From the Chief Executive Officer's desk - March 2015
At the same session, we also looked at the likely political situation in the country over the next 18 months and received briefings from labour analyst John Brand and futurist and scenario planner Clem Sunter respectively on the future of collective bargaining and on international and national labour scenarios. We arranged this session in order to expose our members and those interested in the sector to different views on likely developments over the next 18 months.
On the political front, we can sum the situation up in one sentence: the road ahead will be very bumpy, characterized by more pronounced political and racial divisions, continuing ruptures within the ANC-led tripartite alliance and more violent protests in a number of townships across the country. The business community will find itself under inordinate pressure to be part of the “radical transformation” agenda and to partner with the Government in addressing socio-economic challenges on the ground.
Like most South Africans, one found the spectacle that unfolded in Parliament on 12 February on the occasion of the State of the Nation Address unedifying and most embarrassing. Unfortunately, however, we are likely to see more drama of that nature in the two Houses of Parliament and in different Legislatures across the country.
As the Economic Freedom Fighters (EFF) continue to challenge the governing party and take the fight to it and President Jacob Zuma, tempers will soar and a possibility exists that the situation may even deteriorate to a level where violence occurs both inside and outside our hallowed legislative chambers.
The truth is that the ANC, which the President has said will rule “until Jesus Christ comes back”, is unaccustomed to being challenged. Until last year it was able to do very much as it pleased in Parliament and in the eight provincial Legislatures that it controls, secure in the knowledge that it had a big majority which made it possible for it simply to ignore the opposition. That is no longer the case, thanks to the presence in our legislatures of the confrontational and ultra-vocal EFF whose leaders honed their skills while they were still part of the ANC.
There is a good chance that, in the end, the EFF will conduct itself within the established Parliamentary rules, but there is no doubt at all that its style will continue to be loud, combative and even confrontational, with its primary target being the vulnerable President Zuma. As a result, the Democratic Alliance will have no choice but to be confrontational itself, strictly within the rules of our various legislatures, if only to avoid being out-manoeuvred and out-performed by the smaller EFF.
This means that the governing ANC will be watched like a hawk and its leaders – starting with the President – fully held to account, as all governing parties should be. Given the fact that the ANC is not accustomed to being accountable to the opposition, the situation is certain to upset and frustrate the organisation and verbal insults are likely to be flung to and from across our legislative chambers. The National Assembly, the National Council of Provinces and the Provincial Legislatures are set to be livelier and more interesting for the disinterested observer as they finally perform the task that they are meant to perform, much to the annoyance of the ANC and its allies.
Of necessity, the situation will require a higher degree of skill, better temperament and even more political maturity on the part of the Presiding Officers if proceedings are to be reasonably smooth. Regrettably, judging by developments in the National Assembly last year and in the past two weeks and in the Gauteng Legislature last year, these qualities would appear to be sorely lacking on the part our Presiding Officers, who are woefully wanting when it comes to fairness or even-handedness. The situation, then, appears ripe for on-going conflict.
With the local government elections scheduled to take place next year, the situation will get even worse since parties in Parliament and in our various legislatures will do everything with an eye on the 2016 elections. They will each be putting a show for the electorate, hoping that their radical rhetoric will win them votes among the progressively disillusioned poor in the country’s townships.
The fact is that the ANC has never been more vulnerable than it is at the moment. Indeed, in some cities it appears ready for the taking. In addition to widespread corruption and internal fights, by far its biggest liability is its leader, President Jacob Gedleyihlekisa Zuma. For a variety of reasons, his star has fallen considerably in recent years.
The big prize in the 2016 local government elections will be the Nelson Mandela Bay Municipality in Port Elizabeth, the Tshwane Metropolitan Municipality, the Ekurhuleni Metropolitan Municipality and the Johannesburg Metropolitan Municipality, anyone of which may fall to the opposition and be governed through a coalition. The ANC in Gauteng is alive to this possibility, hence its growing outspokenness on the urban tolling issue which is nothing short of an albatross around the ANC’s neck.
In summary, then, politically 2015 and 2016 will be very unstable years during which our racial and political divisions will be accentuated. Instead of leadership that will keep us all within one big tent, leaders of the different political parties will see us torn asunder and pulled in different directions, all in pursuit of their respective parties’ interests rather than the interests of South Africa Incorporated. As I said earlier, their eyes will be firmly on the 2016 local government elections.
