The Main Agreement guarantees certainty, stability and peace

In an uncertain economic environment such as ours, businesses often strive to ensure that they maintain stability in as many aspects of their operations as possible. This time last year, employers and labour unions were in the thick of negotiations doing their utmost to construct a deal that would find favour with each-others respective constituencies. Regrettable we were unable to avoid a bruising strike but eventually we signed a three-year wage deal which laid the foundation for a settlement agreement widely known as the Main Agreement.

The Main Agreement is the only agreement that has been signed-off by and continues to enjoy the support of all the trade unions in the Metal and Engineering Industries Bargaining Council (MEIBC). It is unique in that aside from the eighteen SEIFSA affiliated Employer Organisations and the Consolidated Employers Organisation (an independent Employer Organisation representing 671 employers, employing 14 222 employees) who is also a signatory to the Main Agreement - no other employer organisation has an agreement covering the comprehensive terms and conditions of employment within the sector that is signed-off by all the trade unions.

Whilst critics bemoan, criticise and threaten never ending legal action against the Main Agreement and its signatories, over the last two decades they have failed spectacularly to come up with a better deal - blaming SEIFSA, the unions, the bargaining council, fellow employer organisations, who now apparently have stabbed them in the back and a litany of other feeble excuses for nothing short of their own lack of imagination and foresight.

Collective bargaining in South Africa and particularly in our sector, where we deal with some of the largest unions in the country is no easy feat – it’s tough!

Negotiations in the metals and engineering industry is a terrain for deeply contested ideas, creative thinking and eventually the crafting of unique and unparalleled deals not seen anywhere else in SA. In 2020 SEIFSA concluded a one-year wage freeze or stand-still agreement - a feat that remains unmatched in the South African collective bargaining landscape.

SEIFSA for years has pioneered long term agreements, wage modelling, defending to the hilt the right of labour brokers to practice their chosen profession no different to any other employer in our sector and a host of employer friendly terms and conditions of employment. Concluding deals requires a deep commitment to building respect, trust and relationships not only with one’s own constituency but more importantly with ones negotiating partners. Ultimately, collective bargaining is about relationships not power, possibly a lesson lost on our critics.

Any employer conducting business in the iron, steel, engineering and metallurgical industry, whether or not the employer is a member of an employer organisation, is legally obliged to register with the MEIBC.  However, only employers who are members of an employers’ organisation that is a signatory to the collective agreement may make use of the various terms and conditions of employment contained in the Main Agreement.

Critics point to the wage rates contained in the Main Agreement as the key disadvantage of the agreement, but in doing so, they overlook the certainty, stability and peace that is guarantees.

We acknowledge that the wage rates contained in the Main Agreement particularly for employers who have been operating outside of the scope of the agreement for the last ten plus years are high, at least when compared to the national minimum wage of R 23.19 per hour. Last year’s settlement agreement seeks to address this in three ways, namely:

  1. Providing for a special phase-in dispensation to allow employers to gradually move from the national minimum wage to sixty-percent of the 2019/ 2020 minimum Main Agreement rate (i.e., R 29,73 at Rate H) by 30 June 2024;
  2. Reverting to the practice for all affiliated member companies to award wage increases calculated on minimum rates of pay (i.e., on Rands and cents) as opposed to a percentage increase on actual rates of pay - for last year, this year and next year. This is a significant break in practice that we’ve last seen almost 30 years ago; and
  3. Recognising that companies who elect to be covered by the Main Agreement through the special phase-in dispensation, will be permitted to award the rand and cents increases on what they are actually paying on the shop floor.

Wages, leave pay and leave enhancement pay aside, the Main Agreement offers a number of significant advantages for employers, for example:

  • Simple guideline for the job grading of employees.
  • Many terms and conditions of employment that employers take for granted and observe on a daily basis, such as hours of work, intervals and breaks, overtime rates, shift allowances, payment for working on Sunday and Public Holidays, to name a few, are all located in the Main Agreement.
  • The Main Agreement contains three key provisions not found in either the Basic Conditions of Employment Act or the Labour Relations Act that allow employers to immediately respond to dips in their operating cycle caused by circumstances beyond their immediate control and implement short time, lay-off and/or being entitled to send employees home due to, for example, planned and/ or unplanned outages, load shedding and/or service delivery failures.
  • The Main Agreement contains an important peace clause that protects employers from being approached to engage in plant-level bargaining, any form of industrial action during the currency of an agreement related to terms and conditions of employment and once gazetted this protection is extended to cover any trade union who may not be a signatory to the Main Agreement or registered with the bargaining council but has managed to recruit members on an employers’ shop floor.
  • Over and above the special phase-in dispensation referred to above, the Main Agreement also contains a generic exemptions clause that allows any party employers to apply for exemption from any provision of the Main Agreement.
  • The Main Agreement also contains an alternative working time provision that allows employers and their employees to reach agreement on a variety of alternative working time arrangements, ranging from averaging of working hours, working over week-ends at normal rates of pay, banking hours etc. to the extent that this provision refers to any alternative working time arrangement agreed between workers and management.
  • In such instances, any working time agreement would trump the terms and conditions contained in the Main Agreement, with the employer retaining all the rights and protections contained in the Main Agreement.

