SEIFSA welcomes the prudent fiscal management approach maintained by National Treasury

Given the difficult economic conditions facing the country, coupled with the many competing interests for funding, SEIFSA commends the National Treasury (NT) for maintaining a prudent fiscal management approach in the Medium-Term Budget Policy Statement (MTBPS).

The NT has not let the exuberance of higher gross tax revenues, now estimated to be R92.6 billion higher over the next three years, relative to the February 2022 estimates, distract it from the fiscal consolidation path. The result is an improvement in the fiscal metrics much earlier than anticipated, namely a primary budget surplus of 0.7% of GDP as early as 2023/24, with expectations of a widening in this metric in the outer years. Gross debt to GDP is also expected to be maintained around the 70% over the medium-term expenditure framework and trend downward to 63% by 2030.

SEIFSA also welcomes the growing emphasis placed on spending on building new and rehabilitating existing infrastructure which will increase from R66.7 billion in 2022/23 to R112.5 billion in 2025/26, making spending on capital assets the fastest-growing item by economic classification. Although even much greater infrastructure investment is still necessary to put the country’s economy and the steel and engineering sector on a sustainable path, the growing emphasis on economic investment is welcomed. In fact, SEIFSA’s view is that this was a recurring theme throughout this budget.

SEIFSA has been involved in the NEDLAC consultation on the public procurement bill and welcomes the announcement of a firm commitment that the bill will be introduced to Parliament in March 2023.

Regarding the announcement that the preferential procurement regulations will be released on the 16th of January 2023, SEIFSA has noted with grave concern that National Treasury has maintained the stance that state organs will have the authority to determine their own preferential procurement policies. During public consultation on these regulations, SEIFSA stressed that this approach will create an untenable administrative compliance environment for domestic companies. It will also make institutional coordination, alignment across the multiple state organs, and the monitoring and enforcement of regulations impossible.

A key message from this budget is that global economic headwinds are intensifying with global growth being downgraded from 4.4% to 3.2% in 2022, and 3.8% to 2.7% in 2023, presenting a less supportive economic environment for South Africa’s prospects and growth. SEIFSA continues to stress that in difficult times like these, domestic economic and fiscal policy must do much heavier lifting to counter the global trends. Well-considered industrialisation plans that create a conducive business friendly environment for domestic companies to operate is absolutely paramount. Creating this environment is squarely in the hands of the government and SEIFSA continues to call for greater focus in this direction.

Its time to rebuild trust

In my last note I put a challenge to our employer colleagues on the Metals and Engineering Industries Bargaining Council (MEIBC) that given that our economy is on its knees – now would be a good time to rise above the rhetoric and play a more constructive role in the affairs of the Council. After all, I said, employers represented by the Employer Organizations on the MEIBC have far more in common than what they think.

If we are going to survive this current crisis, we know that government is pinning its hopes of an economic revival on the private sector. The President is well aware that he cannot solve the country’s problems alone. The state needs the private sector to step up in a big way.

For South Africa, our economy and the metals and engineering industries to dig itself out of the current crisis, business has to take the lead.

Whilst it is up to employers to keep the wheels of industry turning, the job of all role players on the MEIBC is to create a predictable, stable policy environment and for this to succeed requires trust.

Over the last ten years, trust between employer organizations on the bargaining council has all but been eroded. This has severely hampered the work of the bargaining council, has almost led to its liquidation and created a toxic and dysfunctional operating environment that has made it impossible to even begin addressing the real challenges facing our sector.

The MEIBC, once the benchmark, for all Bargaining Councils, is today a shadow of its former self, lurching from one crisis to the next. Staff are demoralized, many have left and it’s a miracle that they have been able to keep the doors open, given that their existence depends solely on two income streams, the administration and dispute levy, both of which were last reviewed in 2011.

Bargaining Council are created by the parties that sit-on them, to provide a platform to conclude agreements covering terms and conditions of employment, including social security benefit fund agreements. More importantly, the platform created by a bargaining council, in bringing organized business and labour around a single table, in an atmosphere of collaboration and joint problem solving ideally should be aimed at highlighting, debating and addressing the many obstacles standing in the way of meaningful interventions in moving the needle forward on job retention, creation and economic prosperity.

This sadly, has not been the case on our Bargaining Council for many years. It serves no purpose to allocate who is mainly, partly or not at all to blame for this sorry state of affairs. As participants and I refer specifically to the employer representatives on the Council, are all culpable, in varying degrees.

The point here is that trust needs to be rebuilt, not so much as between the trade unions themselves or in the engagement process between trade unions and employers but instead amongst the different employer groupings on the Council.

This is where the relationship, dynamic and mind-set to move forward has completely broken down. It’s a tragedy that more often than not unions on the MEIBC are able to find a single unified voice as opposed to the differing and bickering voices that make up the employer bloc.