Needless to say, this will not ingratiate us with the foreign investment community. We are most unlikely, therefore, to see the trickle of foreign investment become a flood.
How should the business community respond? There are those, like the Afrikaner Handels Institut, who take the view that the business community should enter the fray and take the Government head on. Personally, I do not share that view. I think that it has the potential to worsen rather than to heal the divisions that already exist between the Government and the business community.
Instead, I think that the business community should, indeed, speak out, but not on public platforms as if to shame the governing party. In my view, business should be better organised and engage actively with the Government, behind closed doors, in order to lobby for a business-friendly dispensation.
We need to make the Government realise that, without a thriving business community, South Africa cannot realise its full potential, let alone prosper. We need to offer our services or assistance to the Government – locally, provincially and nationally – as partners who want what is good for South Africa, and not as opponents or enemies advancing an agenda not dissimilar to that advanced by political opponents.
Finally, the business community needs to understand the growing impatience on the part of the poor, the vast majority of whom remain black, and enthusiastically embrace and implement transformation. That is fundamentally in the country’s interests and in business’s own long-term interests. Failure to do so will make business a wonderful scapegoat for the Government’s inability radically to change the lives of the poor majority.
From The Chief Executives Desk December January
Having registered a growth rate of 1,9% in our Gross Domestic Product in 2013, in the first quarter of 2014 our economy shrunk by 0,6%. It was that shrinkage, among other factors, that triggered our first downgrading by Fitch and Standard and Poor’s to just a notch above junk status, and Moody’s followed with a downgrading of its own at the end of the third quarter of the year.
As we approach the end of the year, our country is not in a good space. The economy is woefully underperforming, the crime rate remains doggedly high, unemployment is on the rise, our borders continue to be porous and political schisms continue to widen. There is very little that inspires confidence.
Where once the relationship between business and labour was reasonably healthy, the same cannot be said now as we approach the end of the 2014. Instead, there is a great deal of radicalism on the part of labour, with some trade unions short-sightedly returning to their ideological dogmas and adopting a political and patently anti-business posture.
Here matters are not helped by the fact that many among the poor continue to be on the periphery of our economy and that many in business have yet to embrace transformation fully and realise its benefits. As a result, two dominant camps have emerged: one made up of unions whose primary concern is the welfare of their employed members, and business that largely continues to be vulnerable to legitimate criticism about its lacklustre commitment to transformation.
Then, completing that triangle, is a bloated government which has not showered itself in glory and has fallen far short of earning the confidence not only of the two other social partners, business and labour, but also that of the general population. This is a government that has made some of the most shocking appointments into key positions in the civil service and at some of our State-owned companies, where allegiance to the ruling party or some factions of it appears to have been the ultimate determining factor. This is a government that, instead of going out there to bat for South Africa, has had to keep looking over its shoulders to see if its allies with their different agendas and ideologies were in tow. This is a government that, despite its oft-repeated denunciations of corruption, has convinced nobody that it is, indeed, serious about tackling that scourge and eventually eradicating it from our society.
While the ruling party continues to hold onto its allies with their conflicting interests and ideologies, generally it has failed to forge as strong a partnership with the business community, whose cooperation is critical in job creation and growing the economy. While some Government Ministers, such as Dr Rob Davies at Trade and Industry, can be commended for their accessibility to business and their determination to do what is right for the country, but especially the manufacturing sector, the same cannot be said about some of their colleagues. There have even been times when business appeared to be considered either the enemy or the leper.
Such an attitude can hardly be in the country’s best interest. As one has had occasion to state repeatedly in this column, South Africa cannot realise its full economic potential without the Government, business and labour working cooperatively together as partners. Here one is talking about a real partnership among these three stakeholders, a mature partnership that enables the respective stakeholders to sit down together to have robust discussions, as opposed to the charade that currently takes place within NEDLAC, where the three stakeholder groups get together to read prepared speeches that re-state their respective positions.
In many ways, the five-month-long strike in the platinum sector in the current year was a major turning point in our labour relations dispensation. Not only was it very violent and bequeathed to us the terrible tragedy of “the Marikana massacre”, as that unfortunate incident has now come to be known, but it also created a precedent where long strikes accompanied by violence are seen to yield the desired results by those involved in them. That is why AMCU’s Josephy Mathunjwa is considered something of a legend among some workers.
