Shutdown clothing factories: UCTA

South Africa
"If the bargaining council wants to close our factories, be my guest. It will bring the sector to a complete standstill," United Clothing and Textile Association.

Clothes factories threaten closure

Employers refuse to pay 70% of minimum wage as sector faces looming deadline and factory closures

THE national bargaining council for the clothing industry says it will take legal action against manufacturers that have not complied with Friday’s deadline to pay 70% of minimum wage levels to employees.

But employers in KwaZulu- Natal are adamant that they have no intention of complying.

"If the bargaining council wants to close our factories, be my guest. It will bring the sector to a complete standstill," United Clothing and Textile Association chairman Ahmed Paruk said.

The association’s members employ about 28000 clothing and textile workers, mostly in factories in KwaZulu-Natal.

Between July 1 2007 and June 30 last year, 18300 jobs were lost in the clothing sector. The rate of job losses has slowed, with 10143 jobs lost last year, a 30% decline on the 14516 job losses in 2009.

The minimum wage for a machinist in a non-metro area is less than R2000 a month, but many employers complain that they cannot remain competitive if they pay such wages.

The bargaining council gave small factories 15 months to be fully compliant or have their assets seized for not paying minimum wages and council levies.

The South African Clothing and Textile Workers Union’s deputy general secretary, Wayne van der Rheede, said yesterday a full assessment of noncompliant firms would be made after inspections, possibly by next month.

Bargaining council compliance officer Leon Deetlefs said about 471 factories, employing about 18000 workers, or 18% of the industry workforce, may be issued with writs of execution .

Mr Paruk said most of his association’s members, about 300 companies, could not comply with the deadline.

An agreement for the industry concluded at the bargaining council in November last year allowed noncompliant companies to phase in up to 70% of the minimum wage by April 1 . By January next year they would have to be 90% compliant, and 100% by April .

By December last year, 103 noncompliant companies had agreed to the phase-in plan, clothing manufacturing industry consultant Ronato Palmi said.

Mr van der Rheede said noncompliance had been an issue for 10 years and some companies could comply with minimum wages . Noncompliant companies were undercutting companies in the market that did pay proper wages, he said.

Mr Paruk said his association had held an "informal" meeting with the union and the bargaining council last week, but the union did not accept its proposal for a wage structure similar to the leather industry.

Alf Lees, Democratic Alliance National Council of Provinces member for KwaZulu-Natal, said thousands of lowly paid jobs were likely to be lost in Newcastle if clothing factories closed due to noncompliance with the bargaining council. He warned there was "a very good chance" the industrialists would relocate to Botswana or Lesotho, where production costs were lower.

Mr Lees said a tour of clothing factories in Newcastle some months ago showed they provided work for the "desperately poor". While workers said they would have liked to earn more money, they could not contemplate losing their jobs because unemployment was high .

Reference:

EDWARD WEST

Business Day, 30 March 2011

SA clothing union proposed action scares retailers

SA retailers look to local clothing

Retailers facing rising costs in China want to source greater quantities of clothes from local suppliers, but to do so they need better prices from local manufacturers and certainty that problems in the industry will be resolved.

Michael Lawrence, the executive director of the National Clothing Retailers Federation (NCRF), said yesterday: “I certainly think retailers would look to improve local sourcing if pricing was better.”

He added that the local clothing manufacturing sector had good turnaround times and produced quality products, but the disarray in the industry, where many companies faced closure over non-compliance with minimum wages, was also a serious concern.

The bargaining council has writs of execution against 471 companies, which employ about 18 000 people, for about R141 million. These companies operate in Botshabelo, Bloemfontein, Kimberley, the Durban metro, Newcastle, Thaba Nchu and the Western Cape.

The first deadline to phase in the minimum wage is the end of March when companies have to be at least 70 percent compliant.

Lawrence said if the bargaining council implemented the writs of execution, a significant aspect of local manufacturing would be phased out.

