South Africa
25 March 2011
To:
Hon Ambassador of the People’s Republic of China In the Republic of South Africa
CC:
Mr Trevor Manuel, National Planning Commission
Mr E Patel, Economic Development
Dr R Davies, Trade and Industry.
Plea on behalf of citizens of China and India and their workforces, victims of prosecutions by the National Bargaining Council for the Clothing Industry
The unrelenting prosecutions of the Council drove many manufacturers out of Durban and Newcastle to Lesotho and Swaziland.
On their behalf and on behalf of those still in the RSA, this call is made.
The RSA are now partner in the BRICS alliance. Our BRICS status is seen as an international breakthrough with new growth opportunities which should create new jobs.
We are all eager to participate in this alliance and bring growth to the region and seeking goodwill in our international relations.
Sadly our manufacturers are still bogged down by out dated bargaining council regulations and labour laws.
It is not in the spirit of the BRICS partnership to drive factories to neighbouring countries and to operate in secrecy in back yards. These prosecutions are now threatening our international relations and should be brought to a close.
Our plea is for your intercession to free manufacturers to create the projected 5m jobs as anticipated by government.
According to a spokesperson of the National Council for the Clothing Manufacturing Industry, more than 80% their members are violating their regulations. The council is clearly not legitimate any more.
Factories moved to Lesotho and Swaziland and created more than 60 000 jobs in the clothing industry over there. Cape Town’s once thriving clothing and textile had shrunk from 70 000 jobs to approximately 7 000, a senior executive in a local textile company pointed out.
Our plea is for a situation where companies have the option to voluntary associate with these councils or to resort under the Basic Conditions of Employment Act. The majority of the workforce of the RSA falls outside of the scope of the Bargaining Councils and are covered by the BCEA. It covers an estimated 16m people, or 93% of the workforce.
Financial ruin, emotional trauma, unemployment and poverty is caused by the prosecutions of the councils
· Writs of execution
In October 2010 the council issued writs of execution to 385 factories with 20 000 workers and were set to close 55 factories with 8 000 workers in the first round.
· The Sheriff was directed to attach and take into execution the movable goods of “POODLE CLOTHING” …to be realized by public auction the sum of R6 500.00 plus interest…... in terms of an award by the arbitrator”
· To Circle Seven Trading 379CC for R90 001,06
· Notice of attachment in execution
Circle Seven Trading 379CC- 12 Juki sewing machines, 3 Juki overlocking machines, 3 Kingstar sewing machines, 1 Toyota sewing machine, 1 Sirub overlocking machine, 1 Kingstar overlocking machine, 1 Presto press- estimated value R60 000,00
· Clothing manufacturer Ziyaad Ally, of the Cape Town based Ally Fashions was found guilty of contempt of court and sentenced to 60 days in jail without the option of a fine. He was further fined R5 000 (or 30 days) in his personal capacity and ordered to pay the cost of the arbitration of R1 400,00.
· The council has writs of execution against 386 companies for failing to pay minimum wages. An employer states that a number of companies had applied for exemptions, but the applications were declined without transparent reasons given. March 2011.
The Natal Clothing Manufacturers’ Association warned in the media that 80 percent of clothing manufacturers could be jailed or their business closed down because they were not complying with gazetted wage agreements.
As a result 117 000 jobs would be lost. Mr Andre Kriel, at the time deputy general secretary of Sactwu, said the employer’s association had been party to a vigorous campaign to prosecute employers who were not complying with bargaining council agreement”.
Burden of the bargaining councils
Bargaining council levies add 18% to the wage bill. Council levies and regulations are seen as a major restraint for SMME’s and are feared by new manufacturers and investors who are looking for tax breaks and trainable people, not regulations and levies!
Hidden employment costs, public holidays, leave, sick leave, family responsibility leave, other non productive time, and a 13th cheque add another 33% to the actual wage bill.
It is known that the growth models of China and India are highly successful. Our local research proved that production increase with between 50% and 300% when payment is linked to production. The income of the workers increases accordingly.
Some of these factories were rescued from closure and afterwards able to export to sophisticated markets in Europe.
Who benefit from bargaining councils? A small “elitist” few?
It currently protects 500 000 workers, 2.3% of the total workforce.
It protects 2.5% of all employers in the RSA
Dated from 1914, the bargaining council is a colonial concept. While many closed down some 41 councils still survive. The Industrial Council system now protects only an elitist 500 000 union members, a miniscule 2.3% of our gross workforce.
Of an estimated total of 1.8m employers (companies, partnerships etc) only 98 285 (5.5%) are registered at the councils.
Of the 5.5% under the councils, 2.5% are voluntary members of the employer’s organisations party to the council and 3% are non party members who are forced to register at the council because they operate in industries covered by bargaining council agreements.
Levies, contributions, regulations and high minimum wages, discourage new entrants to these industries. It adds 18% to their wage bills.
The Freedom Charter- the choice between freedom, prosecutions or subsidies
The Freedom Charter proclaims that “the People Shall Share in the Country’s Wealth!
All people shall have equal rights to trade where they choose, manufacture and to enter all trades, crafts and professions.
Section 200A of the LRA flies in the face of this and of our constitution which guarantees freedom of trade.
In KZN job opportunities levels have reached an all-time low. Manufacturers moved to Lesotho, contributing to their 60 000 jobs in the clothing industry. It was lauded on BBC TV as a breakthrough for promoting jobs for women, while KZN are in dire need of jobs for women.
