02 Nov Textile industry agreement significant step in relationship between SA business managers and unions
2 November 2011: The significance of the agreement between trade unions and employers to lower the minimum wage in the clothing and textile industry in South Africa in return for job creation should not be underestimated, particularly in the wake of the recent strike season, described by some as one of the most disruptive ever experienced in the country.
This is according to Chris Jacobs, Director at OIM International – one of South Africa’s leading business consultancy firms, who says that as the economy struggles to recover, new long-term partnerships between business leaders and union leaders are crucial to the futures of both businesses and employees.
“South Africa cannot afford to go through repeated cycles of drawn-out strike action. The strike season of 2011 cost the economy dearly. Many people who took part in the strikes now have to cope with the subsequent loss of income that may take months or years to recover. At the same time, businesses experienced a major loss of productivity and many companies have been forced to shut their doors permanently.”
The impact of the recent strikes, coupled with economic circumstances, on employment figures is glaring. According to the September Adcorp Employment Index, employment dropped sharply in the manufacturing (-16.7%), transportation and logistics (-9.0%) and construction (-4.6%) sectors – representing a loss of 25,000 jobs during the month. The survey also revealed that employment of low- and semi-skilled workers fell by 6.4% during the month (or 26,000 jobs).
This aside, Jacobs says the strikes have a major impact on foreign direct investment into South Africa and ultimately on our ability to compete in the global market.
Jacobs, who has consulted on various types of disputes in the mining, construction and manufacturing industries over the past twenty years, says that a completely different relationship between business managers and union leaders is required; not only to secure the future for shareholders, employees and the communities from which they come – but to create job opportunities and promote higher productivity.
“It is necessary to create an understanding of the roles and responsibilities of all role players. This involves both managers and unions looking at the basic principles of business, management and leadership and developing an understanding of the perspective of the other party.”
He urges business managers and unions to focus on the intent of the South African labour law – in a social and an economic context – and not only the letter of its content. “South Africa has very progressive labour laws. The challenge is to cultivate an understanding between an organisation’s business and union leaders which is crucial to achieving the objectives of both parties,” he says.
“At the moment, many union leaders hold the perception that labour laws give businesses all the power. Meanwhile, many business leaders perceive the laws as only benefiting employees. As a result of these conflicting perspectives, the labour laws are achieving the exact opposite of their intentions,” he says.
Jacobs explains that the intent of South African labour laws is to firstly achieve labour peace and stability. “Secondly, they are intended to achieve social justice as well as social responsibility. Thirdly, they aim for economic development and productivity and finally, they aim for the democratisation of the workplace.
“As soon as business managers and union leaders understand that the laws are designed to create prosperity and protect the integrity of both parties, a mutually beneficial and sustainable agreement can be reached.”
Jacobs says that especially after the most recent bout of strikes, wage agreements need to be adapted so that they are based on longer term agreements based on sustainability criteria such as year on year inflation, actual business performance and economic forecasts. He says these agreements need to go further than mere wage negotiations – and should include other factors related to the intent of legislation, such as the upliftment of skills and other social challenges. Jacobs therefore recommends that wage structures include a portion that is fixed and a portion that is linked to collective performance.
“If wages are linked to performance and market fluctuations for the long term, there will be no need to disrupt the partnership annually. Instead, employees will be encouraged to perform to higher levels and in turn, productivity and profitability will increase – an agreed portion of which will be rewarded to the employees. The new agreement in the textiles industry is the first indication that this kind of agreement can be reached – and it is the kind of agreement that we have always believed will be the most suitable.” he says.