Retailers are watching this development closely as they cannot confidently source from local suppliers if they face the nightmare of empty shelves.

“The systemic uncertainty in manufacturing needs to be resolved as a number of retailers are avoiding local manufacturing due to these risks,” he said.

Asked whether NCRF members source from non-compliant businesses, Lawrence said given the complex local supply chain “it is very possible we end up with goods on our shelves from non-compliant companies”.

The Apparel Manufacturers of South Africa (Amsa) believes its proposed wage model for entry-level workers could resolve non-compliance and it will insist that this be the content of wage talks with the union next month.

Amsa executive director Johann Baard said cost pressures in China had resulted in factory prices rising by about 35 percent in the past 18 to 24 months primarily due to rising labour costs there. As a result, South African retailers wanted to source from home, but they needed a price point below the current status quo and a reliable domestic supply chain.

“With this guarantee, retailers will start planning their return to sourcing from South Africa,” Baard said.

He said Amsa confirmed its presence for the negotiations this year, but it was inconceivable for the trade union to expect a conventional exchange under circumstances where half the industry did not comply with current minimum wage, which Amsa members did.

“What is the point of negotiating for a wage increase that is not affordable,” Baard said.

But Wayne van der Rheede, the deputy general secretary of the Southern African Clothing and Textile Workers Union (Sactwu), said if employers said they were coming to discuss an alternative wage model and would not engage on wage negotiations, then that was a disguise for boycotting wage negotiations.

He said discussions on a new wage dispensation fell under the industry accord that was facilitated by the Department of Economic Development. “Clearly we are open to dialogue that seeks to sustain the industry, but Sactwu cannot entertain proposals that will reduce wages to 1985 levels. We are willing to talk about other issues to support the industry,” Van der Rheede said.

He added that the prospect raised by employer organisations of the imminent closure of non-compliant factories was scaremongering. He said from April 1 the bargaining council would assess how many non-compliant businesses had met the deadline to be 70 percent compliant. Once that was determined a strategy would be decided upon.

The weekly minimum wage for a machinist working in a non-metro area is between R489 and R579, and R738 for those working in a city.

Reference: Business Report, 29 March 2011

By: Samantha Enslin-Payne

United Clothing and Textile Association on TV

South Africa

United Clothing and Textile Association’s (UCTA), Chairperson, Mr. Paruk was interviewed on ETV today in regard to the critical situation South Africa’s clothing sector faces this week.

Renato Palmi, of The ReDress Consultancy was also interviewed about the impact on the industry if Sactwu/ bargaining council follow through with the mandate of shutting down factories who are not compliant at the end of March 2011.

Newcastle signal

 I grew up in a not small but rather unremarkable town in northern KwaZulu Natal called Newcastle. Over the past year it has become the focus of a series of critical developments for the SA labour market. After repeated attempts to get Newcastle-based clothing manufacturers to meet minimum wage requirements, the sheriff of the court moved in to close the factories down last August. Surprisingly this was met by angry workers who stoned the officials’ vehicles and ran them off the properties. Many of these workers agreed they were paid a low wage but said there was no alternative: if they lost their jobs they and their children would starve.

Historically, unions have been instrumental in boosting the wages of exploited workers. This has provided a significant net benefit to society as workers’ living standards and spending power was raised — provided the industry was profitable and competitive.

Unfortunately, the bulk of SA clothing manufacturers are neither. The hollowing out of the industry over the past 10 years proves this. As a retailer recently noted, the SA weaving industry no longer exists. Antiquated production methods coupled with poor productivity growth and a strong rand has led to the shutdown of 50%-70% of SA clothing production. Therefore, the Newcastle clothing manufacturers’ claims that their factories will not be profitable at higher wage rates are entirely plausible. And their threat to close down their factories and move them to neighbouring countries should be taken seriously.