Last year’s Settlement Agreement provides a unique opportunity for employers who have in the past opted to go it alone to align themselves with the Main Agreement with little disruption.

In an environment where service delivery is increasingly under strain and we are seeing a proliferation of trade unions across our sector compounded by the latest phenomenon of political parties beginning to venture onto the shop floor – the role of employer organisations to provide professional, mature and expert industrial relations advice and assistance is now, more than ever before, of utmost importance.

The choice for employers is whether the expert assistance that is so vital is done against a legal framework built on compliance, regulation and protection or a framework that will need to be negotiated at individual shop floor level in an environment and atmosphere that is becoming increasingly ladened with tension and anxiety. The Main Agreement provides that foundation and legal framework.

Lucio Trentini is the Chief Executive Officer of the Steel and Engineering Industries Federation of Southern Africa (SEIFSA).


Wage and Wage Related Exemptions and Special Phase-in Dispensation for the period 1 July 2022 - 30 June 2023

APPLYING FOR EXEMPTION FROM THE MAIN AGREEMENT WAGE INCREASES AND SPECIAL PHASE-IN DISPENSATION EFFECTIVE 1 JULY 2022

 Introduction

SEIFSA, on behalf of the 18 affiliated Employer Associations, signed an agreement with all the trade unions in our industry on 21 October 2021 on the terms and conditions of employment for a three-year period ending 30 June 2024.

Exemptions Procedure

 SEIFSA is aware that the current economic environment may pose severe constraints on certain member companies’ ability to implement the increases (see Appendix A) and these members are advised that the industry’s current wage exemption procedure continues to apply.

Furthermore, the parties have taken note that there are many employers who for one or other reason have been operating outside of the terms and conditions of the Main Agreement, particularly when it comes to rates of pay. The parties have agreed that encouraging these employers to come on board in one-step may not be feasible nor practical and will not assist in achieving the end-goal of parity on wages across the sector.

The parties have therefore agreed that in order to reach parity, phase-in will need to be approached in a stepped-phased approach and will form part of a broader project aimed at achieving parity with the Main Agreement in a managed manner over agreed time spans. Phase one of the project will focus on moving employers who may elect to be covered by the Main Agreement and/or have been operating outside of the Main Agreement to achieve 60% of the 2019/2020 Main Agreement minimum wage rates (see Appendix B).

The parties have agreed that 60% of the 2019/2020 Main Agreement minimum wage rates will be fixed for the duration of the 2021/ 2024 Main Agreement. Phase one of the project will end on 30 June 2024. The parties have agreed that during the currency of 2021/2024 Main Agreement the parties will agree on the modalities, goals, time-frames, and objectives informing phase two of the project.

Download the full management Brief on the procedure to apply for a Wage Increase Exemption


Women in STEM: A holistic approach is required to work together as equal contributors.

According to the United Nations Educational, Scientific and Cultural Organization (UNESCO), South Africa is ranked number one in Sub-Saharan Africa as having the highest portion of female STEM (Science, Technology, Engineering, Mathematics) graduates. The narrative has changed, gone are the days where STEM equals men. In the 21st Century and with the Fourth Industrial Revolution (4IR) there are enough seats at the table for everyone.

The issue of whether opportunities exist for women in STEM in South Africa is an easy yes. Nevertheless, there are still a number of obstacles women in STEM in South Africa need to navigate through - both in the classroom and the world of work. Being a woman with close to 10 years’ experience working in a predominately male dominated steel manufacturing industry, I can vouch that woman do indeed face many obstacles.

A recent report by the African Academy of Sciences (AAS) found that the leading elements which attract and influence women to pursue STEM related careers is that they believe these careers fit their capabilities. This confirms that women who pursue STEM careers believe in their capabilities to manage STEM related courses and careers. This is further corroborated by the slow yet steady increase in women pursuing careers in STEM.

There are numerous factors which cause and contribute to these obstacles. The patriarchal perception of STEM related careers, sexual harassment, lack of female representation and role models, limited mentors in the workplace, gender discrimination and inequality in the labour market, hogging of information, lack of expertise transfer, having to go the extra mile to prove one’s self as a woman in STEM etc.

It is generally universally accepted that there is only so much a textbook can teach a person. Dr Bernard Fanaroff, Special Advisor to the Minister of Trade Industry and Competition, argued the same point at the Steel Master Plan (SMP) Conference that took place on the 19 and 20 of May 2022. Dr Fanaroff stressed the difference between skills and expertise, arguing that expertise can only be gained through not only doing the work but also through mentoring and coaching. This is a key problem South Africa needs to focus on across all industries, more so where STEM and woman in STEM careers is concerned, as STEM is critical for South Africa’s economic prosperity.

Credit however needs to be given to strategies and legislation that have been enacted and are aimed at eradicating inequality, such as the Decent Work Agenda where inequality is one of the themes, the National Development Plan in its advocacy for the inclusion of women at all representative levels and the Employment Equity Act which is geared towards promoting equality in the workplace to name a few. The United Nations Population Fund (UNFPA) South Africa is also another promoter of gender equality. In addition, there is also the Commission for Gender Equality and the publication of the Code of Good Practice on the Prevention and Elimination of Harassment in the Workplace which came into effect from March 2022.