Legitimacy - more than 80% of the members of the NBCC are non compliant
At one stage more than half of the 1 239 local clothing factories did not meet the wage and working conditions agreed to at the National Bargaining Council level. According to the bargaining council for clothing, more than 80% of their members are non compliant. Thousands of factories are making a living as cottage industries, working undetected and in the so called informal sector, without registering, making this council further unrepresentative and illegitimate.
For many years we campaigned for a moratorium on prosecutions by the councils. The World Bank supported this plea in writing.
“War against poverty”
To quote from the ANC’s declared “War against poverty” calls for “critical interventions that should receive the highest level of attention from government in addressing poverty… economic interventions to expand opportunities for employment and self –employment…a preparedness to step out of strait jackets in creatively searching for effective and sustainable ways of meeting the national objective to halve poverty by 2014. The challenge is to turn the high-level conceptual framework provided here into viable, phased programs”.
Furthermore the strategy aims to reinforce partnership at all levels among government departments and agencies, business, organized labour and other civil society and non-governmental organizations”.
Our local Indian and Chinese manufacturers and members are eager to partner in the “war against poverty” and with this plea offer our full cooperation.
Government has declared “Within government, over and above the current initiatives, it is about doing some things, differently as well as emphasizing implementation and coordination” . This enforces the DTI and BRICS initiatives.
Cottage or home industries play an important role in China and India. With this concept we can uplift thousands of unemployed females and change our economy and in the short run grow the economy at grass roots level.
Local Indian and Chinese manufacturers’ plea for amnesty to use this concept to be able to compete with importers on a “level playing fields basis”. Instead thousands of these factories are hiding in garages and houses, remaining as small as possible to escape the council inspectors.
Enforcement of bargaining council regulations is an invasion of business privacy
The constraints of bargaining council regulations are not only pricing us out of the market. For international investors it is a blatant intrusion of their privacy when their businesses is inspected, their staff interviewed and graded and when they apply for exemption, also to be required to open their books and lay bare their business secrets for a forum on which their business competitors and trade unions have access to their private information.
They will then find that the exemptions are normally refused. For international investors it reeks of uncompetitive practices.
Members on these councils hold powerful positions in the industry. The councils can direct and manipulate prosecution of their competitors.
Often the small, effective and profitable but vulnerable emergent manufacturers who produces innovative and niche products and create jobs, has no chance of survival and will often hear “we need to level the playing field”. Those rendering “Cut Make and Trim” services are at the beg and call of the big players and at prices decided for them.
Today’s technology and industrial espionage makes it risky for manufacturers to bare themselves for inspection by council agents, to uncover their intellectual property such as design, trade and copyright secrets. Their products can be copied, manufactured overseas and imported within days back to compete with them with their originators.
It also create a vantage point for big money to establish factories elsewhere and import to the RSA and possibly manipulate the market.
The Chinese and Indian remuneration systems
Our research show that their remuneration system largely contributed to their economic success. Their practice to pay per item produced; piece work, system teaches the worker the value of money and production; the cost of waste and how to satisfy the clients.
Empirical research by Cofesa in a large number of local Indian clothing factories has found that production increases with between 50% and 300%. This concept enabled one of these factories to export luxury shoes to Harrods. It creates sustainable businesses and the incomes of the workers increases accordingly.
Section “200A of the LRA, the Presumption who is employee”.
Since 2002 this international way of payment is discouraged by section “200A of the LRA, the Presumption who is employee”.
The presumption means that a person – also an “independent contractor” , like your plumber, electrician, accountant, salesmen, or tradesmen are presumed to be an employee until the contrary is proven. This means that you may have to appear at the CCMA or labour court and convince the commissioner or judge that a person is a contractor.
Many corporations such as the SABC-TV make use of thousands of independent contractors as artists, actors, musicians, writers etc.
This assumption is contrary to normal trade and international trade practice and -law and violates the right of the emergent entrepreneur and the unemployed to freely participate in the economy, for example to do work as seamstresses, designers or packers in a clothing factory.
The IMF solution
“ Job creation would benefit from a relaxation of restrictive regulation, reduced scope for centralized bargaining, a simpler minimum-wage system and streamlined dismissal procedures” the directors of the IMF said on many occasions.
The IMF, World Bank and prominent economists view bargaining councils as major restraints on economic growth and to small enterprises.
End of closed shop in Britain in 1990
British Prime Thatcher passed legislation to end the closed shop concept in 1990. Workers were no longer forced to become members of the “in house” trade unions if they are working at factories, party to the council.
Thatcher’s liberalisation leads to economic recovery and the enormous growth of the British economy.
Progressive Business Forum
As an employer’s organization, Cofesa represents over 7 000 employers in over 50 sectors of the economy. We are also long standing members the ANC’s Progressive Business Forum.
We are fully committed to furthering job creation, fair and productive labour practices and economic growth.
Research done by Mr Menzi Yende and Hein van der Walt.
Mr Yende has more than 20 years corporate and entrepreneurship experience. He is the author of “Entrepreneurship Development, the way to go”
Adv Hein van der Walt has a trade union background and is a founder director of Cofesa. He has researched entrepreneurship over more than 20 years. He is the author of “Code for fairness and productivity” of which more than 150 000 copies were distributed to assist employers to comply with labour legislation.
1 comments:
Very interesting article - does the worker elite really want a change in the status quo - especially when they are out pricing themselves & driving investment outside of our borders where there is a further imbalance in the SADC which is more advantageous to the neighbouring states.
We all cry foul when the union demands but we sit with our fingers firmly stuck & then complain about our inaction. We need pro-action not re-action. We demand too much & deliver nothing in return
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