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Steel Industry: Negotiators, Show Some Steel!

5 JULY 2017


The Steel Industry is currently in a process of negotiating a potential new main agreement, which, if agreement is reached, will prescribe increased wages and other conditions of employment for the Metal and Engineering Industry (MEIBC).

The two previous main agreements for the Industry (2011-14 and 2014-17) were declared a nullity by the Labour Court following court challenges by the National Employers’ Association of South Africa (NEASA). Both these Labour Court judgements were not only based on administrative oversight (‘technicalities’ as the perpetrators want the public to believe), but deliberate and extremely serious actions (even fraud) in order to perpetuate a dispensation which otherwise would not have been possible. The presiding judge in one of these matters referred to these MEIBC processes as a ‘sham’.

The extremely biased and utterly incompetent role of the Department of Labour (DOL) in all of this cannot be overemphasised – the DOL presided over the ‘sham’, they chose to ignore all warnings and put their stamp of approval on this Industry destructive dispensation.

It is shocking to think that businesses closed their doors, employers and workers lost their businesses/jobs, and all of this as a result of an illegal, fraudulently obtained, extended agreement.

The current Industry negotiations are taking place in a South Africa which has an unofficial unemployment rate of 40-50 percent, where more people receive grants than people actually working (17 000 000 vs 15 500 000 according to the IRR), with no growth prospects, where the ability by government to pay these grants will increasingly come under pressure – all of which is a huge social and political risk. The Steel Industry alone has lost 25 000 jobs in the last year and 500 SMME’s closed their doors.

It is within this context that trade unions (and NUMSA in particular) are making their demands in this round of negotiations, and it is within this context that employers will be required to show their steel, at least make a stand this time round. If the history of the Steel Industry negotiations is anything to go by, SEIFSA, representing big business (the Industry ‘nobles’), will no doubt fail to illustrate any of these traits.

Although the entry level wage proposal by employers was not a downward variation of existing terms and conditions of employment, NUMSA insists that it is indeed the case and then stresses the point that they will never ‘down vary’ conditions of employment of employees. They are, however, simply not honest about this. In 2014 NUMSA, following a prolonged lock-out by NEASA, agreed to a 50 percent reduction in entry level wages, an agreement which was subsequently confirmed by the Labour Court in Johannesburg.

Through the years SEIFSA (representing the ‘nobles’ in the Steel Industry), has adopted a similar approach to the approach adopted by the feeble and naive British Prime Minister, Nevil Chamberlain, towards Adolf Hitler. We now know where his approach would have taken Britain. We also now know where the weak SEIFSA approach has taken the Steel Industry:-

wages in this Industry is on average 50 percent higher than other industries involved in the notorious, outdated and business hostile South African bargaining council dispensation; and
the entry level wage in the Motor Industry is more than 50 percent lower than in the Steel Industry. Here’s the point though: NUMSA is involved in both these Industries, in both sets of negotiations. The difference, however, is the involvement of SEIFSA in the Steel Industry – SEIFSA is the signatory to all the previous illegal agreements; it is the employer body which agreed to the establishment of the now unaffordable and unsustainable Industry arrangement.

The role SEIFSA plays within the Industry has diminished substantially, simply because the employer bodies affiliated to SEIFSA now only occupy 4 out of 21 (18 percent) seats on the Management Committee of the MEIBC. The ‘agent’ SEIFSA does not have a seat on the Council but, somehow, still plays a very important, albeit destructive, role.

It is doubtful whether the SEIFSA affiliated organisations, should they come to an agreement with NUMSA, after they have surrendered all their initial demands, will have the ability to extend their agreement to non-parties. It may however still prove to be possible due to the manner in which the Labour Relations Act was drafted, which nullifies the voting power of SMME’s.

What is more concerning though is the fact that SEIFSA might even contemplate approaching the Minister in this regard, in order to have their agreement extended to non-parties. Will they (I am referring to the Industry ‘nobles’), whose cost of labour is as low as 7 percent of total cost, again be willing to extend an agreement (done solely out of self-interest, fear and weakness) to SMME’s, whose cost of labour is as high as 60 percent of total cost – in a climate where the Industry finds itself in rapid decline? Where is their collective conscience? Don’t they have any backbone? It may, yet again, prove that they don’t have either.

Every time employers budge in weakness, selfishly serving their own interests and, from a position of undemocratic power (bestowed on them by an bizarre undemocratic LRA arrangement), betray the interests of their SMME counterparts, more jobs are lost and more SMME’s cease to do business.

Again the Industry finds itself at this juncture. What will the ‘nobles’ do this time round? Will they do what is right and bring about a dispensation in the Industry which will give employers, especially SMME’s, at least a fighting chance to, not only to survive, but to prosper in order to create work? Or will they, as in the past, just capitulate and fade away?


This opinion piece is by Gerhard Papenfus, Chief Executive of the National Employers’ Association of South Africa (NEASA), which is also the largest employer body involved in the current negotiation(s).