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NEASA responding to NUMSA’s demands

Mr Irwin Jim
General Secretary



We take note of the demands contained in the dispute (dated 15 June 2017) that NUMSA declared against NEASA.

Among these are demands for a 15% increase and to extend the ‘current agreement’, with the exception of wages, for a further two year period.

You should appreciate that, since both previous Industry agreements (2011-14 and 2014-17) and consequently the extensions thereof have been set aside by the Labour Court, there is no binding agreement, not only in respect of NEASA members, but not a single employer in the Industry.

Therefore with regards to the NUMSA demands, the effect is twofold:-

FIRSTLY, the extension of the ‘current agreement’ for a further period of two years is legally impermissible and frankly impossible – simply because the 2011-14 agreement (which the Labour Court found was not a collective agreement), and the extension thereof, has been declared null and void. The 2011-14 agreement, and the extension thereof, suffered the same fate. There is simply no legal mechanism which will allow any party to extend a period of an extension which never existed.

SECONDLY, and in light of the above, we are unable to comprehend on which wage schedule the 15 percent increase has been demanded – since there is no binding agreement whatsoever. There is simply no longer a prescribed wage for the Industry.

The only agreement that we are aware of which binds NEASA is the agreement reached with NUMSA  in order to end the NEASA-2014 lockout, the terms of which were the following:-

  • NUMSA accepted a 7 percent across the board increase which offer was made subject to,inter alia:-
    – a 50 percent reduction in the entry level wage for new entrants in respect of the lowest three grades; and
    – the introduction of a completely new exemptions policy.

You no doubt recall NUMSA unconditionally conceded to all these demands, which resulted in an ‘agreement’ which was confirmed by the Labour Court in Johannesburg, on 23 December 2014. The relevant case is attached for ease of reference.

As no other binding agreement exists between NEASA and NUMSA, we can only assume that this agreement is the basis on which NEASA needs to consider the proposed 15 percent wage increase. Within this context, we are willing to, at any time you deem fit, discuss your demands.

Since you have already agreed to the introduction of a new entry level wage, and agreed in principle to a modernised exemptions policy, we find it difficult to understand your refusal to do so in the current negotiations.

You often mention the dire situation of the Industry. Everybody in the Industry shares that concern. Negotiators in previous negotiations – in 2011 and 2014 – have avoided making decisions which had the potential to put the Industry on the path of recovery. Every negotiation which passes without these issues being dealt with, another opportunity is lost – with merely a promise to do it in the next round of negotiations.

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 of 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 months. The issue of uncompetitive wages is one of the main issues stifling job creation in this Industry.

Although the high wages in the Industry are 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 can 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 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.

You are aware that NUMSA, in the Motor Industry, has agreed to an entry level wage of 50 percent of what the Steel Industry is currently paying. Having done so in the Motor Industry, we invite you to engage with employers in this Industry with the purpose of reaching a similar agreement.

We must repeat however, in order to avoid any confusion, that such an arrangement will not, in any way, ‘down vary’ (decrease) the wages of existing employees.


The current MEIBC wages far outstrip the wages of any comparable Industry. Apart from preventing any growth, this has made the Industry uncompetitive and forced business to retrench and/or close down. Over many years, as a direct consequence, hundreds of thousands of jobs have been lost. The current practice of increases on actuals has made it impossible to award employees increases 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.


The current exemptions policy only allows for an exemption under severe financial difficulty. Exemptions have to cater for different scenarios for example new employment, capital investment, growth of business, etc. The exemptions policy should assist to create an environment in which the Industry can grow.


This provision places 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 increasing production during the year.

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 for employment to the millions of unemployed people has now become one of South Africa’s most important challenges. In the Steel Industry, taking the lead in this regard and doing something constructively about the situation, is within our power.

We look forward to engaging with you in order to find a solution which best suits, not only all stakeholders in the Industry, but South Africa as a whole, including the millions of work seekers for whom the Steel Industry has become a ‘no go’ area.


Gerhard Papenfus
Chief Executive