In light of this it is alarming to see the SA Clothing & Textile Workers Union (Sactwu) insist that wages rise from April 1. It looks set to create another 14000-28000 unemployed workers rather than have them be lowly paid “exploited” workers. This outcome should not be surprising. If Sactwu did not act it could see wage rates in the rest of the industry erode . Similarly, its aversion to a wage subsidy for first-time job seekers stems from a concern that existing workers will be displaced by subsidised workers.

These positions reveal two things. First, the deep distrust between unions and management in SA. The 2010/2011 Global Competitiveness Report ranks SA 132nd out of 139 countries for labour-employer relations. This explains unions’ assumption that management always seeks to minimise the size of the workforce and disadvantage workers. This led to the excessive wage demands of 2009 that greatly accelerated job losses. In addition, performance related wages are viewed with scepticism (SA wage flexibility is ranked at 131st out of 139).

Second , it reveals a union belief that workers possess no greater skill than potential new employees and therefore companies will not value their experience. This subconsciously acknowledges SA’s poor educational and labour productivity levels. A skilled or even a semi-skilled worker is not threatened by a cheaper unskilled worker as he knows his extra wage is earned. The poor education system has to shoulder much of the blame. SA’s primary education system is ranked 125th and the quality of the education system 130th in the 139-country survey.

Though the desire to boost workers’ living standards is laudable it cannot be done with current skill and productivity levels as this will simply increase the uncompetitiveness of SA workers and lead to greater unemployment.

Fortunately, the labour department has realised that tightening labour laws will hurt job creation. Since late January, the labour minister has repeatedly stated the proposed changes to the labour laws are negotiable. This is good news. Now if only some flexibility could be applied to the workers in Newcastle, they may be able to keep their jobs. The final outcome of this dispute will send a clear signal of government’s primary aim: better jobs for a few or more jobs for all.

Moola is a director with Macquarie First South

Reference:  Financial Mail. 17 March, 2011

Deadline nears for South African clothing sector

Closures loom as factories battle to meet compliance deadlines

Thousands of workers in the clothing industry face losing their jobs in the coming months, thanks to the deadlock over minimum wages.

This after the industry's bargaining council gave non-compliant manufacturers until the end of March to pay outstanding levies and fees and 70% of minimum wages.

But none of the 259 members of the United Clothing and Textiles Association (UCTA) - who employ about 28000 workers - will be able to meet Thursday's deadline, said its chairman, Ahmed Paruk.

About 450 factories are affected, representing nearly half the industry. They are expected to shut down completely, moving to neighbouring countries such as Lesotho and Swaziland. They could also move deeper into the informal sector, where thousands of people, mainly formerly employed workers in the formal sector, are estimated to work from homes and garages.

"This is a very sad situation. We're facing an unmitigated disaster in the clothing industry," said Renato Palmi, director of textile industry research agency The ReDress Consultancy.

"Hundreds of factories will be closed and thousands upon thousands of people's livelihoods will be disrupted."

While moving operations out of the country is an option for UCTA factories, Paruk said his members "will fight here. We want to stay here and we want to keep our assets in the country.

"We want to comply, but the union (Sactwu, the SA clothing and Textile Workers' Union ) and the bargaining council also need to come to the party (with realistic demands). We need to find common ground once and for all."

Despite meeting with the UCTA this week, Sactwu and the bargaining council have refused to budge on minimum wages or a restructuring of the wage model, including lower entry-level wages.

The Apparel Manufacturers of SA (Amsa), which forms part of the council and represents compliant factories, has also pushed for a new wage model, saying present wages are 30% too high.

Sactwu described the phase-in policy, which would require factories to be fully compliant by February next year, as an "important signal that we wish to work together with employers who show goodwill to obey the law".

While non-compliant factories are not eligible for any government support, the governments of Lesotho and Swaziland have been wooing local employers to move their factories across the border with offers that include rent-free premises, significantly lower wages and less union interference.

Many factories have already moved out of the country to Botswana and Mozambique.

