Sactwu wages and deals

South Africa
This article was published on 15 January 2011.


Sactwu stays firm on wages

Pay deal likely to lead to retrenchments or factory closures

Clothing and textile workers' union Sactwu's insistence on maintaining current minimum wages in the industry is likely to lead to retrenchments, factory closures and relocations to neighbouring countries such as Lesotho and Swaziland, according to industry employers.

 

More than 380 registered clothing factories, employing about 15000 workers countrywide, do not pay minimum wages and are facing shut-down by the Bargaining Council, which obtained writs of execution against the offenders. Matters came to a head in Newcastle in August last year when workers stood in solidarity with owners in opposition to the clampdown on non-compliant factories, indicating their willingness to work for salaries at lower than the regulated levels.

Shortly before Christmas, Sactwu and the Apparel Manufacturers' Association of SA (Amsa), which represents mainly large, compliant factories, agreed to a further extension on the clampdown. All factories will have to pay 70% of minimum wages by the end of March, and be fully compliant by April 2012. Should these targets not be met, the writs will be served and factories closed down.

However, various manufacturers and consultants say factories simply cannot afford the wage model, and are likely to either retrench workers or shut down.

"Our view remains that many non-compliant factories, and currently compliant factories, cannot afford the current wage structure," said Johann Baard, Amsa director.

Amsa has said that wages need to decrease by at least 30% for the industry, which has already shed tens of thousands of job in recent years, to remain viable.

Baard says Amsa had to agree to the Sactwu proposal, or face the potential breakdown of the Bargaining Council and the closure of more than 380 factories.

Sactwu had not responded to queries at the time of going to press.

Renato Palmi, director of The ReDress Consultancy, described the agreement as "upsetting and worrying". It was likely to lead to retrenchments, factory closures and relocations to SA's neighbours - Lesotho, Swaziland and Mozambique - whose governments are wooing investors and where minimum wages are lower, he said.

The agreement also ignores SA's huge productivity problems, Palmi said. Manufacturers were lobbying to implement wage incentives that would encourage increased productivity, including piecework pay, which is standard practice internationally.

Alex Liu, chairman of the Newcastle Chinese Chamber of Commerce, whose members employ about 8000 clothing workers, also expressed unhappiness with the Sactwu proposal. According to Liu, up to 40% of non-compliant factories will not be able to pay 70% of the minimum wage by the end of March.

"Why should the Bargaining Council be used as a tool to eliminate competition? Provided the workers are happy with the wages being paid, the Bargaining Council should not have the right to shut down factories," he said.

The expectation is that Amsa will be granted rebates on textile import duties as a "little sweetener" in exchange for the wage agreement.

Marcus Varoli, chairman of Mediterranean Textile Mills, said the introduction of further duty rebates on textile imports "will lead to the final death knell of the textile sector", where less than 10 big mills remain.

Amsa has requested input from textile manufacturers on the proposed rebates by the end of the month, but Varoli fears there won't be enough time for sufficient engagement.

Textile players have not participated in meetings between the clothing industry and Rob Davies, the Minister of Trade and Industry.

Reference:
Jan 15, 2011 11:06 PM
By JANA MARAIS
TIMESLIVE