In addition to a political agenda driven by the majority union in our sector, that strike in the platinum sector and the manner of its conclusion was very much a factor in the negotiations that we went through in the metals and engineering sector this year. Again we bore witness to a violent, month-long strike whose conclusion was not too different from the way that the platinum sector ended.
As we end the year, even our hallowed Parliament has become a joke, with the National Assembly Speaker unable to preside over the institution with a sense of fairness and dignity and to maintain order. As opposition parties finally make their presence felt, in their role to hold the Executive and the ruling party to account, the National Assembly has seen chaos descend upon it and the riot police summoned to enforce the Speaker’s egregious rulings.
So, as we get ready to bid 2014 farewell, we cannot but conclude that it was an annus horribilis for our country. During his Mid-Term Budget Policy Statement, Finance Minister Nhlanhla Nene revised the year’s GDP down to 1,4% - and it remains to be seen if we will accomplish even that level of growth. We can only hope that 2015 will be a much better year.
But, will it? We can’t say with any certainty. What we do know is that we will still have on the scene the same players who got us into this situation in the first place, which means that the chances of us doing better are slim – if not very slim.
With local government elections due to take place in 2016, regrettably we are likely to see more of the same, with the ruling party closing ranks and seeking to shut out any opposing voice that seeks to make itself heard. With the impending launch of the NUMSA-inspired United Front and the entry of a new union into the metals and engineering sector, in opposition to NUMSA, we are likely to see more energy expended on more political one-upmanship and to experience even more instability on the shop floor.
For now, I guess, we can all rejoice at the fact that we have made it to the end of 2014. Do yourselves a favour and be safe on the country’s roads and have a good rest during the festive season, and return to work in January well rested and ready for the new challenges.
Please remember to enter your company for the SEIFSA Awards for Excellence and to register for the Southern African Metals and Engineering Indaba.
Merry Christmas and Happy New Year to you all.
Kaizer M. Nyatsumba
Chief Executive Officer
From the Chief Executive Officer's desk - October 2014
This is so despite the fact that, as already indicated above, manufacturing has since fallen on very hard times in South Africa, even though a cursory glance can be very deceiving. According to the South African Reserve Bank, manufacturing is 29% larger today than 10 years ago, 66% larger than 20 years ago and 71% larger than 30 years ago.
However – and this is the all-important point – manufacturing’s share of the economy declined first from 20% in 1983 to 19% in 1993, and then further still to 18% in 2003 and eventually to 16 % in 2013. So, over a period of four decades, manufacturing’s share of the economy declined from an impressive 20% right at the height of apartheid South Africa’s isolation from the international community through to 16 percent at the end of our second decade of democracy.
Surely something must be terribly wrong with this picture. Yes, global tourism and the hospitality sector as well as the international capital markets are now bigger contributors to our Gross Domestic Product (GDP) than was the case in the midst of punitive international economic sanctions against Pretoria, but they alone do not explain the considerable decline of manufacturing’s contribution to our GDP.
For some reason, it is as if South Africa, as a country, simply turned its back on manufacturing and decided, instead, on importing most of its products and intermediary goods that used to be manufactured here at home. Just as the Government’s policy of complete or near-complete transparency to international competition until now has not helped matters, so, too, has South Africa’s hard-line labour relations regime that has been characterised by conflict and growing aggression on the part of labour. Sadly, as a result, we lag behind in a number of areas when it comes to international competitiveness.
Economists and operations executives tell us that many factors determine the health of manufacturing. High capacity utilisation due to strong domestic and/or export demand leads to higher profit margins and higher levels of fixed investment in the sector. In South Africa, manufacturing exports represent an estimated 35% of production, while imports have captured nearly 45% of the domestic market. On the other hand, the metals and engineering sector exports 60% of its products and competes with imports for 60% of the domestic market.
Reintegration into the global economy has huge benefits due to access to bigger markets, but can develop into a mortal battle for survival between competitors and importers. Higher imports replacing domestic suppliers lead to lower capacity utilisation, lower profit margins and, eventually, lower domestic investment in the sector.
However, the investment patterns within the sector and the size of production capacity show very worrying signs. The value of capital stock in manufacturing relative to output has been declining since the early 1990s. Annual fixed investment, as a percentage of output, has declined by about a third over the last two decades when compared to the 1980s. These patterns are much more profound in the metals and engineering industries where fixed investment relative to output has declined by two thirds of the levels where they were at the beginning of the 1990s.