Sactwu itself owns a significant indirect stake in Seardel, one of the largest remaining clothing manufacturers, which owns NyeNye Clothing in Lesotho. The UCTA estimates that about 40% of SA's clothing comes from Lesotho and Swaziland.

However, while wages may be significantly lower and more sustainable, there are other challenges, mainly regarding logistics and other infrastructure, said one clothing industry veteran who operates factories in SA and Lesotho.

"The first thing you need to do is find a factory, and that's not easy. You also can't really get customers to come and visit you in Lesotho, as travelling there is time-consuming and not always an easy, convenient trip," said the source.

As Lesotho is rated as a least developed country, it enjoys favourable market access to the US in particular, which can be a lucrative export market.

Swaziland is a more attractive option in terms of location, "but if you fancy exporting to the US, your location might be frowned upon. They don't see the Swazi royal family as the nicest people on earth," the source said. "It's probably the best location if you want to serve the South African market."

He has also investigated setting up factories in Botswana, where productivity can be problematic, and Mozambique, where a shortage of available buildings and the language barrier prevented investment.

However, the biggest threat to local factories comes from Mauritius, the industry source said. "We've seen a big move in local orders going to Mauritius. A lot of their garments are probably outsourced to Madagascar, where wage rates are minimal, but local buyers won't even know that it's not from Mauritius," he said.

"You can set up a compliant factory in SA, but you have to be very streamlined and you must know that you're not going to get rich. If you serve customers like Woolworths, Truworths and Foschini you can keep head above water. But there are other levies and provident fund requirements that place an extra burden on struggling businesses," the source said.

 Reference:  JANA MARAIS, BUSINESS TIMES: 27 March 2011

Millions may be lost in clothing industry pension fund

South Africa

Workers' fund faces massive Pinnacle losses

Clothing workers stand to lose R90-million through their provident fund investment in Trilinear Empowerment Trust, the main shareholder in the struggling luxury property developer Pinnacle Point.

According to minutes from a meeting held by the Cape Clothing Association, the clothing workers' provident fund invested R197-million in Trilinear and faces potential losses of around R90-million.

A Financial Services Board (FSB) investigation into the conduct of Trilinear was in progress, Jaco Pretorius, the provident fund consultant from Pan African Benefit Services, told the meeting in Mouille Point, Cape Town on March 14. The FSB found that the trustees of the provident fund acted "within the terms of their fiduciary responsibilities," Pretorius said.

Various representatives at the meeting expressed "particular displeasure in respect of this development and the role of the fund consultant" and a special work group was convened to review the details of the Trilinear transaction. Trilinear invested R100-million in Pinnacle in October 2009, and bought Absa's stake in the company for R150-million in February last year. In December, Trilinear invested an additional R13-million in Pinnacle to fund working capital and development expenditure.

Investec applied in February to liquidate four Pinnacle Point subsidiary companies, due to the non-payment of debt. The case has been postponed until June. The group has also signed an agreement

Reference:  JANA MARAIS
BUSINESS TIMES

27 March 2011

Pension fund investment contravenes Act

By: Nellie Brand-Jonker

2011-03-27

Cape Town - There is great concern within the Cape clothing industry after millions from the garment workers’ pension fund was allegedly invested in contravention of the Pension Funds Act.

The Financial Services Board (FSB) is currently investigating, among others, Cape asset manager Trilinear regarding the manner in which the investments were made. Various provident funds for the Cape clothing manufacturing industry apparently invested money in the fairly unknown Trilinear group’s Trilinear Empowerment Trust, and they are now struggling to get their money back from the asset manager.

One of the funds – the National Bargaining Council for the Clothing Manufacturing Industry Western Cape Region Provident Fund – invested almost R200m. The value of this investment was now almost half what it had been worth.

