unexplainable urge to give everything that you can just for your kid to have a good future.
Returning to college can be a well recognized and controversial topic, the president of the United States would like single moms to go back to college. The belief is that when single moms return to school they’ll get the training they have to have to come back to the employed pool. More mums that enter in the workforce raises spending and from this investing of dollars the economic system will increase.
The proposals that have been put on the table by the three parties are surely the start of a way forward, a slpit as mentioned in the blog is very unfortunate and needs to be addressed with urgency, this merely gives more ammunition to the parties whose aim is firmly on Newcastle and other areas who falls into the same "category" as Newcastle, the differences of the Strait must be put aside for the sake of moving forward and finding an equitable solution. There will be some fall out - not everyone will be able to afford the proposed wages as highlighted, that is the nature of business, look at Seardel,heavy investment by sactwu, compliant and bleeding jobs and money, moving their production across the border to Lesotho currently, yet the union is steadfast against a new wage model which can promote employment first and then have a phased in increase.
We are going to outprice ourselves if we carry on this path of destruction. The retailers themselves need to play a more constructive role in the industry, prices are increasing globally, our labour cost outstrips most in the developing world yet we continue to complain about quicker cheaper imports from abroad from other developing countries, what makes it more disturbing is that we woo these developing countries with bi-lateral agreements that further show us up for only looking short term, especially with low cost products such as apparel.
Minister Patel's plan although flawed in many respects needs to be looked at critically and serious debate needs to had by all, we should not complain and do nothing, but get around the table and start getting things right - even if it takes years, at least small breakthroughs during negotiations are positives that can be worked with, if it becomes an act of parliment then once again it shows our shortsightedness and lack of resolve.
There is no quick fix to this imapsse, but solutions found to issues through negotiation with all parties, along the way will have a positive impact for the industry.
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