South Africa
22 January 2010
Will South African clothing companies be closed?
Comment from The Redress Consultancy
Will South African clothing companies that do not comply with the Bargaining Council and Sactwu deadline be forced to close?
Once again, the information being disseminated by the media is ambiguous.
South African clothing companies do not have 16 months to comply. They have two months to comply with 70% of the minimum wages or “there will be no lee-way.”
Further confusion arises when AMSA says, that it wants current compliant companies to pay less for new entry-level workers in order for the industry to expand. Why is AMSA saying this, when the union, has rejected the proposal that was first tabled by the Newcastle Chinese Chamber of Commerce and Industry. Is AMSA indicating that there is still space for further negotiations?
In another article (Minimum wage threats), see below, AMSA is quoted as saying, “At the end of March many noncompliant factories will have failed to meet the 70% wage target, but it will be politically too sensitive to shut them down.” Is AMSA tactfully sending a message to non-compliant companies that they need not fear being shutdown by the March deadline and thereby extension of their statement non-compliant companies can ignore the Bargaining Council’s threats?
Clothing Plants get 16-month last chance
Clothing manufacturers who do not phase in minimum wages over the next 16 months,will be closed.
Leon Deetlefs, the national compliance manager at the National Bargaining Council for the Clothing Manufacturing Industry, said yesterday that this phase-in was a reprieve that companies must use.
The council would proceed with writs of execution against companies that did not comply, Deetlefs said. It has obtained 385 such court orders against firms for failing to pay the prescribed minimum wage.
Based on an audit done in September 2009, R40 million is owed in arrears wages. A moratorium on proceeding with the court orders was lifted in December after the council decided to give companies 16 months to comply with minimum wages by April 2012.
The council resolution stipulates that companies will have to pay 70 percent of the minimum wage from March, 90 percent by January next year and 100 percent by April 2012. If by March companies were not paying 70 percent of the minimum wage "there will be no leeway", Deetlefs said.
The companies would then be expected to pay the backlog in arrears wages. If they failed to do so the sheriff would attach and remove their assets, effectively closing them down.
For those that did comply with the policy the issue of arrears wages would be dealt with at a later stage and they could be written off depending on the decision taken by the council, Deetlefs said.
It was reported earlier this week that members of the Newcastle Chinese Chamber of Commerce had threatened to retrench unskilled workers, shut down factories and relocate to Swaziland and Lesotho if the minimum wage resolution was enforced. "We proposed to the (bargaining council) that they should lower the entry wage to accommodate more workers and to allow the operator to operate," said Alex Liu, the chairman of the chamber.
Apparel Manufacturers of SA executive director Johann Baard said the closure of the 385 companies faced with writs of execution would result in the loss of 15 000 jobs.
Reference:
Business Report
21 January 2011
Samanth Enslin-Payne
Labour and business need inflation reality check
Business and labour are notoriously slow to adjust to changes in the inflationary environment. Regular surveys by the Bureau for Economic Research (BER) at Stellenbosch University have shown that financial analysts, quizzed on their expectations, routinely come up with lower predictions than business executives and trade union officials.
However, the latter two have finally conceded that inflation could remain within the Reserve Bank’s 3 to 6 percent target range this year. The survey conducted in the fourth quarter of last year showed financial analysts expected 4.5 percent average inflation this year while business and trade unions forecast 6 percent.
This produced an average expectation of 5.5 percent for the year, compared with the 6.1 percent average in the previous BER survey.
Though the Reserve Bank has started revising its inflation expectations upward, its estimate for the year is still much more favourable at 4.6 percent this year (up from a 4.3 percent estimate in November) than the average BER forecast. And private sector economists are making predictions in line with the bank.
Let’s have a reality check. Inflation has been running at less than 6 percent since February last year, which shows the bank and other analysts have a much firmer grasp of reality than business and labour. This may be because inflation allows businesses to hike prices and blame events outside of their control, such as rising input costs. And it allows trade unions to bolster their case for bigger wage hikes. Not that trade unions are constrained by inflation figures – last year wage demands were twice or even three times the inflation rate.
But the fact that two powerful lobbies are out of sync with reality is dangerous because their demands help shape economic policy.
Perhaps some scarce resources should be diverted from schools and universities to training courses for ignorant business and trade union leaders.
Clothing workers
Some clothing manufacturers’ compliance with the minimum wage is as low as 25 percent, others pay closer to the prescribed wage, which for a qualified machinist is between R451 and R740 a week, depending on the area.
But the Apparel Manufacturers of SA (Amsa) wants clothing manufacturers that are compliant with the minimum wage to be able to pay less for new entry level workers in order to expand their factories to take on bigger orders from retailers.