The key factor is global competitiveness. Without a sufficient and secure supply of energy – and, in this case, electricity – it is not possible for South Africa to be globally competitive. As we all know, electricity supply in the country reached its lowest levels between 2000 and 2008. When investment patterns in manufacturing and metals and engineering are overlaid on electricity supply, the inconsistency of supply and the cost of energy trends, one cannot but conclude that investment is held back by this constraint.
Instead, South African manufacturers are importing more and more components for assembly here due to cost advantages and security of supply which their own domestic investments cannot guarantee. The physical value of production capacity in both manufacturing and metals and engineering reached its lowest points after the year 2000.
We at SEIFSA are gravely concerned about this situation. In fact, so concerned are we that we have decided to introduce two vital initiatives in the current financial year. In an effort to stimulate manufacturing, we will launch an annual, two-day Southern African Metals and Engineering Conference to take place in Johannesburg each year, and we will also introduce annual SEIFSA Awards to celebrate excellence in manufacturing.
The mining sector has the annual Mining Indaba, which has become synonymous with Cape Town and is attended by all players in the mining sector and the relevant Government stakeholders from different parts of the world, but especially the African continent. The metals and engineering sector, which is a vital supplier to the mining, auto and construction industries, has no such international conference of its own.
We are about to correct that terrible omission. Our inaugural Southern African Metals and Engineering Conference, organised and brought to you by SEIFSA, will take place on 28-29 May 2015 in Johannesburg. It will bring together experienced business leaders and executives, enterpreneurs, policy makers and investors in a major conference that will become a major feature on the calendar of the steel and engineering sector in the Southern African Development Community.
Invitations to speakers, sponsors and exhibitors will soon be going out, so don’t miss out on this wonderful opportunity. Among the key focus areas of next year’s inaugural conference will be an update on and concrete plans related to the Government’s ambitious National Development Plan. Interested attendants, speakers, sponsors and exhibitors should make contact with our Marketing and Communications Executive, Adelia Pimentel, while there is still space.
Government Departments like Trade and Industry, Economic Development and even Small Business Development are hereby encouraged to partner with SEIFSA at their very earliest convenience.
The Southern African Metals and Engineering Conference is one of three vital innovations that began with the current CEO’s tenure in November 2013. First we extended the Federation’s reach beyond our borders to Southern Africa and profiled it in the March issue of Financial Mail. Now, in addition to the aforementioned Southern African Metals and Engineering Conference, we are also introducing annual SEIFSA Awards.
Intended to encourage manufacturing and to foster a culture of innovation and excellence, the Awards are open to all metals and engineering manufacturers and will be offered in the following categories:
Most Innovative Company of the Year
Criterion: To be awarded to a company that has shown the best level of innovation in Research and Development or Production, in the process either gaining market advantage or reducing production costs
Health & Safety Award of the Year
Criteria: To be awarded to a company with the best legal compliance record when it comes to Health and Safety or the lowest Lost Time Injury Frequency Rate (LTIFR)
Best Corporate Social Responsibility Programme of the Year
Criterion: To be awarded to a company with a CSI project that makes the biggest impact on the lives of its beneficiaries
Customer Service Award of the Year
Criterion: To be awarded to a company with the best/highest rating by its customers for its performance in customer service
Most transformed company of the Year (X2)
Criterion: To be awarded to the most transformed company in terms of the composition of its Board of Directors, Executive Management and Managerial Team: one category will pit companies employing fewer than 100 people against one another, and the second category will pit companies employing more than 100 companies against one another
Decade of the Artisan Award
Criterion: To be awarded to a company with the highest number of artisans trained each year (for itself and/or the industry)
CEO Awards
- Gold Awards – 50-60 years membership and in good standing
- Platinum Awards – 70-plus years membership and in good standing
Potential sponsors, among whom we hope will be the Departments of Basic Education, Higher Education, Science and Technology and MerSeta, are again invited to contact Adelia Pimentel (Adelia@seifsa.co.za) as a matter of extreme urgency.
Finally, from 2015 the annual SEIFSA Golf Day, which takes place in August each year, will be open to all sponsors, and not only SEIFSA members (as has been the case so far) or only to companies in the metals and engineering sector. Here, too, the message is clear: go big, or go home. Sponsors, first come, first served.