Nevertheless, and notwithstanding these worthy initiatives, the question remains - why is there still gross underrepresentation of women in STEM in South Africa?

In the President of the Republic of South Africa’s own admission in one of the State of the Nations Addresses, South Africa still remains a highly unequal society where poverty and prosperity are still defined by elements such as gender. This notwithstanding, South Africa has been successful in putting some measures in place, however, in the absence of implementation, monitoring, individuals championing of same and the right support - we are a long way-off from believing the struggle for woman and woman in STEMS has been won.

I believe more role models of women in STEM are needed to assist, not only for inspiration purposes, but for mentoring, coaching, expertise transfer as well as support.

Support needs to start in the class room and carried over into the world of work. The barrier of accessibility of information regarding STEM careers needs to be addressed and more specifically for girls in rural areas. We also need to see more initiatives to assist the girl-child in both rural and urban areas and a far greater involvement with girls early in their school careers. Access to bursaries and opportunities to be mentored also needs to be significantly expanded.

There should be more emphasis on encouraging and supporting initiatives such as Take a Girl Child to Work and Women in Mining which has greatly assisted in increasing women in the mining sector.

South Africa is in need of a targeted and strategic skill strategy for the success of our economy. This requires a holistic approach, that is for all, irrespective of gender, to work together as equal contributors.

Zizile Lushaba
Human Capital and Skills Development Executive
Steel and Engineering Industries Federation of Southern Africa


Employers must drive implementation of the Steel Master Plan, says SEIFSA

The pivotal role that employers must play in ensuring the objectives of the Steel Master Plan become a reality was highlighted at the Steel and Engineering Federation of Southern Africa’s (SEIFSA’s) Mainstreaming the Steel Master Plan Conference on May 19 and 20.

This is the view of SEIFSA CEO Lucio Trentini, who said that everyone who attended the conference – captains of industry, senior member of government and union leaders must stand together in wanting the Steel Master Plan to succeed, though employers have a particularly important role to play.

Furthermore, as a body representing employers in the steel industry - both upstream and downstream – SEIFSA, through its eighteen Employer Associations, is best positioned to ensure the objectives of the plan are met. Trentini said a lot was riding on the SMP and neither government, business nor labour could expect to do it on their own.

“SEIFSA’s associated employer membership employs the vast majority of employees in the sector and has a long-established track-record of successfully representing the interests of its membership.  Hence, SEIFSA is ideally placed to champion the aspirations of the Steel Master Plan,” said Trentini.

While the conference heard about many of the SMP’s early wins since it was signed in June 2021, stakeholders expressed their impatience with the lack of implementation.

SEIFSA COO Tafadzwa Chibanguza said the discussions about the SMP at the conference have shown the important role industry can play in making public-private partnerships work. The SMP represents a collaborative approach with stakeholders working together in pursuit of agreed end objectives, he said.

Minister of Trade, Industry and Competition Ebrahim Patel also emphasised the importance of partnership. He said that building a sustainable path involved business, labour and government all understanding that for the plan to work, difficult choices and sometimes compromises would need to be made. The focus needed to be on partnership and working together, rather than any party expecting their demands to be met in absolute terms.

Ensuing that more can be done in the months ahead, Patel said his department was committed to reducing red tape in internal processes. SEIFSA has also identified this as an opportunity for collaborative efforts where the private sector can contribute to identifying areas where red tape is unnecessarily hindering progress, especially in areas that may be a blind-spot for the state.

“The Steel Master Plan Conference was a successful two-day event, with participants leaving with a renewed appreciation of the plan and, importantly, the work that needs to be done.” said Trentini.

“In championing the Metals and Engineering Sector recovery and growth, SEIFSA will avail itself to working collaboratively with all like-minded employer bodies,’’ Trentini said.

SEIFSA is working on a comprehensive report of the conference proceedings.


Energy crisis is symptom of policy failure, and only reform will solve it

When analysing South Africa’s energy crisis, it is pointless to rehash how we got to this point. We know that the state ignored the warnings that electricity was running out, that maintenance was not done, that the grid has deteriorated to the point of near collapse, that corruption was allowed to run rampant and so on and so on ad-nauseam. What is needed now is focus on what can be done to finally begin addressing the problem.

The two most glaring issues that the energy supply industry (ESI) faces are the above-inflation-rate increases in electricity tariffs and the ever-present rounds of load-shedding due to the severe lack of capacity. We tend to equate the energy problem with Eskom but when viewing it from the broader ESI perspective and the roles played by the Department of Mineral Resources & Energy (DMRE), the National Energy Regulator of South Africa (Nersa), municipalities and the Independent Power Producers (IPPs), we see that Eskom is just one part of a much wider ecosystem and for things to get better we need more harmony between and among all these moving components.

South Africa has an energy shortfall of 4,000MW, according to the Council for Scientific and Industrial Research (CSIR), and this potentially represents a ready market for the private sector to invest in to the benefit of all.

