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The Demise Of The Metal Industry Bargaining Council


18 April 2016

Although it’s been a well-known fact for quite a while that the Metal and Engineering Industry Bargaining Council (MEIBC) is in severe financial difficulty, reports in Sunday’s newspapers in this regard has prompted me to break my silence on this issue. It is, first of all, important to state the correct facts regarding the circumstances which led to the current situation:

  • the current impasse is a result of the trade unions’ refusal to negotiate NEASA’s demands regarding the current administration levy dispensation;
  • the MEIBC’s failure to submit audited financial statements to the Department of Labour, notwithstanding being required to do so by prevailing legislation, among others due to the fact that the MEIBC Management Committee refused to accept the financial statements as a result of MEIBC officials’ redirecting funds they were not entitled to do; and
  • the delay in the processing of the extension of current levy agreements was as a result of the MEIBC’s own administrative inefficiencies and non-compliance with prevailing legislation.

For many years the MEIBC has been tormenting SMMEs in the Steel Industry. The MEIBC has created the platform where big business (through their agent Seifsa) could collude with trade unions (primarily Numsa) in deals, which for these role-players, secured their own version of ‘stability and labour peace’, a dispensation completely hostile to the interests not only of SMMEs, but South Africa as a whole. The MEIBC secretariat, funded by, among others SMMEs, were then (and still is) used to enforce these outrageous and unlawful wage agreements.

These unaffordable wage agreements, unconstitutionally and unlawfully obtained, has caused the Steel Industry to be 40% more expensive than the second most expensive industry governed by any other bargaining council dispensation. This has led to hundreds of thousands of job losses; 90 000 since 2008 of which 40 000 was lost in 2015 alone. The MEIBC has set in motion a devastating process of de-industrialisation, a huge contributor to unemployment and consequently economic and social instability.

In 2010 this tyranny by a unconstitutional but powerful minority was challenged for the first time, which set in motion a series of events leading to the situation that the MEIBC currently finds itself in – and all because of the fact that it refused to stop its illegal and unconstitutional conduct and also because it refused to transform itself into a body catering for the interests of SMMEs.

In 2011, after a dispute being declared by two of the employer bodies on the MEIBC, the rest of the parties admitted to the complete unconstitutionality of the MEIBC. The fact is that for many years prior to 2011, the MEIBC was not constituted at all; it functioned in a constitutional vacuum. However, this constitutionally speaking, empty shell [with the agent Seifsa (representing less than 20% of employers in the Steel Industry) on the one hand, and primarily Numsa on the other side], continuously found it fit to enter into agreements (which a Labour Court judgement referred to as a ‘sham’) and then, through the intervention of the Minister of Labour, enforced these agreements on employers who chose not to be part it, the so-called non-parties.

After lengthy and costly legal processes the extension of the 2011-14 Metal Industry Agreement was set aside by the Labour Court. A similarly illegal Agreement, in respect of 2014-17, is the current subject of further Labour Court proceedings. A Court date is awaited.

Court dates are also awaited in respect of a previous and current Administrative Levy Agreements (which is the source of income for this Council).

All these legal challenges, which, among others, contributed to the financial decline of the MEIBC, is the result of unconstitutional, unlawful and undemocratic conduct, playing itself out in an environment in which governance is non-existent and the voice of SMMEs, the lifeblood of the economy, is suppressed.

For the MEIBC to secure future financial resources, they now need the support of those very SMMEs whose interests where deliberately ignored, but who were victimised and bullied, many to the point where they simply could not continue to conduct business.

There are those who argue that the Steel Industry needs the MEIBC. It is a well-known fact that trade unions desperately need this MEIBC, but only for their own selfish (specifically financial) reasons. A few big and powerful employers might also need this undemocratic institution, primarily for purposes of market control and the elimination of competition from SMMEs. Then, off course, there are the few individuals who need this system for purposes of employment, who have found in this bargaining council scheme a lucrative financial source.

The South African economy however, which needs a particular environment to grow, an environment which this Council does not create, does not need the MEIBC. Neither the millions of unemployed people, for which the MEIBC has created an insurmountable obstacle to find a job, nor the 11 000 SMMEs in the Steel Industry, which are on the receiving end of a repetitive unfavourable, business hostile dispensation, needs the MEIBC, at least not in its current format.

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