Clothing bosses must take a 30% reduction-SACTWU

South Africa

Comment: The clothing union, has now thrown into the current wage negotiations and ongoing debate around a new wage model a new proposal. Clothing bosses must now disclose their cost of employment and take a a salary cut of 30%. Only then, maybe would the union consider revisiting the New wage model that they rejected. As far as I know, this was never a condition in the discussions around the new wage model proposal. Contradictions continue to prevail. In a media report published on the 20th April 2011 (see link), AMSA stated they represented 70% of the industry. However, this report states that  nearly 47% of the industry is non-compliant. Clothing industry - Wage negotiations Tearing apart Claire Bisseker Thursday, 21 Apr 2011 With about 47% of employers noncompliant with minimum wage levels and other legislated benefits, any further increase in wages risks creating a fresh crisis as even more firms fall on the wrong side of the compliance drive

In the middle of a wage compliance process in the clothing industry, in which only about 40% of noncompliant firms have so far been able to make the first hurdle, unions are demanding hikes of 10%-17% to the minimum wage. The SA Clothing & Textile Workers’ Union (Sactwu) and compliant employers, represented by Apparel Manufacturers SA (Amsa), squared off last week for the first day of annual wage negotiations as if the compliance crisis were a mere sideshow. But with about 47% of employers noncompliant with minimum wage levels and other legislated benefits, any further increase in wages risks creating a fresh crisis as even more firms fall on the wrong side of the compliance drive. “Not only do we have to meet the phase-in requirements, but now we’ve got the wage increases on top of that. It will put firms under even more strain,” says Renato Palmi of the United Clothing & Textile Association (Ucta) , which represents noncompliant firms. The compliance drive is back in full swing after a moratorium was imposed late last year, giving noncompliant firms until March 31 to begin paying 70% of the minimum wage. Firms then have to be 90% compliant by January 1 2012 and 100% compliant by April 30 2012. National Clothing Bargaining Council compliance manager Leon Deetlefs says only 40% of the formerly noncompliant firms inspected since end-March have been able to meet the first hurdle of 70% compliance. Based on his discussions with employers, he expects this to drop to about 30% as more firms are inspected . All those companies that have failed to meet the 70% deadline — out of an original 250 noncompliant factories employing about 28000 people — will be served with writs by the sheriff of the court and their assets seized. The council is ready to start executing writs in Durban, Newcastle and Qwa Qwa this week. This means that mass factory closures and job losses could form the backdrop to this year’s wage round in which the union is demanding an increase in the annual bonus equivalent to two weeks’ wages, among other things. But how can the clothing industry — one of the most precarious in SA — afford to legislate itself an automatic bonus for the year ahead, irrespective of industry or company performance? Sactwu general secretary Andre Kriel says an annual bonus is not a gift but rather “deferred wages” that should be seen against “ the obscene bonuses that clothing bosses earn, most of whom have a guaranteed 13th cheque and substantial additional performance bonuses”. Clothing workers earn the lowest wages in SA’s manufacturing sector, he says. Furthermore, “the total cost of employment has been substantially reduced by the R1bn in government incentives made available to the industry during 2010”. Amsa executive director Johann Baard says government support has helped stabilise the industry and arrest the speed of the decline witnessed over the past three years. But, to really achieve a turnaround, firms need more industrial support, a new wage model, a scrapping of the 22% duty on fabric and more progress on customs fraud. For a compliant firm, the union’ s opening demand of an R80/week across- the-board wage increase translates into a 17,8% increase in the non metro minimum wage and a 10,8% increase in the metro minimum wage. This is steep, considering the Reserve Bank expects inflation to be at 5,7% in 2012 and the industry is shedding jobs. “Sactwu’s package of demands is close to a 20% increase in total labour costs, which is not only unrealistic but completely undoable, so we’re in for a tough round this year,” says Baard. Kriel defends labour’s position, saying its demands are based on the need to compensate workers for past inflation; offer protection against future inflation; narrow the wage gap between workers and clothing bosses; and claw back past injustices such as when the union agreed to cut wages by at least 10% in the non metro areas a few years ago in return for increased compliance and job creation, which never came. “The bosses never delivered on their promise ,” he says. “Why should we believe them now?” The two bodies that represent the manufacturers are pushing for an alternative wage model for the whole industry in which only new employees are paid the lower wage rates currently paid by most noncompliant firms. Existing workers would not be affected. But the union is not budging. “Though the clothing bosses see the solution as cutting the wages of already low-paid workers, they themselves are not prepared to take wage cuts,” Kriel responds. “The union is prepared to consider an alternative wage model, provided that clothing bosses publicly disclose their total cost of employment packages and commit to taking a cut of least 30%.” For noncompliant non metro firms, the union’s proposed R80/week increase will add 28,5% to their R280/week/person labour costs. In the metro areas, it will push wages up by 17,7%. But given that most Ucta members are adamant that they cannot meet even the 70% phase-in requirement because it is not financially sustainable , the stage is set for a massive showdown as the bargaining council starts closing down these firms. Government has been absent from the fray, leaving the union and employers to find a way out of an intractable situation. If it is serious about job creation, government needs to step in and find a solution that will prevent the mass destruction of livelihoods in the clothing sector.

Referece: Financial Mail, 21 April 2011-04-21 By: Claire Bisseker