As Eskom has stated repeatedly, it simply implements the policy set by the DMRE, it is the state, and only the state, that can facilitate the inclusion and participation of the private sector.

There are essentially two solutions to the crisis, which are not either/or options. One is what needs to be done in the immediate short term, the other what needs to be done in the longer term.

The immediate solution would be for the DMRE to put the 4000MW out for bid on Bid Window 7. The department has tended to cap how much capacity can be bid for but suppliers typically bid for more. In the last bid window 9,000MW were bid for – more than double the shortfall - most of it coming from renewable energy providers, however, the department only procured 2,583MW.

The Renewable Independent Power Producer Programme (REIPPP), which the DMRE developed in 2011, was intended to bring additional megawatts onto the grid through private-sector investment in wind, hydro and other sources of energy.

In April the DMRE called for proposals under Bid Window 6, which is looking to secure another 2,600MW of renewable energy (1,600MW of onshore wind and 1,000MW of solar photovoltaic) – approximately half of the 4,000MW shortfall.

The Integrated Resource Plan (IRP), which maps out South Africa’s energy demand and the least cost energy mix to meet that demand, while also charting a roadmap of South Africa’s planned transition from coal to cleaner energy sources as part of the international commitment to reduce greenhouse gases and decrease carbon emissions, has been criticised for being too soft on coal. But there are indications that the government is willing to revise it. Forestry, Fisheries and Environmental Affairs Minister Barbara Creecy told MPs in Parliament in March that Mineral Resources and Energy Minister Gwede Mantashe “has indicated to the climate commission that he is open to receiving presentations on revisions on the IRP, which obviously could be necessary if we are to achieve the lower limit of our nationally determined contribution (NDC)”. Given the rate at which renewable energy prices have dropped since 2011 and with the downward trajectory only anticipated to intensify, a much faster adoption of renewable energy projects has the potential to be environmentally friendly, while also limiting tariff inflation.

The longer-term solution is expediting the unbundling of Eskom to create an independent transmission company that will buy electricity from the market, including from state-owned Eskom and various IPPs, to sell to consumers. This ensures a bigger role for the private sector in the production of electricity, creating a competitive market that can make a real dent in tariff increases as well as increasing capacity, so that load-shedding eventually is phased out.

Eskom will play a smaller but still-relevant role – as one of the providers of electricity for the country, though it will need to improve its efficiency significantly to remain relevant and competitive.

There are five main benefits to this framework:

  • Eskom is not killed off, but still has a role to play.
  • Competition acts as a disciplining force on prices. We all want the cheapest energy, so players will need to keep up to date with new technologies to stay ahead of the pack and win over consumers.
  • Customers can choose the type of energy they want; this is especially good news for companies that can reduce their carbon footprint by using only renewable energy and in turn allow their products to capture premiums on the international market.
  • Companies can limit the penalties they have to pay on their products in certain regions for high-carbon usage. The EU, for example, has announced a carbon adjustment mechanism, where products will carry a penalty for high carbon usage, making them more expensive and therefore less competitive.
  • The end user will benefit through market-determined tariffs and better-quality service.

Neither of these solutions are out of the realm of possibility and both would make big changes to the ESI, South Africa’s battle-scarred economy, our attractiveness to foreign investors and the everyday life of all South Africans.

But the reality is that the energy landscape is very much at the mercy of our elected politicians. It is unacceptable for South Africans to endure the current electricity crisis and ongoing bouts of loadshedding. Government needs to do and be seen to be doing everything in its power to ensure that this crisis, like state capture, becomes a thing of the past.


Important announcement: SMP conference venue change

Due to the Minister of Health extending the government’s coronavirus transitional rules at midnight for a further three-months, we unfortunately have had to find an alternative venue to accommodate the numbers we expect at the Conference.

Seating at the Industrial Development Corporation (IDC) under the status quo is limited to 60 which unfortunately is not suitable. We have been able to confirm an alternative venue, Emperors Palace, Kempton Park which we are confident will be able to accommodate all expected delegates.

In their practical effect, the extension of the transitional rules, means that masking for indoor public spaces and restrictions on indoor gatherings remain unchanged. As before, all gatherings are limited to 50% of normal occupancy and no more than 1,000 people may gather indoors unless proof of vaccination or a coronavirus test result is checked on entry.

We have confirmed with the venue and in anticipation that we will not breach 1,000 delegates neither will be required on registration.

Thank you for your understanding and our apologies for any inconvenience this may have caused.

Nuraan Alli

MSC Executive


SEIFSA delegation meets with Eskom

As part of SEIFSA’s lobbying and advocacy initiatives a delegation from SEIFSA comprising Senior Executives, CEOs and the Office (L Trentini and T Chibanguza, SEIFSA CEO and COO respectively), met with the Group Chief Executive Officer of Eskom, Mr Andre de Ruyter on the 25th of April 2022. In attendance from Eskom were Mr Monde Bala: Group Executive Distribution and Nkosana Ntlekeni: Key Accounts Executive Manager.