The unions are having none of this, saying that workers in this industry are already among the lowest paid.
If an industry cannot survive unless it pays such appalling wages, is it really one that can be saved? Just how little are people, no matter how unskilled, expected to spend hours working for? Are there not more sustainable and lucrative industries that can be grown to create jobs?
Business, of course, wants to make profit. But so do those who work, that is, profit through their labour by earning enough to survive and live as comfortably as possible. A mere R880 a month does not seem to cut it.
But an entry level position could provide an unskilled unemployed person with an “in” into the job market, a possible stepping stone to better things. If this sector could pay lower wages to entry level workers it could expand and larger factories could take on more orders from local retailers.
Johann Baard of Amsa says in this scenario 100 000 jobs could be created in 18 months. If these companies can’t expand and create more work opportunities, South Africa could face the loss of even more jobs after the hundreds of thousands of jobs lost in the two years across all industries.
As Gwede Mantashe, the ANC’s secretary general said recently, there is nothing decent about being unemployed. More specifically he was quoted as saying there was “nothing more (degrading) than being unemployed”.
Reference:
21 January 2010
Independent On Line
Edited by Peter DeIonno. With contributions from Ethel Hazelhurst, Samantha Enslin-Payne and Ann Crotty
Minimum-wage threat to factories
Council gives clothing factories 15 months to become fully compliant with minimum wages and levies or face closure
IN A blow to the survival prospects of SA’s clothing industry and to ambitious job-creation targets set by the government, noncompliant clothing factories have been given 15 months to become fully compliant with minimum wages and levies or face closure.
The National Bargaining Council for the Clothing Manufacturing Industry’s order dashes hopes of a much-needed overhaul of the wage regime in the ailing industry. It follows the expiry in December of a moratorium on prosecution by the bargaining council against small companies struggling to meet the minimum wages set by the council.
The moratorium was called by Economic Development Minister Ebrahim Patel after an unprecedented uprising by small businesses in the Newcastle area against a bargaining-council clampdown in August last year.
Noncompliant businesses now have until the end of March to become 70% compliant with the minimum wages prescribed by the bargaining council, and until the end of the year to become 90% compliant. By April next year, they must comply fully.
"Arrears of noncompliant companies will be placed in a ‘suspense account’, which will become payable upon such employer committing a breach of compliance phase-in obligations," a bargaining council resolution says.
Alex Liu, chairman of the Newcastle Chinese Chamber of Commerce, described the development as "unfortunate" and warned that mass retrenchment , factory closures and an exodus of clothing factories to neighbouring states would continue. The industry has shed more than 50000 jobs over the past 10 years.
"So far, the feedback from our members has been very negative," said Mr Liu, who speaks for 160 factories employing 18000 staff.
Mr Liu emerged last year as the voice of small clothing manufacturers not represented at the bargaining council. He led a one-day closure of more than 100 small factories to protest at the bargaining council’s threat to shut down two of their members for noncompliance. Workers reportedly joined factory owners to save their jobs from the bargaining-council onslaught.
Following Mr Patel’s call on the bargaining council to halt the prosecution of 385 noncompliant small companies, jeopardising 20800 jobs, hopes were high for a renegotiation of the industry’s dysfunctional wage regime, especially since the established clothing employers that are represented at the bargaining council came out in support of the noncompliant factories last year.
Johann Baard, CEO of Apparel Manufacturers of South Africa (Amsa), which represents compliant clothing factories, says the latest development is not an about-turn by Amsa, nor is it the end of an industry overhaul.
Amsa still agrees with the noncompliant businesses that the only way to save the clothing industry is to drop minimum wages 40%-50% for new workers entering the industry, coupled with productivity incentives.
Mr Baard said that when Amsa failed to convince the South African Clothing and Textile Workers Union (Sactwu) last month to consider a new wage model at the bargaining council, the employers agreed, "under protest", to the phased-in compliance order for the sake of short- term stability. Amsa believes that at the end of March many noncompliant factories will have failed to meet the 70% wage target, but it will be politically too sensitive to shut them down.
Mr Baard said he would then say to Sactwu: "Minister Patel wants to create jobs, President Zuma wants to create jobs, (Trade and Industry Minister) Rob Davies wants to reindustrialise. Now you tell us, union, what are you going to do to those companies?"
Sactwu argues that the woes of the clothing industry are due to rand strength and dumping by eastern countries rather than high wages. It did not answer requests for comment.
Reference:
21 January 2011
Business Day
BARRIE TERBLANCHE