A report in Sake24’s possession about the provident fund's performance in the year to end-December 2010 indicated that all the assets under management at Trilinear were currently worth R105.6m. This report, sent to members of the provident fund and employers, showed with concern that the performance of the investment at Trilinear Empowerment Trust had fallen by 62%.

While the performance of most other asset managers managing the fund's money was in line with the set criteria, the trustees had for some time been concerned about the Trilinear investment, said the report. The provident fund trustees – who represent the garment workers and employers – had contacted Trilinear to disinvest, said the report. But disinvestment was apparently too difficult because of the nature of the assets into which investments had been made. There was a reference to "liquidity restrictions".

Trilinear’s poor performance had had a negative impact on the provident fund's overall performance for the past three years, said the report. Responding to questions, Sicelo Nduna, the general secretary of the provident fund, said the investment had not performed as expected and had led to the provident fund being in contravention with two aspects of the pension fund and its regulations. Nduna is the secretary of the National Bargaining Council for the Clothing Manufacturing Industry.

According to pension fund registrar Jurgen Boyd, the investigation involving Trilinear was examining how the investments had been made. It concerned contraventions of Regulation 28, which prescribes the percentage of pension fund monies that may be invested in certain types of investments, as well as Section 5 (2) of the Pension Funds Act which stipulates that the pension fund's assets must remain in its own name or in that of a designated company.

Reference: Fin 24

Clothing union in a twist

It seems that the South African clothing union (Sactwu) is in a twist when it comes to history and their partners.

• Union adamant that they have worked tirelessly to find a solution to clothing sector woes.
• Clothing industry body AMSA in conflict with union.

On the 22 March, the United Clothing and Textile Association had a meeting (which was informal-the instance of the Bargaining Council) with Sactwu, the clothing bargaining council and AMSA.

The United Clothing and Textile Association (UCTA) informed these parties that it members were not going to meet the March deadline of being 70% compliant and that an unmitigated disaster faced the clothing sector if hundreds of companies were shut-down.

The bargaining council and the union confirmed action would take place against non-compliant companies.

A consultant to UCTA stated the industry had faced this situation many times before but beyond rhetoric and countless workshops nothing concrete had been done and there was an urgent need for visionaries. The bargaining council and the union vehemently denied that nothing had been done and AMSA admitted that consultants had been hired but unfortunately the phase-in policy was the only policy and it was law and everyone had to comply with the law.

The question is, has anything really changed?  These headlines dating from 1995 through to 2007 and further commentary (click here) says no, there has not being any creative collective engagement on restructuring a compliance and wage system that is sustainable.

Both the union and bargaining council are adamant in seeking a hollow victory.  What is their response going to be when thousands of people have no work, when they undermine economic development and fragment an economic sector?  Surly, we need to put away personal agendas, and move forward for the betterment of society, the industry, the economy and the country?

When UCTA met with the union and bargaining council officials, they demonstrated that they had applied their minds to the situation. The union dismissed the initial wage restructuring proposal that was endorsed by AMSA. They have now dismissed any consideration of reviewing and realigning the clothing bargaining council system in alignment to that of the leather and footwear sector, which offers a three tier approach.

All non-compliant companies can undertake to meet the 70% compliance needed by the end of this month and follow the Phase-In Agreement. However, there is no guarantee that they would be able to sustain the Phase-in approach due to a fluctuating trading regime, further wage increases and input cost rising.

There is a clause in the agreement stating if any company violates the agreement they are liable to face legal action.

Furthermore, even if hundreds of companies showed good-faith, and undertook to meet the deadlines of the agreement until they are 100% compliant and have no outstanding levies etc they will not be considered compliant and therefore, by extension, cannot access any government incentives. 

The central argument to my thesis is signing the agreement will provide no surety that the industry will grow or jobs be sustained.

This is what UCTA and its members are saying, yet, the logic of their argument is agreed by some ie: AMSA, and rejected by the union and the bargaining council.

