Clothing factories will be closed according to the bargaining council and the clothing union Sactwu.
Factories shut, Sactwu wants raise
Clothing and textile workers union Sactwu is demanding wage increases of between 14% and 18.5% this year - as the industry's bargaining council starts shutting down factories that have not been complying with minimum wage requirements.
A moratorium on bargaining council shutdowns was imposed last year as the industry tried to find ways to avert 28000 job losses at non-compliant factories across the country. The council resumed inspections at the beginning of April. At least four factory employers have made it clear they will not be able to meet the requirements.
Nearly half of employers in the industry are not fully compliant with bargaining council requirements. At least 60% of non-compliant factories have not met the April 1 deadline to pay 70% of minimum wages, and cannot meet the rest of the phase-in requirements, which would see companies pay full minimum wages by early 2012, said Renato Palmi, director of The ReDress Consultancy.
"Hopefully the bargaining council is just rattling the cage and the parties will go back to the drawing board and find ways to solve this amicably," said Palmi.
An official at the council would not provide details of the number of affected workers and factories, but 64 factories are reportedly due to be shut down next week due to non-compliance. A total of 45 factories have already shut their doors voluntarily since the beginning of the year, bringing the number of jobs affected to 3200, according to Business Report.
The bargaining council will continue to serve writs of execution on non-compliant factories across the country this week, said Wayne van der Rheede, national organising secretary of Sactwu.
"If there is a legitimate reason why a factory is not complying, we will apply our minds. We're not following a shotgun approach," said Van der Rheede.
Factories that commit themselves to a date when they will meet the requirements, and pay the backlog in wages, would be granted reprieves, he said.
Despite the extent of non-compliance in the industry, Sactwu has asked for a 14% increase in wages in metro and 18.5% in non-metro areas, to be effective on September 1.
The union has also asked employers to take a 30% pay cut and publicise financial statements, though this request has not yet been formally tabled.
Van der Rheede said the request for a 30% pay cut "goes to the heart of the issue in the NGP (New Growth Path)". He said it was unfair that workers made all the sacrifices when an industry was struggling. "In trying times ... employers should also take a cut."
Industry parties have appointed officials from the Commission for Conciliation, Mediation and Arbitration (CCMA) to facilitate negotiations and make proposals on a way forward, said Johann Baard, executive director of the Apparel Manufacturers of SA (Amsa).
The first meeting will be on Thursday. "We hope by May 20 they will be in a position to give us some indication (of a way forward). We don't want to rush the process; we want buy-in from both parties," said Van der Rheede.
Baard called for a new wage model "more in line with the demands of the current reality. The question is whether the union is willing to confront the market realities, the global competitiveness realities in the interest of the survival of the sector, and the jobs of workers, their members."
Amsa, which represents mainly large, compliant factories, has expressed concerns over the unfair cost advantage that non-compliant factories enjoy because they do not pay minimum wages. The organisation has said wages should be about 30% lower for the industry to grow and be sustainable.
THIS year’s annual wage negotiation round is turning out to be one of the most difficult on record.
The proximity of the local government elections to the annual wage round has encouraged some unions to try to force concessions out of the government, using the implied threat that they will refrain from supporting the ruling party. This is the kind of political extortion that has worked during past election cycles and which is partly responsible for the total public servant wage bill increasing by double the inflation rate over the past decade.
In the context of a fast-growing economy, it is possible to satisfy these demands to an extent. There is even a credible theory that doing so enables state employees to improve their lifestyles and the education of their children, which all helps in the long term to create more productive workers and a stronger consumer class. The same sort of arguments apply to the private sector too, with the notable difference that workers in the private sector do not possess the political bargaining chip.
Yet there are two obvious problems. The first is that workers have apparently got used to the notion of wage increases substantially higher than inflation. The second is that it is much easier for business to capitulate to higher than inflation wage demands in the context of a growing economy. SA’s growth over the past two years has been anaemic, and this is starting to be reflected in profitability, with the result that neither business nor the government is in a mood to compromise. In some cases, they are anyway not in a position to do so.
Yet the wage demands remain extravagant, verging on the nutty. For example, the South African Municipal Workers’ Union and the Independent Municipal and Allied Workers’ Union are demanding an 18% across-the-board pay rise. The government’s offer is 4,8%, an unusually large differential. The National Union of Metalworkers of SA’s demand for a 20% increase is the largest so far. But even the traditionally cautious National Union of Mineworkers is demanding 14%.
One of the ironies is that many of the wage demands are premised on the notion that workers need the increases to compensate for the dramatic electricity price increases and new toll-road fees. To an extent, this may be true, but the demands are way in excess of the effect these new living expenses might have. And this is precisely the way inflation gets a grip on the economy, as one inflationary factor starts setting off and worsening others.
There is a real chance that, by overplaying their hands, unions might find that their members’ increases, to the extent that they are won, will be eaten away by inflation. This is especially bizarre, since the official economic position of the government, outlined in the New Growth Path, calls for wage restraint. In fact, what is happening is precisely the opposite: wage eruption.
The predicament of clothing workers in Newcastle highlights the extraordinary decision by the government to start closing down factories that are not compliant with minimum wage regulations, against the wishes of many employees. Fully half of the companies in the sector are not compliant and insist they cannot become so and remain viable financially. Only 40% of the companies that were threatened with closure last year were able to meet the end-March deadline of being 70% compliant. And yet, in the midst of a crisis that threatens thousands of jobs in one of the poorer parts of the country, the South African Clothing and Textile Workers’ Union is demanding across-the-board increases of 10%- 17% on the minimum wage.
What should be done? The reflex position of business is that trade unions need to reassess their wage demands and, in this particular case at this particular time, that conclusion is inescapable: the unions really do need to get a grip. The country cannot afford such extravagant increases, and union leaders should know that. Either they don’t care about the consequences or are looking for a political confrontation.
Reference: Business Day, 29 April 2011
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