Details on all these events will carried in SEIFSA News and the mainstream media over the next few weeks and months.
Kaizer M. Nyatsumba
Chief Executive Officer
From the Chief Executive Officer's desk - September 2014
It is important that we understand why economic transformation features so prominently in the Government’s plans, what is intended by it and how business – but especially the metals and engineering sector – stands to be affected by it. Failure to understand the strategic importance of this matter and the urgency with which it is approached would leave our sector ill prepared for the changes that certainly lie ahead.
For understandable reasons, political freedom was prioritized above all else both in the run-up to and after our founding democratic elections of 27 April 1994. Given our ignoble history and background, it made sense for our political leaders to focus all their energies on securing political freedom and equality for all, with the black majority whose rights had previously been trampled upon with impunity over the years suddenly enjoying the same rights as fellow citizens.
Again, for understandable reasons, a great deal of emphasis was placed on ensuring that a common national identity is forged from the different racial and ethnic groups that had previously been described by officialdom at the time as different nations within one country. It was in that context that our founding father, President Nelson Mandela, and the irrepressible Archbishop Desmond Tutu repeatedly preached the gospel of A Rainbow Nation.
As a country, we reaped the rewards of the sterling leadership that had been provided primarily by former president FW de Klerk and Mr Mandela, and we basked in international glory and welcomed the praise and ringing endorsement of the civilised world. We had done very well, thanks to the wise leadership that we had at the time. We had managed to eschew a political Armageddon that many had considered an inevitability.
On the sporting front we hosted the Rugby World Cup, followed by the Cricket World Cup and the FIFA World Cup, while on the political front we hosted many important international events, among them meetings of Heads of States who had previously been at the forefront of calls for sanctions against apartheid South Africa.
Despite the numerous challenges that continue to stare us in the face, men and women of goodwill will accept readily that South Africa has made considerable strides in the first 20 years of its democracy. We are certainly not the country that we were in the mid-1980s and early 1990s, which was considered a leper among civilised nations.
Sadly, however, a different picture emerges when we take a look at the state of our economy. Not only have we seriously under-performed in this area in our first two decades of democracy (especially in the past decade), but, more worryingly, the vast majority of the formally politically excluded remain on the periphery of the economy, with most of them continuing to be mired in poverty. Indeed, many of them are worse off now than they were in 1994.
Admittedly, that is a reflection on our Government, which could have done much more for the poor than it has so far. Where the educated have taken up opportunities that were previously unavailable to them and benefitted from the new dispensation, regrettably the rate of economic change has been relatively slow. This is the case not only when it comes to general business ownership patterns, but also with regards to occupation of senior leadership positions in the private sector.
While there are commendable exceptions, by and large the majority of private-sector executive appointments announced in the media each week continue to be those of white males. Admittedly, some sectors of the economy are more transformed than others, with our own metals and engineering industries being among the poorest performers. During its meeting on 27 August, the Parliamentary Portfolio Committee on Trade and Industry expressed grave concern about the state of transformation in our sector.
We at SEIFSA would not be doing our job properly if we failed to sensitise the industry to the need to embrace change and advocate transformation. If we failed to do so, we would not be preparing our members for the inordinate pressure under which they are certain to come in the months and years ahead.
There are three reasons for this agenda of “radical transformation”. The first one is the growing disillusionment of the poor, some of whom have participated in various violent protests across the country, with their anger directed at the different tiers of government. As their disillusionment grew, they have either abstained from voting or voted for the growing number of opposition parties, at the expense of the ruling party. It follows logically that the ruling party would want to advance economic transformation in order to placate its members and stem the flow of support to the opposition.
Secondly, parties to the left of the ruling ANC, most notably the Economic Freedom Fighters, have taken maximum advantage of the disillusionment on the ground, painted the ruling party as a weakling that has sold out and propagated radical economic agendas which include nationalisation without compensation. In such a situation, the ANC had no choice but to come up with a radical economic agenda of its own.
Thirdly, it cannot possibly be right or in the interest of South Africa that, more than 20 years into our democracy, our economy continues to be skewed predominantly in favour of our previously privileged compatriots. Such a situation can only fuel growing resentment and aggravate racial tensions.