Trust is built over time and requires a level of transparency that has not been forthcoming from within the employer bloc. Rebuilding trust is difficult, but is vital if the MEIBC is to play a pivotal role in facilitating meaningful and constructive dialogue between all social partners.

The stakes are higher than they have ever been. Our economy is under siege as it battles a job, growth and hunger crisis. A devastating 63.9% of South Africans under the age of 24 are unemployed, consumer inflation is at a 13 year high and one in four people live below the food poverty line.

Employer representatives, duly elected by their respective constituencies, simply cannot afford to play fast and loose with the trust members have invested.

It’s high time employer representatives elected to serve on the Council bury the hatchet and take a step forward and ask: how can we make a meaningful contribution to the crisis facing our sector, how can we pull together and build the MEIBC that we are supposed to serve and finally, how can we move beyond our narrow and fixed paradigms.

I believe we have no choice; we can continue to quibble, disagree and look to score points off one another or we can wipe the slate clean and start afresh. The choice is quite simple, change the paradigm or continue on the path to eventual insignificance.

Who is prepared to lay down their arms (figuratively speaking) and take a seat at the table with a view on focusing on what unites us as opposed to what keeps us apart?

Lucio Trentini

SEIFSA Chief Executive          

Applying for exemption from the Main Agreement leave enhancement pay

Section 14 of the Main Agreement provides that every employee is entitled to leave enhancement pay calculated on the basis of 8.33 percent of actual earnings excluding allowances.  This pay is calculated on a 40-hour work week or upon the actual normal hours worked on the date that the employee actually goes on leave.

Exemptions procedure

SEIFSA is aware that the current economic environment may pose severe constraints on some member companies’ ability to pay the leave enhancement pay. Members are advised, in this regard, that the industry’s current leave enhancement pay exemption procedure continues to apply.

A company that is unable to pay the leave enhancement pay may submit an application to its local Regional Council for exemption from paying the leave enhancement pay.

The exemption procedure is outlined in Appendix A.

It is important to note that an exemption application must be lodged with the bargaining council by no later than 31 October 2022.

This means that companies wishing to apply for exemption must do so without delay, failing which the trade unions may refuse to consider any such late applications.

Exemption application questionnaire

A pro-forma exemption questionnaire is contained in Appendix B.

A company wishing to apply for an exemption must complete the questionnaire in its entirety and return all the necessary documentation to the bargaining council by no later than 31 October 2022.

Management’s attention is drawn to the importance of the Council’s requirement that an application must be accompanied by the following important information in order for the application to be considered:

  1. A fully detailed motivation explaining the difficulties that the company is experiencing and hence the need for the application. This motivation is not the same as the business plan (see point 2 below).
  2. Audited Financial Statement for the financial year ending 2021/ 2022. In the case of a closed corporation - a full set of Financial Statements which are to be signed by an Accounting Officer and the latest Management Accounts for the last three months. If the Financial Statements are older than six months, then the Management Accounts for the recent three months are required.
  3. Formal confirmation that employees were informed of the company’s decision to make an application for exemption.
  4. Where employees reject the company’s approach, they are to be informed of their right to submit written reasons for objecting to the exemption application and such reasons should be attached as an annexure to the company’s application.
  5. The signature of at least two employees who accept being the representatives for the workforce and who will be affected by the application. Representatives of the workforce are to sign the form, contained in the exemption application questionnaire, consenting to this.
  6. The signatures of employees accepting that they have been informed of the implications of what the firm is proposing to the Council.
  7. Where the employees are trade union members, the company should inform the local trade union office of the intention to apply for an exemption and request, in writing, a meeting with the local official to discuss the impact of the exemption on the company and the members of the union.
  8. Where employees have elected a trade union representative or representatives (shop stewards) these persons should be requested to sign that they were consulted and that they understand the need for applying for the exemption. Where the local trade union official and/or shop stewards have been consulted and where they reject the application, such refusal must be recorded in the application and countersigned by at least two witnesses.
  9. Where the local trade union official and/or shop stewards and affected employees support the exemption application, this signed agreement should be included with the application.
  10. It is recommended that all meetings in this regard between management, employees, shop stewards and union officials be minuted and that the minutes of such meetings be submitted with the exemption application.
  11. The application itself is to be signed by either a Director of the firm, Member, Owner or a Senior Accountant - neither a Bookkeeper nor the Human Resources Manager’s signatures will be acceptable.
  12. The savings in cost to company should the application for exemption be granted and the workings in arriving at this cost.

Please Note:

  • The exemption application will not be considered or processed by the bargaining council unless all the above requirements are met.
  • It is not a condition of the exemption that employees accept the proposed exemption. All that is required is that employees and their representatives are fully informed of the company’s intention to apply for exemption and that this consultation process and their response thereto is formally recorded and submitted with the application.
  • If granted, the employer shall then be obliged to become a compulsory contributor to the Bargaining Council’s monthly contribution scheme.