The objectives for requesting the meeting towards the end of 2021 had been to open a channel of communication and on-going dialogue with Eskom with a view to identifying strategic initiatives that SEIFSA on behalf of its affiliated membership and Eskom, can work on collaboratively in contributing to resolving the challenges experienced in the energy supply industry (ESI).

To this end, the following agenda points were submitted to Eskom in advance of the meeting in order to guide the discussion:

  • Discussion on Eskom’s long term strategic vision and plans on the following:
  • Maintenance (preventative and unplanned outages);
  • Staff costs; and
  • Cost of electricity (price path).
  • Discussion on Eskom’s long-term plans on accelerating alternative energy sources onto the national grid.
  • Discussion on the feasibility of by-passing municipalities and companies paying their electricity bill direct to Eskom.
  • Ongoing and further collaboration between Eskom and SEIFSA

This brief note highlights some of the key aspects that emerged out of the meeting

  • Eskom outlined the precarious state of the national grid and the origins of the current challenges, which include a lack of historic maintenance and delays to building new generation capacity. While building the Medupi and Kusile power stations, the organisation ran its generation capacity very hard, measured by the energy utilisation factor, while simultaneously neglecting maintenance. This, we were advised, has resulted in the long-term deterioration of the existing generation fleet. In addition, Eskom is struggling with on-going technical build problems at Medupi and Kusile, resulting in a situation where the power stations that were meant to relieve supply shortages cannot be fully relied on as yet, to ease the supply deficit.
  • Maintenance is currently at 12%-13%, much lower than what Eskom would want it to be. However, a careful balance needs to be struck between planned maintenance and supplying electricity to the economy, against the backdrop of the poor state of the national grid.
  • The limitations to resolving the challenges include, a lack of:
  • money: to adequately finance the maintenance program to the extent that it is required;
  • time: a lack of head-room from a generation capacity perspective to remove units from production while at the same time supplying electricity to the economy; and
  • skills: which have been lost over the years constraining the ability for Eskom to resolve the challenges facing the organisation.
  • Persistent and endemic corruption, which continues to plagues the organisation. This in itself was framed as one of the key constraints to resolving the challenges of the organisation.

Outlook

  • Greater private sector investment into electricity generation capacity was identified as a key enabler to resolving the electricity supply challenge. Eskom does not see its future role as being one where it will be the primary source of new large scale generation capacity (its balance sheet simply does not permit this).
  • The unbundling of Eskom with a dedicated transmission company that will act as a system market operator, to facilitate buying and selling of electricity between electricity producers and end customers is seen as a key enabler to bringing on private sector investment. Eskom indicated that it is in the process of setting up the electricity trading platform.
  • It was mentioned that the electricity tariffs that could potentially be achieved through this trading platform could be market determined, which would go a long-way towards controlling the pace and extent of tariff increases into the future.
  • Eskom indicated that these unfolding processes will open business opportunities in the economy. Eskom intends to retire 22 GW of coal fired generation capacity by 2035. This, it was stressed, will presents opportunities to convert this capacity to gas, an important enabler toward a just energy transition. Greater solar and wind capacity will also need to be developed to compensate for retired coal capacity. The metals and engineering sector it was mentioned could set to benefit from these developments, along with other sectors of the economy.
  • Eskom will be embarking on an 8000 km build program to strengthen and grow the transmission network to allow independent power producers access to the grid, would again presents opportunities for the sector and the economy.

Areas of collaboration between Eskom and SEIFSA

  • On the opportunities that are unfolding from the developments in the electricity supply industry, a significant amount of effort needs to be invested in policy formulation on how the country can take full advantage of these opportunities. Localisation, local content, industry development incentives, designation, etc., will need to be explored further to determine decisions that are in the best interest of the sector and the greater economy.
  • Eskom indicated a clear willingness to work with SEIFSA, representing its affiliated membership on these and other matters. This is an important development due to the potential cost implications for Eskom, whilst presenting opportunities to develop nascent industries within the sector and the country.
  • Municipal debt was identified as a massive problem for Eskom (currently growing at R 7.3 billion per annum). Eskom has indicated that organised business organisations should be more involved in aspects relating to municipalities. SEIFSA on behalf of its affiliated membership, Eskom stressed, could play an important role in this regard, given the vast geographical spread of its members across the country’s multiple municipalities.
  • Eskom indicated a willingness to further explore models of direct supply and payment between Eskom and end customers, however, Eskom stressed that any considerations in this regard need to take into account the sustainability of the municipalities. Eskom highlighted that every geographical area of the country is covered by a municipality, and therefore it would be ill-advised to pursue decisions that undermine the sustainability of the municipalities.
  • Grid Access Unit (GAU): Eskom has set up a unit that manages aspects relating to accessing the national electricity grid. Regulated bids, which are facilitated through the Renewable Independent Power Producer Programme (REIPPP), we were advised are now much easier to manage. The challenge faced by the GAU is with unregulated bids, where companies build capacity behind the meter or on a bilateral basis between a customer and IPP. Eskom. Indicated its willingness to work with SEIFSA in consolidating the unregulated bids within the metals and engineering sector.
  • Theft and vandalism of Eskom’s infrastructure was highlighted as amounting to a major problematic area that Eskom continues to dealing with. Eskom suggested that SEIFSA and its membership should consider working with Eskom in the following areas:
  • the development of the specifications of electricity cables to make them less attractive to cable theft; and/or
  • advocating for improving scrap metal regulations to eliminate unscrupulous operators while allowing legitimate businesses to continue to operate.