It is very important, therefore, that companies within the metals and engineering sector appreciate the fact that economic transformation will be one of the Government’s priorities over the next five years. In particular, there will be an emphasis placed on the need for transformation when it comes to business ownership, in addition to the other areas of the Broad-Based Black Economic Empowerment.
Failure to embrace and implement transformation at the work place will not only have legal and financial implications, but it will also negatively affect companies’ ability to compete for public-sector business. The latter point would mean that these companies would not be able to take advantage of opportunities that will arise as part of the ambitious infrastructure development programme envisaged in the National Development Plan.
SEIFSA stands ready to assist companies to embrace transformation in order to place themselves in a position where they can comply with the new BBBEE legislation and be in a position to compete for business from Government and State-owned companies. Our Transformation Specialist has all the experience necessary to help companies to comply with the country’s laws, and we are in the process of exploring the setting up an Enterprise Development Fund that would facilitate black shareholding in companies that are interested in bringing black shareholders on board.
Our Commercial Manager and the Transformation Specialist, who are an important part of our Economics and Commercial Division, stand ready to work with companies that need their services.
Kaizer M. Nyatsumba
Chief Executive Officer
From the Chief Executive Officer's desk - August 2014
With this issue of SEIFSA News dedicated to the negotiations and the agreement eventually reached after a four-week strike, it is important that we seize the moment to reflect on the process and the outcome.
For the very first time in the Federation’s history, SEIFSA entered the 2014 negotiations with demands of its own, which were mandated by our Associations. Among those demands was a need for all parties to conclude a Peace Accord right at the beginning of the negotiations. That, for us, was a very firm condition, and our firm mandate was not to discuss any substantive matters until all parties had signed a Peace Accord. Early on in the process, following a Labour Court judgement on a demand at one of our member companies by one of the unions for a housing allowance, we added the need for Section 37 to be tightened up to make explicit the fact that all matters related to the cost of employment would be dealt with in national negotiations within the MEIBC.
Clearly, the unions were taken by surprise by our demands, which they interpreted to indicate aggression on our part. Except for Solidarity, they refused bluntly to discuss a Peace Accord, Strike and Picketing Rules with us, saying that it was only when they were preparing to “go to war” that they would discuss these matters. When it became clear that they were not prepared to budge, the Council relaxed the demand and authorized us to proceed to dealing with substantive matters, while stressing that a Peace Accord remained a key demand for us. That was the first major concession that we made on an important point of principle.
We took our time to table our wage offer, and did so when we realised that we were getting close to the middle of the negotiations. On a day when Statistics South Africa announced that Consumer Price Inflation was 6,1%, we opened with a credible 6,1%. To our surprise, the unions, the majority of whom had stated their opening wage demand to be 15%, consolidated their position on the 20% that had been demanded by two small unions – and remained there for a long time.
As we realized that we were running out of time, we made an offer that we believed would be as close as possible to our settlement figure. We adjusted our offer to 8% for 2014, CPI plus 1 for 2015 and CPI plus 1 for 2015. Before tabling that offer on 20 June, on the eve of a declaration of a dispute, one tried valiantly to appeal to the unions, asking them to be mindful of the parlous state of our economy. This is what one said then:
Our economy is seriously under-performing, and we have a flood of cheap imports to contend with not only in the metals and engineering industries, but generally throughout the manufacturing sector. All these factors tell us one thing: that increasingly jobs in South Africa are becoming an endangered species. They tell us further that even more companies in our economy – including in our sector – will find themselves confronted with the sad reality of having to downsize or be liquidated as they fail to compete, given their high fixed costs.
It makes absolutely no sense, I submit humbly, Ladies and Gentlemen, to get a hefty salary increase today and to be retrenched two months later. Instead, it is far more prudent to accept a realistic salary increase that acknowledges your worth and the contribution that you make to a business’s performance and to continue indefinitely to be employed. That is the context within which the offer that we are about to make should be viewed.
As important Partners, we have an opportunity to strike a delicate balance between allowing the companies for which we work to continue to survive and ensuring that those who work for these companies are valued and compensated appropriately. Were we to adopt a narrow, selfish approach, it cannot later be said that we did not know the potential harmful consequences of our actions. We cannot cite ignorance as the reason for any myopic decision that we may take either individually or as Partners. That defence will simply not be available to us – not now, and not years later when future generations ask us why it is that the important metals and engineering industries have progressively shrunk in South Africa. ……………………………………………………………………………………………
I plead with our Labour Partners to accept this reasonable offer. I plead that we work together to preserve jobs and to grow the metals and engineering sector in South Africa.