Maybe, the time is now for the people behind the sewing machines to decide on their future. Allow the union to shut down factories across the country-taking note that all companies both in the formal and informal sector (those operating from houses, garages etc) will also be targeted, or stand-up and demand a revisit of the wage system.

HEADLINES -

“Strike threat – Taiwanese garment factories targeted”

Some 42 factories owned by Taiwanese in South Africa’s former decentralized industrial centres “could be hit with strikes … if political intervention fails to resolve a long standing dispute.” Sactwu approached the Taiwanese consulate to intervene because “there was no discernible employer organisations representing the Taiwanese companies” (News of the Nation, 25 August 1995).

 “Employers say compliance is impossible”

In 2005, employers in Durban said “the high level of non-compliance with bargaining council wage agreements indicated that employers could not afford the agreed wages and remain competitive.” (Star, 22 March 2005).

.The Natal Clothing Manufacturers Association, said in 2005, that a report given to the clothing union about wages and compliance with the sector was “worthless to them as not one of their suggestions had been included among the proposals, however, some recommendations made by the Cape Clothing Association, the biggest employers’ association with a strong metro base, had been included.”  (Star, 29 March 2005).

CMT employers join hands on wage rates

(Star, 6 May 2005)

Clothing bosses toyi-toyi

Hundreds of employers marched in Durban's Gale Street this week, alongside their workers this time. They were protesting against the clothing industry's big guns whom they claim are forcing them out of business. More than 700 of these small employers countrywide face jail terms and having their assets seized because the organised industry, the National Bargaining Council (NBC), representing 1 100 employers, is bringing compliance action, which threatens their survival, against them.  (M&G, 17 June 2005)

Clothing sector tries to iron out wage problems

(Star, 5 October 2007)

Press statement from SACTWU

24 MARCH 2011 

SACTWU NEC REJECTS CLOTHING EMPLOYERS' ATTEMPT TO BOYCOTT WAGE NEGOTIATIONS 

A large group of clothing employers, organised under the auspices of a national employers' association called the Apparal Manufacturers of South Africa (AMSA) has threatened to boycott this year's clothing wage negotiations,   the General Secretariat report tabled at last week's National Executive Committee (NEC) meeting of the COSATU-affiliated Southern African Clothing & Textile Workers' Union (SACTWU) shows. The SACTWU NEC was held from 16-18 March 2011 in Cape Town.

This threat was made in a letter sent to SACTWU by AMSA, on 1 March 2011. In 
essence, these clothing bosses claim that they should not be required to present themselves for wage negotiations this year, due to the extent of wage non-compliance in the industry and the fact that the union has not accepted their proposal for a 'new wage model' for the industry. 

The SACTWU NEC has cautioned AMSA that their threat is provocative and means 
a route of confrontation which will not be in the best interest of the local clothing industry. The union's NEC has re-endorsed the compliance phase-in agreement for the industry concluded at bargaining council level in November last year, whereby non-compliant companies would be allowed to phase in to 70% of the minimum wage by 1 April 2011, to 90% by January next year and to 100% by April 2012, as an important signal that we wish to work together with employers who show goodwill to obey the law. 

The union's NEC has endorsed the sentiments expressed by the union's secretariat, in a formal response letter submitted to AMSA Director Johann Baard by the SACTWU Deputy General Secretary, as follows: 

Dear Johann 

RE: AMSA POSITION ON 2011 WAGE NEGOTIATIONS 

We refer to your correspondence dated 1 March 2011 regarding the above 
matter, and advise as follows: 

It's not our intention to respond to all the points raised in your letter, but place on record that we reserve the right to do so in future should we deem it necessary to do so. Nor are we interested in a debate via correspondence, as many of the matters raised in your letter are issues consistently addressed during the regular meetings of the Bargaining Council. 