 

In closing, the president has been emphasising the importance of attracting investment to SA to boost economic growth. The crisis at Eskom can only diminish the confidence of potential external investors in our economy if they cannot be guaranteed a stable and predictable supply of power.

The parting impression gleamed from today’s session is that the Eskom Group CEO and his Team appear to have the determination to continue to do what must be done, no matter how unpopular. This will unfortunately result in more not less rotational power cuts in the short term hopefully resulting in noticeable improvements in the medium term.

What is not in dispute is Eskom’s position within the SA economy, it is so pivotal that it cannot be allowed to collapse. Power stations will be taken down and maintained for longer than has been the case in the past, new renewable energy capacity must be brought on stream quicker and those responsible for corruption must be rooted out.

SEIFSA on behalf of the affiliated membership looks forward to playing its part.


Steel Master Plan needs industry’s commitment to take flight

Almost a year after the launch of the Steel Master Plan (SMP), Scaw Metals CEO Doron Barnes acknowledges the frustration many in the industry feel about the Plan, but he also believes it has the potential to rejuvenate upstream and downstream industries.

Much of the criticism of the plan is a result of a misunderstanding of its role, he said.

The Plan — which was launched on June 11 2021 and signed by representatives of Government, Business and Labour — provides a series of practical steps for the steel and engineering industry to follow in order to reinvigorate itself.

The Steel and Engineering Federation of Southern Africa (SEIFSA) will give everyone a chance to discuss their frustration, praise and ask questions about the Plan at the Mainstreaming the Steel Master Plan Conference on May 19 and 20.

Like Barnes, Macsteel CEO Mike Benfield also has strong views about the Plan. “We need to re-energise it, we need to prioritise and we need to get workstreams going around those priorities,” he says. He is concerned that it will not become a reality without a whole-hearted commitment to a list of prioritised infrastructure projects, specifically in the areas of railports and power.

Barnes, in a recent interview with Creamer Media Engineering News & Mining Weekly, is adamant that industry must take the lead. “It is up to industry to take leadership by dedicating time, energy and resources to make it work, rather than sitting back and moaning about all the problems.”

SEIFSA CEO Lucio Trentini agrees with this, saying: “This industry stands ready to make its contribution to translating the government’s vision of reindustrialising the metals and engineering (M&E) sector, and to start translating visions, promises and policy into action and deliverables.”

“We need government to roll-out its promised infrastructure spend, which is absolutely central to the reigniting of industrial capacity in the sector.”

SEIFSA is eager to see many small business owners at the conference. “We urge SMEs to attend the conference so their important voices can also be heard. It is crucial that they too are well represented at the conference” says Trentini.

Large corporates, SMEs, company executives, public servants and anyone keen to find out more can visit the conference website (https://www.seifsa.co.za/product/steel-master-plan-conference/) for all the details of the Mainstreaming the Steel Master Plan conference.

The conference will play host to senior Department of Trade, Industry and Competition officials, representatives from the Steel Oversight Committee, Business and Labour leaders who will analyse the progress of the plans as well as the commitments that will lay the foundations for the development and growth of the M&E sector in the years ahead.

Minister of Trade, Industry and Competition Ebrahim Patel will deliver the keynote address, after an opening address from Elias Monage, SEIFSA President. Other speakers include Irvin Jim, the General Secretary of National Union of Metalworkers of South Africa (NUMSA), and Marius Croukamp, Deputy General Secretary of Solidarity.

There will also be a series of panel discussions looking at supply-side measures, demand-side measures, transformation, resource mobilisation and the African Continental Free Trade Agreement.

Trentini said: “The big gains will be made by moving our infrastructure programme from shallow waters to deep waters and to get it moving on a bigger scale and then introducing a localisation requirement not only on primary steel, but also downstream steel.”

The Mainstreaming the Steel Master Plan conference will be held on May 19 and 20 at Industrial Development Corporation, Sandton. 

The conference will be organised and hosted by SEIFSA in partnership with the Industrial Development Corporation and the Department of Trade, Industry and Competition.

Book now

 


SEIFSA comments on the draft preferential procurement regulations (2022)

The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) is the principal advocate for companies operating in the metals and engineering sector. SEIFSA as a federation represents 18 employer associations, who collectively represent in excess of 1100 companies. These companies employ 170 000 employees in the sector.

METALS AND ENGINEERING SECTOR FACT AND FIGURES

The metals and engineering sector constitutes 25.6% of the total manufacturing sector. The sector is an integral part of the global and domestic economy and a crucial supplier of inputs into sectors such as mining, the automotive sector, construction and other manufacturing industries.

