From the Chief Executive Officer’s desk – August 2014

With this issue of SEIFSA News dedicated to the negotiations and the agreement eventually reached after a four-week strike, it is important that we seize the moment to reflect on the process and the outcome.

For the very first time in the Federation’s history, SEIFSA entered the 2014 negotiations with demands of its own, which were mandated by our Associations. Among those demands was a need for all parties to conclude a Peace Accord right at the beginning of the negotiations. That, for us, was a very firm condition, and our firm mandate was not to discuss any substantive matters until all parties had signed a Peace Accord. Early on in the process, following a Labour Court judgement on a demand at one of our member companies by one of the unions for a housing allowance, we added the need for Section 37 to be tightened up to make explicit the fact that all matters related to the cost of employment would be dealt with in national negotiations within the MEIBC.

Clearly, the unions were taken by surprise by our demands, which they interpreted to indicate aggression on our part. Except for Solidarity, they refused bluntly to discuss a Peace Accord, Strike and Picketing Rules with us, saying that it was only when they were preparing to “go to war” that they would discuss these matters. When it became clear that they were not prepared to budge, the Council relaxed the demand and authorized us to proceed to dealing with substantive matters, while stressing that a Peace Accord remained a key demand for us. That was the first major concession that we made on an important point of principle.

We took our time to table our wage offer, and did so when we realised that we were getting close to the middle of the negotiations. On a day when Statistics South Africa announced that Consumer Price Inflation was 6,1%, we opened with a credible 6,1%. To our surprise, the unions, the majority of whom had stated their opening wage demand to be 15%, consolidated their position on the 20% that had been demanded by two small unions – and remained there for a long time.

As we realized that we were running out of time, we made an offer that we believed would be as close as possible to our settlement figure. We adjusted our offer to 8% for 2014, CPI plus 1 for 2015 and CPI plus 1 for 2015. Before tabling that offer on 20 June, on the eve of a declaration of a dispute, one tried valiantly to appeal to the unions, asking them to be mindful of the parlous state of our economy. This is what one said then:

Our economy is seriously under-performing, and we have a flood of cheap imports to contend with not only in the metals and engineering industries, but generally throughout the manufacturing sector. All these factors tell us one thing: that increasingly jobs in South Africa are becoming an endangered species. They tell us further that even more companies in our economy – including in our sector – will find themselves confronted with the sad reality of having to downsize or be liquidated as they fail to compete, given their high fixed costs.

It makes absolutely no sense, I submit humbly, Ladies and Gentlemen, to get a hefty salary increase today and to be retrenched two months later. Instead, it is far more prudent to accept a realistic salary increase that acknowledges your worth and the contribution that you make to a business’s performance and to continue indefinitely to be employed. That is the context within which the offer that we are about to make should be viewed.

As important Partners, we have an opportunity to strike a delicate balance between allowing the companies for which we work to continue to survive and ensuring that those who work for these companies are valued and compensated appropriately. Were we to adopt a narrow, selfish approach, it cannot later be said that we did not know the potential harmful consequences of our actions. We cannot cite ignorance as the reason for any myopic decision that we may take either individually or as Partners. That defence will simply not be available to us – not now, and not years later when future generations ask us why it is that the important metals and engineering industries have progressively shrunk in South Africa. ……………………………………………………………………………………………

I plead with our Labour Partners to accept this reasonable offer. I plead that we work together to preserve jobs and to grow the metals and engineering sector in South Africa.

Let us give those companies that continue to operate in the metals and engineering sector an opportunity to survive and fight another day in this ultra-competitive, low-margin environment. Let us preserve our cherished jobs. Let us give our economy a fighting chance.

Regrettably, that plea fell on deaf ears. Instead, there was a single-minded determination on the part of the unions to get what they wanted on wages and other matters. Eventually, when they finally moved, they came back to the 15% that was the original demand of four of them. Following the declaration of a dispute, they moved again to 12% – and remained there until weeks into the strike. In addition, they – or some of them – remained implacably opposed to accommodating our concerns regarding Section 37.

We are relieved that an agreement brokered by the Minister of Labour and her team was eventually reached and the strike was called off. However, one is left with very disturbing observations.

