Small employers in the metals and engineering sector have vowed to oppose an extension of the wage deal agreed last week between the Steel and Engineering Industries Federation of Southern Africa (Seifsa) and the National Union of Metalworkers of SA (Numsa).
Seifsa and Numsa agreed to implement an above-inflation wage hike of 6%, with the union saying it hoped the deal will be extended to those employed by small-scale employers.
After reaching the wage agreement with Seifsa, the largest employer body, Numsa called on employment & labour minister Thulas Nxesi to extend the agreement to non-parties including the National Employers Association of SA (Neasa).
In a media statement on Friday, Neasa, which represents smaller players in the sector, said it will fight any extension of the 6% deal to its members.
Over the past five years Neasa has taken court action to prevent the Metals and Engineering Industries Bargaining Council from extending wage deals to nonparties. Neasa members now reach deals on a plant level.
Neasa said since 2011 it had successfully set aside or prevented the extension of these agreements to its members and will again oppose “and defend any attempt at extending this unaffordable, destructive agreement to our members”.
The extension of the agreement will cause the demise of many businesses in the already “shrinking” steel sector and will further contribute to the staggering unemployment rate in SA. “It is therefore paramount that the extension of this agreement is prevented at all costs,” Neasa said.
It further stated that the wage deal was not binding on its members. The association recently recommended that its members implement a 5% increase across the board for employees who were not on strike in the R15bn sector — it employs about 190,000 people and is a mainstay of the manufacturing sector, which contributes 10%-13% to GDP.
Labour consultant Tony Healy told Business Day on Sunday that Neasa had a point in fighting the extension of the wage agreement to nonparties.
“When you have a bargaining council system you often have a situation where the larger employers dominate the wage negotiation process. They are more able to pay higher wages than the smaller employers in that sector,” said Healy.
“One of the unintended consequences is that higher wages agreed by larger employers increase the barrier for entry for new smaller players and competitors. It can close small businesses down if an agreement is extended to them to pay wages that they can’t afford.”
Healy said while there was legislation in place for Nxesi to extend wage agreements to nonparties, the whole issue “raises a broader debate” on the wisdom of bargaining councils. While they were generally not a bad idea, he said he had never been of the view that they were in the interest of anybody, especially in a high unemployment environment. SA is battling a 34.4% unemployment rate, the highest in the world.
Another labour analyst, Michael Bagraim, agreed with Healy, saying extending the agreement will hurt small businesses and lead to job losses. “Extending it would be a nightmare. Small businesses are trying to create more employment for people who are uneducated, unskilled, untrained,” Bagraim said.
“Neasa is absolutely correct in preventing the deal from being extended to nonparties. The only people creating employment in SA are small businesses.”
Neasa’s rejection of the wage deal coincides with criticism of Numsa for dragging out the three-week wage strike, which cost the industry R600m and employees R300m in lost wages.
Bagraim said the strike should have been called off earlier, noting that it will now take metalworkers about three years to make up for the R300m they lost in wages during the strike.
On their respective websites, the SA Engineers and Founders Association (Saefa) said it represents about 500 companies while the Consolidated Employers Organisation said its 20,000 membership base includes private and public entities as well as small, medium and micro enterprises.
Numsa general secretary Irvin Jim last week labelled Neasa, the Consolidated Employers Organisation and Saefa as “conservative employer associations”, saying they should tell Numsa by Monday whether they would accept the agreement made with Seifsa.
“If they fail, Numsa will not take responsibility for the negative consequences as a result of their intransigence as they have consistently refused to negotiate and to bargain for the entire duration of the strike. We are warning them. They must not test us,” said Jim.
The three-year wage deal between Numsa and Seifsa, which the union now wants extended to the smaller employers, will translate into increases of R52.52 to R59.01 per hour for the lowest paid workers and R88.99 to R98.11 per hour for the highest paid workers during the term of the deal. The wage hikes will be backdated to July 1.
Numsa, SA’s largest union with about 432,000 members, which has been on strike in the sector since October 5 for an 8% wage increase, conceded on Thursday that its members had paid a “heavy price” during the strike.
It said accepting Seifsa’s wage offer was a compromise it had to make to resolve the strike as soon as possible. But it appears that Numsa’s back was against the ropes as Seifsa had said its proposed increase of 5% for artisans and 6% for general labourers was final.
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