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The Demise Of Centralised Bargaining

03 MAY 2017


On Workers’ Day, 1 May 2017, the trade union NUMSA orchestrated protest action against what they call the ‘all-out assault’ by the National Employers’ Association of South Africa (NEASA) against centralised bargaining in South Africa.

As a result of NEASA’s recent successes in setting aside the extension of agreements by the Minister of Labour, and even the prevention of requests of this nature to reach the Minister, on the basis of it failing to meet legal requirements, NUMSA goes out of its way to create the impression that it is the intention of NEASA to bring about the demise of centralised bargaining in South Africa.

This misrepresentation by NUMSA is a dangerous one, especially in view of intense negotiations which are about to commence in the Steel Industry. Their inciting remarks may cause violent strike action and damage to property at the premises of NEASA member companies, which in turn will lead to appropriate action against the perpetrators. It may lead to a vicious cycle with no winners.

What NUMSA is doing here is to divert the attention away from the real issues which will eventually cause the demise of centralised bargaining in South Africa.

The most prominent factor in this respect remains the Labour Relations Act (LRA). Quite ironically, this instrument, drafted in a way to strengthen trade unions through, among others, centralised bargaining, will for this very reason bring about the end of this SMME hostile dispensation. This is so because the LRA specifically neutralises the voice of SMMEs and promotes collusion between primarily big trade unions and big business.

The LRA was drafted at a time when macro labour institutions, for instance a big umbrella trade union federation (COSATU), with a strong trade union like NUMSA within its ranks, played a major role in the South African labour landscape. The framework of the LRA opened the door for big labour organisations and big business to control the outcome of centralised bargaining, completely undermining the interests of SMMEs.

That has all changed now. Not only is COSATU a shadow of its old self, with insignificant private sector influence, there is also an overall proliferation of trade unions. As the dynamics of politics in general have changed, so did the politics and tactics of trade unions.

Add to this the awakening among SMMEs, and it is clear that the centralised bargaining landscape has changed completely. There is a direct conflict between the framework created by the LRA and the new reality on the ground and unless the legal framework adapts to accommodate the interests of SMMEs, it will lead to the demise of centralised bargaining.

The Metal and Engineering Industry Bargaining Council (MEIBC), until not so long ago still the flagship of bargaining councils, is now a scrapyard and the reason for this is their refusal to recognise this reality.

The role of the Department of Labour, unless it changes its approach drastically, will also play a crucial role in advancing the demise of centralised bargaining. The Department’s policy to condone administrative non-compliance and slackness in governance, is adversarial towards the rights of those who are prejudiced by these big business/big trade union deals. At least there are signs of improvement in this regard.

If the Department will play the role of an honest broker – by ensuring that the rights of all players, trade unions and business, both big and small, are evenly protected – and also bring about legislative changes which will ensure that SMMEs are no longer bound by agreements they have no say in and consequently are not part of, it will go a long way to restore confidence in this system and ensure SMME buy-in. If this is done, the business environment will become flexible and therefore more attractive, industry growth will follow and as a result jobs will be created.

The present archaic dispensation has not kept up with the demands of a constantly changing world. It simply does not allow for business to adapt to the challenges of the global village in which we find ourselves. Consequently, the system will eventually become irrelevant and become extinct. Industries which do not see the signs, or see it but choose to ignore it, do it at their own peril.

In 2014, in a matter involving the Steel Industry, a presiding judge referred to the manner of dealings in that Council as a ‘sham’. Nothing changed, resulting in another presiding judge, in a similar matter a few days ago, expressed his surprise that they just do not learn from their mistakes. That is the reason for the dire situation the Steel Council (MEIBC) finds itself in. The point is that, unless this Council learns from its mistakes (and other councils learn from the Steel Council’s mistakes), and bring about fundamental changes, they will all eventually close their doors. It will therefore serve all councils well to learn from current events and trends; if the new tide hasn’t hit them as yet, it will do so very soon.

The message to NUMSA is this: it will be of no use utilising protest- and mass action in an attempt to force NEASA, among others, to do anything to rescue the current dysfunctional and SMME hostile dispensation. In order for NEASA, and SMMEs in general, to make any contribution, financial or otherwise, to save the system, fundamental changes will have to be implemented first. We suggest that NUMSA, and other trade unions, spend their energy constructively and in a manner that will bring about this change, a form of change which will move South Africa forward, a form of change which will cause our economy to grow and to create jobs; because if they don’t, centralised bargaining will eventually collapse.

This opinion piece is by Gerhard Papenfus, Chief Executive of the National Employers’ Association of South Africa (NEASA).