SACTWU, notes the reference to prejudice AMSA members face due to the extent 
of non-compliance in the industry, but in the same token point out  that the extent of non-compliance is not the doing of SACTWU. AMSA is well aware of the history on non-compliance, which dates prior to the time when the bargaining council took over jurisdiction of the non-metro areas. We have also, on numerous previous occasions,  placed on record our position relating to this matter and in particular the active role some AMSA affiliate employer associations have played in instigating non-compliance 

which exacerbated the prejudice they now face. 

In any event, we have ensured that a number of industry support measures, in 
fact all of it,  are only available to compliant companies. This is to mitigate the prejudice and we have previously indicated to you the value of that mitigation. 

We are also particularly perturbed that it appears that senior representatives of your organisation have not fully embraced the recent phase in resolution of the bargaining council. We are aware of meetings which have been convened in KZN, where non-compliant companies have been urged not to comply with the phase in agreement.

In addition, your own recent public utterances in this regard show a complete undermining of  a jointly adopted bargaining council resolution, indicating that AMSA has no intention of contributing to the success of the compliance phase in resolution. We are perturbed at this very public undermining of a unanimous and joint decision of the parties Bargaining Council. 

While we do not say that this is conclusively the case, it makes us wonder whether AMSA is at all interested to constructively assist to resolve the non-compliance difficulties in the industry or whether it wishes the problem to persist simply in order to strengthen your demand for wage cuts in the industry, under the guise of '... a new wage model...' 

The point of interventions which AMSA refers to requires no further response from SACTWU. Our track record speaks for itself. Many of the interventions were implemented at the insistence of SACTWU with a luke warm support by AMSA. To now place on record how AMSA embraces the Government's goals on job creation is somewhat misplaced when in fact you were aggressively promoting the closure of non-compliant companies not too long ago. It is the trade union which took the public flak. 

Our position on your new wage model is known to AMSA as we have articulated this in the appropriate forums of the Council. 

The stance you adopt on the forthcoming substantive negotiations for the period is one of clear confrontation.  This would not assist the industry and is not a route preferred by SACTWU. 

In this regard, the provisions of the Constitution of the National Bargaining Council for the Clothing Manufacturing Industry on annual collective bargaining  is unambiguous in spelling out the obligations of the parties. The trade union will follow our obligations for the collective bargaining processes and procedures, as outlined in the Council constitution and the Labour Relations Act and we similarly hope that AMSA will do the same. 

Yours sincerely

The parties have now (on Tuesday this week) set a preliminary date for wage 
negotiations to commence, for 13 and 14 April 2011. 

Issued by 

Andre Kriel 

SACTWU 

General Secretary 

If further comment is required, kindly contact Wayne van der Rheede, SACTWU 
Deputy General Secretary,   on 021 4474570 or 082 8007143 

  

Comments from The ReDress Consultancy

There is a subtlety in AMSA’s statement that they wish to boycott this year’s wage negotiations because of the high number of non-compliant companies in the sector. They are exerting pressure on the union and bargaining council to shut-down the non-compliant factories at the end of the month. Indirectly they are saying, close these companies down, eradicate the competition and then we will come to the table.

At the meeting with the union, bargaining council and AMSA, the UCTA proposed an alternative model-the three tier approach. It will be interesting to see if AMSA supports this proposal.

SACTWU says that the union’s NEC had re-endorsed the compliance phase-in agreement in November; however, the industry was only informed of this agreement on the 22 December 2010.

In its letter to Mr Baard (AMSA) they admit that the situation in regard to non-compliant companies has a long history. This reinforces my thesis that very little if nothing has been done in a collective environment to address the issue.

The union claims in the same latter that AMSA affiliates have “instigat[ed] non-compliance.”  Who are these affiliates?

I do agree with the union that support measures are accessible only to compliant-companies placing them in an advantageous position.

The union claims that meetings have been convened in KZN, where non-compliant companies have been urged not to comply with the phase-in agreement. Again, we require evidence.  Every individual company owner has the final decision to comply or not. There has been no subversive measures taken to force companies not to comply with the agreement.