By far the most over-arching such impression is that negotiations between employers and labour in South Africa are terribly flawed. In fact, they are negotiations by name only and are, in reality, an occasion for labour to make near-immutable demands and wait for employers gradually to accede to them. That attests to the considerable power that organised labour has in the country and the adversarial nature of relations between business and labour.

There may well be reasons for this attitude, with our ignoble past and the painfully-slow pace of transformation in the metals and engineering sector perhaps some of those reasons, but it is hardly a recipe a success. South Africa will not realize its economic potential for as long as that adversarial relationship exists between business and labour. One cannot but echo the call made by others in recent months that South Africa desperately needs an Economic CODESA not dissimilar to the political one that we had during the difficult transition from apartheid to our democracy. When that Indaba takes place, the Government would have to be an important third participant, along with organised business and labour.

Until then, given the unfortunate nature of negotiations, we must hope that it will be possible for us to engage more meaningfully with the unions on important industry matters – including on the many issues referred to the Forum in the course of the negotiations – in the Industry Policy Forum (IPF). It is vitally important that the IPF starts working on those matters as soon as possible.

Hopefully, in that non-adversarial atmosphere, it will be possible for us to discuss and make progress on issues of importance for the long-term sustainability of our industries.

It is deeply regrettable that, yet again, violence was used during the strike as a lever to extract the desired concessions from business. It is a great pity that, almost inevitably, strikes in South Africa are accompanied by violence against companies or those who want to continue to work – and the union leadership can always be counted upon routinely to deny their members’ involvement and to mouth platitudes to the effect that they do not condone violence.

In this regard, we can do no more than strengthen relations between ourselves and the police at all levels and, more importantly, we will have to play our part by laying charges and making ourselves available to be witnesses during the trials that follow.

In the long term, we will have to work to help unions to understand how the economy works and how vulnerable South Africa is to international competition. Regrettably, however, our chances of success in this regard are very slim because most of the unions are driven by ideologies opposed to market enterprise, which explains why their leaders routinely describe employers pejoratively as “capitalist exploiters”.

Yes, the figures on which we eventually settled for the next three years (which came from the Ministerial Settlement Proposal) are high. Unfortunately, the settlement reached in the platinum sector, after the five-month-long strike, was a factor: not only did the National Union of Metalworkers of South Africa want to flex its muscles vis-à-vis the ruling party and those unions within COSATU who are at odds with it, but it also wanted to demonstrate to AMCU that it, too, was radical and capable of leading a longish strike.

Although the 10% increases for low-level employees for the next three years are high and, like the settlement in the platinum mining sector, are likely to set a bad precedent for other sectors, the unfortunate fact remains that we were not negotiating with ourselves or with those who think like us. It is unfortunate, but true, that we have to accept our interlocutors for who and what they are, and cannot fashion them into versions of ourselves.

August is a very important month for women in South Africa, which sees them recognized and appreciated for who and what they are and their immense contribution to the country’s development.

It is against this backdrop that we have dedicated part of the August issue of SEIFSA NEWS to honouring women who make great strides and enormous contributions to our industry and the South African economy as a whole. You can read about these extraordinary women from page…to page…of this edition.

The manufacturing industry in general, and the metals and engineering sector in particular, is in dire need of female leaders. We need to continue to achieve a critical mass of female leaders to transform and take our industry to new heights.

I am delighted to join millions of other South Africans in wishing our female compatriots Happy Women’s Day on 9 August and a very happy women’s month.

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JOHANNESBURG, 04 JULY 2014 – Efforts to end the current stalemate in the metals and engineering sector – following a violent strike that began on Tuesday – failed last night when the National Union of Metalworkers of South Africa (NUMSA) rejected a new offer made by employers represented by the Steel and Engineering Industries Federation of Southern Africa (SEIFSA).


JOHANNESBURG, 04 JULY 2014 – Efforts to end the current stalemate in the metals and engineering sector – following a violent strike that began on Tuesday – failed last night when the National Union of Metalworkers of South Africa (NUMSA) rejected a new offer made by employers represented by the Steel and Engineering Industries Federation of Southern Africa (SEIFSA).