Sub-Sector % of Manfacturing
Plastic products 2,29
Basic iron and steel products 2,82
Non-ferrous metal products 3,26
Structural metal products 1,98
Other fabricated metal products 3,35
General purpose machinery 3,46
Special purpose machinery 3,87
Household Appliances 0,73
Electrical machinery and apparatus 2,31
Bodies for motor vehicles, trailers and semi-trailers 0,71
Other transport equipment 1,37
Total M & E Sector 26,15

Source: Statistics South Africa

The important facts and figures relating to the metals and engineering sector are contained below:

Dashboard: Comparison of the 2020 to 2021, in the M&E Sector
ECONOMIC VARIABLE 2020 2021
M&E production (% growth) -12,8% 10,7%
M&E production sales (Rand value) R633,6 billion R804,1 billion
M&E capacity utilization (%) 67,1% 76,2%
M&E Employment (number) 361 983 352 625
Total M&E employment share (%) 35,8% 35,9%
M&E Export value (Rand billion) R371, 3 billion R458,8 billion
M&E Import value (Rand billion) R432 billion R531,5 billion
M&E Net trade balance (Rand value) -R60,7 billion -R72,7 billion
M&E Gross earnings (Rand current prices) R104,5 billion **R108,2 billion

 

Source: Statistics South Africa, SARS, MIBFA

The graphs below are the most effective way of communicating the distress experienced in the sector. Production trends have been on a persistent downward trajectory since the 2008/9 global financial crisis from which the sector has never recovered. Naturally, the sector was not spared from the economic disruption of covid-19.

THE IMPORTANT ROLE OF THE STATE

State organs namely general government, state owned entities and the country’s 278 municipalities are key markets to which the metals and engineering sector supplies products. In 2020, state organs procurement amounted to R70.9 billion, or 22.9% of total domestic sales from the sector. Notably, state procurement from the electrical machinery sub-sector accounts for more than half (52%) of domestic sales. The importance of state procurement from the metals and engineering sector has necessitated that SEIFSA prepare this submission in response to the draft Preferential Procurement Regulations (2022) issued by the National Treasury for public comment. Public procurement has the potential to stimulate domestic demand for products from the metals and engineering sector, which will support economic and industrial development. State procurement is an important domestic demand anchor for the sector and contributes to facilitating greater economies of scale, which in turn contributes to competitiveness and export opportunities.

 

The conventional GDP equation (GDP = Consumption + Private-Investment + Government-Investment + (Exports – Imports) proposes that large scale private investment, which is inversely related to taxes and interest rates, drives economic growth. However, in reality private sector investment is also driven by “herd” instincts, which are naturally volatile and in turn makes the overall GDP outcome volatile. Greater domestic investment (and domestic procurement) by the state introduces a stable anchor on which the rest of the GDP components can be built on, thereby creating a stable and sustainable GDP trajectory, (Mariana Mazzucato - Entrepreneurial State, 2013).

Given the above context as a departure point and the importance of state procurement for the metals and engineering sector, SEIFSA submits that the draft preferential procurement regulations published by National Treasury run counter to the industrialisation aspirations of the country, have the potential to reverse the historic efforts that have been invested into processes of developing industry master plans and designation efforts. The regulations will also create an untenable environment wherein local companies will have to contend with multiple un-standardised procurement policies from different state organs.

The material aspects of SEIFSA’s submission to the draft Preferential Procurement Regulations (2022) are listed below:

  • It is important to stress that SEIFSA’s concerns are not with the decision of the Supreme Court of Appeal (SCA) or the Constitutional Court on the Preferential Procurement Regulations. It is important that all regulations that direct the functioning of state organs are consistent with the country’s constitution.  However, the concerns listed below relate to National Treasury’s interpretation of the court decision as inferred by the published draft Preferential Procurement Regulations 2022.

 

  • The omission of local content, local production or designated products in the draft regulations, to give some preference to local companies from public procurement is a missed opportunity to leverage state procurement as an instrument to drive domestic industrialisation.

 

  • To remove any forms of preference for domestic companies, in the absence of initially dealing with aspects that relate to the cost of doing business in the country is akin to putting the proverbial cart before the horse. The unfortunate outcome that is likely to manifest is that domestic companies will be unable to compete with imported products leading to further de-industrialisation. This is not to advocate that local procurement by the state and industrialisation should pursued at all costs and at the cost of competitiveness, however, the domestic input cost structures creates an unfavourable environment for companies to compete with imported products. The focus should be to create a suite of incentives from tax rates to industrial incentives that will assist domestic companies to compete if the preference for local procurement from domestic companies were to be removed.

 

  • Efforts to revive the unprecedented levels of decline in the economic performance of the metals and engineering sector are contained in the Steel Master Plan (SMP), which is an industry initiative by government, labour and the private sector. The SMP envisages leveraging the country’s infrastructure drive and localisation by state owned entities as instruments to boost demand for locally produced products. The plan also proposes designation of locally produced products for public procurement as a stability measure that can be implemented in the short-term to support demand for local products. The draft preferential procurement regulations in the current form would in essence reverse all the efforts that have been invested by the sector in the development of the SMP. This point is possibly applicable to all the other sector master plans. This raises the very worrying prospect of inconsistent policy formulation in the state, where different national departments develop and pursue fundamentally different policy directions.