Condonation application

  • Where companies have failed to make the exemption application before 31 October 2022, they may apply for condonation.
  • In the application, companies will be required to inform the Bargaining Council of the following:
  1. Degree of lateness (days/months)
  • Reason for lateness;
  1. Prospects of success;
  2. Potential prejudice to be suffered by the company if the application is not granted; and
  3. Any other information that may be relevant in assisting their application.

Please note: that the Condonation Application must be signed before a Commissioner of Oaths.

  • A copy of the Condonation Application is attached marked Appendix C

Application Forms

Download forms below 

  1. Application for exemption from metal and engineering industries bargaining council
  2. Employee / Trade Union Acknowledgment of this Application
  3. Application for exemption from the metal and engineering industries bargaining council

The economy cannot afford a strike at Transnet

SEIFSA understand all too well the consequences of industrial action in the context of wage bargaining. A four-week strike in 2014 followed by a three-week strike last year left many an employer on the brink of contemplating closure.

Arguing that the right to strike is enshrined in our constitution and strike action is a functioning mechanism of collective bargaining is ignoring the obvious and avoiding reality. South Africa is on its knees. The stakes are higher than they have ever been. Our economy is under siege as it battles a job, growth and hunger crisis. A devastating 63.9% of South Africans under the age of 24 are unemployed, consumer inflation is at a 13 year high and one in four people live below the food poverty line.

A full-blown strike at Transnet, which seems unavoidable, will have a serious effect on the economy, it will halt exports and put thousands of jobs on the line. Under the current harsh economic climate, Transnet as with Eskom, is crucial to the country’s economy. Transnet’s rail and port facilities are key to exporting the country’s bulk commodity exports such as coal, iron ore, chrome and manganese.

Exporters rely heavily on efficient rail networks and ports, but as we know, Transnet has been operating below capacity for years as it grapples with a shortage of locomotives, cable theft, vandalism, poor maintenance and outdated and slow port infrastructure. This substandard service has had a significant impact on the local steel industry and its ability to manufacture steel to meet its customers’ demands. In some instances, primary steel producers have had to shut down operating plants due to the unavailability of raw materials, at great cost to their businesses and the economy.

A full-blown strike at Transnet, will add to the damage suffered by the South African economy. This will be as bad as load-shedding in terms of economic impact. For an economy battling to maintain momentum this could well be the final nail in the coffin.

With load-shedding being reintroduced as from today, workers threating to paralyze Transnet and Transnet having already declared force majeure, we appeal for a constructive approach that seeks to advance the interests of our country.We know that it will not be easy to make compromises, but we appeal nevertheless for a win-win approach to the negotiations, as opposed to a winner-takes-all approach. Our plea to all the negotiators, and to those from whom they obtain their mandates, is that you rise above your narrow interests and put the interests of the South African economy first, and look to settle quickly.

Lucio Trentini
SEIFSA Chief Executive Officer

Finally, Main Agreement Gazetted

Friday, 7 October 2022 The Minister of Employment and Labour gazetted the Metal Industry Consolidated Main Agreement today thereby making it legally binding on all employers and employees who are subject to the agreement’s scope of application.

This brings to an end a journey that began more than a decade ago – costing many millions of rands, occupying far too much court time and, quite frankly, could have been avoided.

After many rounds of litigation, the fact remains we have an agreement covering terms and conditions of employment, supported by the overwhelming majority of employees who are members of the trade unions (represented on the Bargaining Council) and the overwhelming majority of factory workers employed by employers who are members of one or other employer organizations represented on the Council. I have no doubt, however, that legal challenges will continue all the way to the Constitutional Court.

Whilst the Main Agreement has been unfairly and mischievously characterized as a SEIFSA / NUMSA Agreement, this couldn’t be furthest from the truth. The Agreement enjoys the support of five of the biggest trade unions in the industry, including NUMSA and the support of 18 independent Employer Organizations, in addition to the Consolidated Employers Organization (CEO), who on their own represent in excess of 6 70 employers employing well over 14 000 employees.

Whilst we acknowledge the right of our detractors to continue in their quest to have the agreement declared a nullity, our critics would be best advised to do some introspection and ask themselves what have they been doing for the last twenty years, participating on a forum that is designed and created to support centralized collective bargaining.

Bargaining Council by their very nature are created to uphold standards of fair play and decency, in the hope that every employer is free to run a business in a climate of industrial peace, stability, certainty and workers free to earn a decent wage from an honest day’s work. Bargaining Councils are designed to bring together employers and trade unions with the very purpose of concluding agreements that both sides can live with. This year we witnessed the coming together of NUMSA and the Plastic Convertors Association (PCA), the creation of their own bargaining chamber and the signing-off of their own collective agreement, operating under the auspices of the MEIBC.  This agreement too, has been gazetted and extended to all employers and employees in the plastic sector of the metals industry.

