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


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