Political Analysis South Africa

Labour

Steel Negotiations: NEASA Proposes Drastically Reduced Entry Level Wage

Steel Negotiations: NEASA Proposes Drastically Reduced Entry Level Wage

This time around, like many times before, the Metal and Engineering Industry Bargaining Council (MEIBC), finds itself in watershed negotiations. Employers have, in previous Industry negotiations, avoided making decisions which had the potential to put the Industry on the path of recovery. By delaying these decisions, previous negotiators attempted to avoid industrial unrest, in order to buy time. That proved to be a disastrous tactic.

In my discussions with employers all over South Africa, I hear one common message: The Industry is in serious trouble. One element which may best illustrate the dire situation in the Industry, is the element of job losses. According to information provided by the MEIBC, the Industry lost 150 000 jobs over the 10 year period from 2006 to 2015. The IDC recently confirmed a further 25 000 job losses and 500 business closures during the last twelve month period. The issue of uncompetitive wages is one of the main issues stifling job creation in this Industry.

Although the high wages in the Industry is not the only cause for the situation the Industry finds itself in, it is still the most important challenge employers, especially SMMEs, experience and is the most prominent barrier to job creation.

Making tough decisions can no longer be avoided. This time round we have to negotiate a dispensation in which business could be profitable, at least sustainable, a dispensation in which employment again becomes a possibility.

In achieving this NEASA is proposing the following core measures in order to stimulate the recovery of the Industry:

THE INTRODUCTION OF A NEW ENTRY LEVEL WAGE
The wages in the Steel Industry are currently, on average, double that of other Industries covered by bargaining council agreements. The wage gap is even bigger when it is compared to wages prescribed by wage determinations.

It is NEASA’s position that a drastically reduced entry level wage will do much to open job opportunities for unskilled work seekers. There rests an obligation on Industry negotiators to make a bold contribution to address the issue of wages – perhaps the most strategic demand South Africa is facing.

ALL INCREASES ARE TO BE BASED ON THE NEW MINIMUMS
The current MEIBC wages far outstrips the wages of any comparable Industry. This has made the Industry uncompetitive and forces business to retrench and/or close down – as a consequence jobs are lost. The increase on actuals has made it impossible to award employees on merit. The increase on minimums attempt to slow the trend of runaway wages and assist in the survival of employers and the stimulation of job creation.

RADICALLY REVAMPED EXEMPTIONS POLICY
The current exemption policy only allows for exemption under severe financial difficulty. Exemptions have to cater for different scenarios for example new employment, capital investment, growth of business etc. The exemption policy should create the space for employers to grow the Industry.

CHANGES TO LEAVE ENHANCEMENT PROVISIONS
These provisions place a massive financial burden on employers in a period where there is little to
no production. Employers should be able to determine a different bonus system, for example
based on production to offset the financial burden by increased production during the year.

OVERTIME: FIRST 45 HOURS AT NORMAL TIME
Employers are deterred from introducing overtime as it will not allow them to produce more as the cost associated with overtime pay, after 40 hours, is too burdensome and is therefore not cost effective.

Stakeholders at the negotiating table, both employers and trade unions, must remember that they are not only negotiating for their own interests. There is indeed much more at stake. Opening the door of employment to the millions of unemployed people has now become one of South Africa’s most strategic initiatives. In the Steel Industry, taking the lead in this regard and doing something constructively about the situation, is within its powers.

Gerhard Papenfus, Chief Executive of the National Employers’ Association of South Africa (NEASA)

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