Let us give those companies that continue to operate in the metals and engineering sector an opportunity to survive and fight another day in this ultra-competitive, low-margin environment. Let us preserve our cherished jobs. Let us give our economy a fighting chance.
Regrettably, that plea fell on deaf ears. Instead, there was a single-minded determination on the part of the unions to get what they wanted on wages and other matters. Eventually, when they finally moved, they came back to the 15% that was the original demand of four of them. Following the declaration of a dispute, they moved again to 12% - and remained there until weeks into the strike. In addition, they – or some of them – remained implacably opposed to accommodating our concerns regarding Section 37.
We are relieved that an agreement brokered by the Minister of Labour and her team was eventually reached and the strike was called off. However, one is left with very disturbing observations.
By far the most over-arching such impression is that negotiations between employers and labour in South Africa are terribly flawed. In fact, they are negotiations by name only and are, in reality, an occasion for labour to make near-immutable demands and wait for employers gradually to accede to them. That attests to the considerable power that organised labour has in the country and the adversarial nature of relations between business and labour.
There may well be reasons for this attitude, with our ignoble past and the painfully-slow pace of transformation in the metals and engineering sector perhaps some of those reasons, but it is hardly a recipe a success. South Africa will not realize its economic potential for as long as that adversarial relationship exists between business and labour. One cannot but echo the call made by others in recent months that South Africa desperately needs an Economic CODESA not dissimilar to the political one that we had during the difficult transition from apartheid to our democracy. When that Indaba takes place, the Government would have to be an important third participant, along with organised business and labour.
Until then, given the unfortunate nature of negotiations, we must hope that it will be possible for us to engage more meaningfully with the unions on important industry matters – including on the many issues referred to the Forum in the course of the negotiations - in the Industry Policy Forum (IPF). It is vitally important that the IPF starts working on those matters as soon as possible.
Hopefully, in that non-adversarial atmosphere, it will be possible for us to discuss and make progress on issues of importance for the long-term sustainability of our industries.
It is deeply regrettable that, yet again, violence was used during the strike as a lever to extract the desired concessions from business. It is a great pity that, almost inevitably, strikes in South Africa are accompanied by violence against companies or those who want to continue to work – and the union leadership can always be counted upon routinely to deny their members’ involvement and to mouth platitudes to the effect that they do not condone violence.
In this regard, we can do no more than strengthen relations between ourselves and the police at all levels and, more importantly, we will have to play our part by laying charges and making ourselves available to be witnesses during the trials that follow.
In the long term, we will have to work to help unions to understand how the economy works and how vulnerable South Africa is to international competition. Regrettably, however, our chances of success in this regard are very slim because most of the unions are driven by ideologies opposed to market enterprise, which explains why their leaders routinely describe employers pejoratively as “capitalist exploiters”.
Yes, the figures on which we eventually settled for the next three years (which came from the Ministerial Settlement Proposal) are high. Unfortunately, the settlement reached in the platinum sector, after the five-month-long strike, was a factor: not only did the National Union of Metalworkers of South Africa want to flex its muscles vis-à-vis the ruling party and those unions within COSATU who are at odds with it, but it also wanted to demonstrate to AMCU that it, too, was radical and capable of leading a longish strike.
Although the 10% increases for low-level employees for the next three years are high and, like the settlement in the platinum mining sector, are likely to set a bad precedent for other sectors, the unfortunate fact remains that we were not negotiating with ourselves or with those who think like us. It is unfortunate, but true, that we have to accept our interlocutors for who and what they are, and cannot fashion them into versions of ourselves.
August is a very important month for women in South Africa, which sees them recognized and appreciated for who and what they are and their immense contribution to the country’s development.
It is against this backdrop that we have dedicated part of the August issue of SEIFSA NEWS to honouring women who make great strides and enormous contributions to our industry and the South African economy as a whole. You can read about these extraordinary women from page…to page…of this edition.
The manufacturing industry in general, and the metals and engineering sector in particular, is in dire need of female leaders. We need to continue to achieve a critical mass of female leaders to transform and take our industry to new heights.
I am delighted to join millions of other South Africans in wishing our female compatriots Happy Women’s Day on 9 August and a very happy women’s month.