This chamber will join other stand-alone Negotiating Forums and House Agreements all operating under the umbrella of the MEIBC.

In an environment where employers are struggling to keep the lights on and workers eking out a living, one needs to question the strategy of resorting to never ending court action and litigation, to achieve what ends?

Collective bargaining is tough, uncompromising, its contested terrain, it requires ingenuity, creative thinking and solid relationship in order for deals to be concluded. If you represent a constituency, you have a duty through the principle of agency and mandate to bargain as hard as you can to get the best deal possible for your membership.

Our loudest critic has been occupying a key space on the Bargaining Council for over two decades, and we are told time and time again that they represent a considerable constituency. This may be so, but with that comes the responsibility, duty and burden to negotiate, bargain and conclude deals in the best interest of one’s members.

With industry on its knees for reasons employers are all too well familiar, now is the time to rise above the noise and play a constructive role. After all, employers represented by all the Employer Organizations on the Bargaining Council have far more in common than what they think.

When all has been said and done, collective bargaining, in the final analysis, is about relationships not power – its high time our detractors learnt this point and put their shoulder to the proverbial wheel.

The Main agreement becomes legally binding on all non-party employers from Monday 17 October 2022.

Should you wish to scroll through the Main Agreement Click here

If you want to find out a little bit more about the Main Agreement and how it can benefit you and your business attend a the SEIFSA workshop by attending the Main Agreement Training Gazetted Training

If you are reading this and you are not a member of an Association federated to SEIFSA, now would be a good time to join.

To find out more about membership and benefits click here

SEIFSA must demand a far more conducive business environment for its members, says SEIFSA President

South Africa’s severe economic challenges — from load-shedding to the inflationary effects of the war in Ukraine — make it more important than ever for SEIFSA to take a stand and call for a far more business-friendly environment.

This is the view of Steel and Engineering Federation of Southern African (SEFSA) President and Chairman Elias Monage, who was speaking at the Annual SEIFSA Presidential Breakfast on Friday at the Holiday Inn Johannesburg Sunnyside Park.

“These harsh economic realities emphasise the important role that business leaders need to play, and more importantly, the role SEIFSA must play in representing its members in the lobby for a far more conducive and business friendly environment,” said Monage.

The breakfast provides a yearly opportunity for companies in the Metals and Engineering sector to engage with the SEIFSA’s executive team and board of directors. Justice Malala, one of South Africa’s best-known political analysts, founding editor of This Day newspaper, publisher of the Sowetan and Sunday World, and Sunday Times correspondent, provided thought-provoking discussion and in-depth insights in his address.

While Monage recognised that little can be done to change the global economic headwinds, “the domestic ones — which are frankly own goals of bad policy choices and economic mismanagement — are in the hands of the policymakers. And this is where SEIFSA must continue to play the important role of keeping government accountable”.

Locally, the energy crisis has hamstrung the economy and deters much-needed investment, while “the rising cost of capital which will taper domestic economic activity and the poor state of local government, affecting service delivery for companies and infusing costs of doing business, are all headwinds faced by the sector — and at present, only intensifying”, warned Monage.

Malala called for attendees to fasten their seat belts and then took them through some of South Africa's deepest failures — the energy crisis, the looming water crisis, the riots in KwaZulu-Natal and Gauteng in July 2021, the 65% youth unemployment, xenophobia, a widespread crisis of confidence and many more — all contributing to a deep distrust in the ANC, the government and its institutions.

He warned that in the face of all these challenges the “key risk is when people lose confidence in democracy itself”.

But he did mention that there is “some positive news”, including the censuring of consulting firms McKinsey and Bain as a result of what was exposed during the Zondo commission into state capture. “The battle to win over corruption seems to have been rejuvenated,” he said.

He called the Zondo commission a “victory for law and order”, adding that the judge did an outstanding job despite many challenges.

Business has a huge role to play in addressing these challenges, said Malala. “SEIFSA, as an organisation, and many others have a key voice” and can provide the country with a “path forward”.

As part of the presidential breakfast, SEIFSA also announced the federation’s new board at the breakfast, with SEIFSA CEO Lucio Trentini saying: “We are confident that SEIFSA’s new leadership will continue with the excellent efforts of our outgoing board members, and the newly elected members will bring their own dynamism, experience and wisdom to the task.”

Trentini said: “This board has the appropriate mix of expertise, experience and skill to provide the necessary strategic direction and guidance to the SEIFSA Executive.”

SEIFSA’s new board members are: E Monage (President), L Trentini (CEO), T Chibanguza (COO), N Ngwenya, Pam du Plessis, T Tsehlo, E Volschenk, H Mamabolo, R Haynes, M Naidoo, M McCulloch and Pieter du Plessis.