The union cries foul when industry approaches the media. Every organization has the right to engage with the media. This is of national concern.  The union has no right to try and gag industry bodies.  The union, themselves, has and continues to use various media platforms to promote and advocate their stance. Not once has any industry body asked them to stop engaging with the media.  

The union continues to circumnavigate around the issue of non-compliance by camouflaging the proposed new wage model put forward last year as a model for “slave wages.” This is not the case. However, the union themselves have not developed alternative model.

AMSA has been criticized by UCTA, and even Newcastle representatives for double standards.  However, UCTA acknowledges the fact that AMSA has publicly stated on numerous occasions that they are weary of the sustainability of the phase-in agreement.

No one wants confrontation. On the contrary, I believe both AMSA and UCTA wish for open, honest discussions that will find a favorable solution to the current crisis the industry faces.

 It is my interpretation that the action taken by AMSA is because they are concerned about the consequential economic and political results if the union and bargaining council seek to shut down hundreds of factories across South Africa. Furthermore, I believe that AMSA has had time to reflect on the situation and on the sudden appearance of UCTA and its strength within the industry and is trying to send the union a duel message. (1) level the playing fields by closing down the factories and let’s see what the consequences are (2) engage with UCTA at executive level and allow them fair representation.

South African clothing industry faces a disaster

Bargaining council cracks down on clothing industry

March 24 2011 at 06:02am 
By Samantha Enslin-Payne

---

The National Bargaining Council for the Clothing Manufacturing Industry this week attached assets at Alex Liu’s Newcastle factory as part of an order against 11 other companies for refusing to register with the council.

Leon Deetlefs, the national compliance manager at the bargaining council, said the main reason for the action related to the refusal of these companies to register with the council, but they also owed levies and back pay claims.

Deetlefs could not say how much these companies owed.

The attaching of assets comes after 53 companies were asked in January to register with the council.

Liu is the chairman of the Newcastle Chinese Chamber of Commerce, which previously threatened to relocate factories to Lesotho or Swaziland if forced to comply with the minimum wage. His business Simunye Co-op employs 120 permanent and 40 casual workers.

Liu yesterday questioned the timing of the action, saying the bargaining council knew he would be at a meeting with the council in Cape Town.

Deetlefs said the action was not specifically targeting Liu. The sheriff had attached assets two weeks ago at companies in Free State, Durban, Ladysmith and Newcastle. The order against Liu’s business would also have been executed then, but he had moved his factory.

“Alex has been giving us the runaround,” Deetlefs said, adding that it took two weeks to find Liu’s new premises.

Deetlefs said it did not automatically follow that by attaching assets these companies would close down.

Meanwhile, clothing manufacturers yesterday met informally with the Southern African Clothing and Textile Workers Union and the bargaining council to request an extension to the phasing in of minimum wages.

But Renato Palmi of the Redress Consultancy, which is advising the United Clothing and Textiles Association (UCTA), said the bargaining council took a “very hard stance” and would implement the writs of execution by the end of March.

A moratorium on proceeding with the writs of execution against companies that were not compliant with the minimum wage was lifted in December after the council decided that companies would have until April 2012 to comply.

In terms of the plan, non-compliant companies must be at least 70 percent compliant with all prescribed minimum wages by the end of this month, 90 percent compliant by January next year and fully compliant by the end of April 2012.

Palmi said the aim of yesterday’s meeting was to try to stall the implementation of the minimum wage phase in plan. UCTA would now consider legal action, which could include applying for an interdict at the labour court or applying to the council for an exemption in paying the minimum wage.

In terms of council regulations, an exemption is available to companies in financial hardship. Palmi said that a number of members had tried this route, but the applications were declined without transparent reasons given.

Deetlefs said the council was not prepared to give further moratoriums.

It has been reported that the council has writs of execution against 385 companies for failing to pay minimum wages. Based on an audit done in September 2009, R40 million is owed in arrear wages. - 

Business Report