 

  • In the absence of explicit regulations guiding state organs on the procurement policy, the Preferential Procurement Policy Framework Act (PPPFA) state that state organs will develop their own procurement policies based on socio-economic considerations listed in the Reconstruction and Development Programme (RDP) of 1994. This means that organs of state will develop their own measures for industrial, economic development and socio-economic aspirations. While these measures will support local economic development, SEIFSA submits that devolving this obligation to each state organ to create its own procurement policy will create an untenable administrative and compliance environment for domestic companies. It is paramount that National Treasury develops a national guideline for state organs to comply with in the development of their procurement policies. This will be important for institutional coordination and alignment across the multiple state organs. It will also make monitoring and enforcement of regulations possible. Coherence and uniformity should be the basis on which national regulations are developed.

 

  • SEIFSA recommends that given the importance of these regulations and the possible unintended consequences that would manifest if they are to be passed in their current form, National Treasury should embark on an extensive consultation process in the development of these regulations. While it is acknowledged that regulations are an executive function that govern day-to-day functioning of the state, we submit that the policy implications of these regulations extend far beyond the aspects that they seek to regulate. As a result, SEIFSA recommends a thorough consultation process for these regulations be implemented through the NEDLAC processes. This will allow National Treasury the opportunity to receive much more detailed inputs from the social partners represented on the NEDLAC structures.

Thank you for the opportunity to make representation on behalf of the metals and engineering sector. We trust that our inputs will receive your favourable consideration.


Paid holidays for the metal industry

With the long weekend coming up, many companies will be wondering how to apply and interpret the Public Holiday provisions in the Main Agreement. In this article, prepared by SEIFSA’s Industrial Relations Division, the application of Public Holidays is clarified.  

All the Public Holidays specified in the Public Holidays Act are paid holidays for employees covered by the Main Agreement.

Employees covered by the Agreement are not required to work on a Public Holiday and are entitled to full pay if the day falls on an ordinary working day. Companies working a Monday to Friday work week are not required to pay employees for a Public Holiday if it falls on a non-working day, for example Saturday (24 September 2022) unless employees work on that day.

Working on a paid Public Holiday

Where an employee works on a paid Public Holiday the employee is entitled to:

  • The rate of pay for an ordinary shift; plus
  • One-and-a-third times the hourly rate for the hours worked.

If an employee works overtime i.e., hours in excess of the normal hours on that day, then he/she is entitled to an additional two-and-a-half times the hourly rate for those extra or overtime hours.

Where a Public Holiday falls on a Sunday

Public Holiday’s falling on a Sunday will be observed as a paid public holiday the following Monday. Employees who are called-in to work on a Sunday, which happens to be a Public Holiday, will be paid at Sunday rates i.e., double-time.

The one exception to this rule is where Christmas Day falls on a Sunday. Employees working on Christmas Day, which happens to be a Public Holiday, will be paid at the Public Holiday rate. This is due to the next day being Day of Goodwill.

Paid Public Holidays and shift workers

Difficulty often occurs where employees work a two or three-shift system, especially where part of the shift falls on the Public Holiday. In such a case, the worker will be paid for the shift before, during or after their shift as if it were a paid Public Holiday. Therefore, the whole shift, if not worked through the Public Holiday, irrespective of where it falls, will be paid on Public Holiday rates. Where the employee works overtime on that particular shift, they must be paid at two-and-a-half times for the overtime hours.

For example, a night-shift employee starts his shift at, say 18:00 on Thursday, 15 June 2022 and ends his shift on Friday, 16 June 2022. The part of the shift from midnight onwards falls on the Public Holiday. If the employee’s next shift starts at 18:00 on 16 June 2022, the option is to treat either the whole shift starting on 15 June or the whole shift starting on 16 June 2022 as the public holiday.

Annual leave and Public Holidays

If a Public Holiday falls within an employee’s annual leave on a day which would have been a normal working day, then the leave period must be extended by one day with full pay for the day. Where Public Holiday’s fall on a non-working day then the annual leave is not extended.

Public Holiday during periods of short-time or lay-off

Any Public Holiday during a period of short-time or lay-off must be regarded as falling on an ordinary working day, and the employee must be paid at the ordinary hourly rate for that day.

Work-in-time arrangements to extend Public Holidays

Management and employees may agree to work time in, so that designated normal working days may be treated as paid holidays, thereby extending existing public holidays and creating long weekends. For example, 16 June 2022 falls on Thursday. The workforce may work on an elected non-working a such as a Saturday, in return for a paid holiday on Friday 17 June 2022. Requirements to implement this arrangement are management support, a 75 percent positive ballot amongst the workforce and an exemption from the Council.

Absence after or before a Public Holiday

Where an employee is absent the day before or the day after a Public Holiday, the employee does not lose his/her entitlement to be paid for the public holiday. However, this does not absolve him/her from appropriate disciplinary action if the reasons for the absence do not validate his/her absence.

Where management requires further assistance, they should contact SEIFSA’s Industrial Relations Division (011) 298-9400.