Severe consequences for all in the clothing and textile industry if the trade union sticks to an ideological position.
Business Day first published the following letter by Johan Baard, Executive director, Amsa – Union is conflicted.
With the permission of Business Day here are some extracts but the letter needs to be read in full by clicking above or going to business Day itself.
“Andre Kriel, the general secretary of the Southern African Clothing and Textile Workers Union (Sactwu), recently accused the Apparel Manufacturers Association (Amsa) of misrepresenting the union’s position in respect of the high levels of minimum wage non compliance by employers in the clothing manufacturing sector (Union misrepresented, Letters, June 21) [see below].The difficulty we have is that he consistently fails to use such opportunities to publicly record exactly what the union’s position is. We are now compelled to approach the Labour Court to order the Bargaining Council to enforce its employment standards.More than 400 writs of execution have been gathering dust for more than six months. If Sactwu is committed to ensuring that all employees in the clothing industry receive the wages legally due to them, why should it be necessary for Amsa to approach the Labour Court in this regard?The reality is that the union finds itself in a conflicted position due to its membership profile spanning across both compliant and non compliant factories. Closing these non compliant companies would result in the union being a party to a decision which would lead to members losing their jobs.The extent of the pressures and contradictions faced by the union while it attempts to keep the pieces together on this policy tightrope, must be unbearable. The union’s rejection of our proposals for a new wage model, makes no sense. Added to this, the union misrepresents our position when it says that our wage model proposal seeks to reduce the wages of employees.Space does not permit me to go into the detail other than to categorically state that our proposal guarantees the wages of employees will not be reduced, while making it more attractive for employers to employ more people from the ranks of the poor and unemployed. This is admittedly at a lower minimum wage. Our model does, however, make provision for such employees to earn more in terms of factory-based incentive schemes.”
Business Day were the first to publish an article by Bekezela Phakathi –
Textile workers set to strike as wage talks falter.
With the permission of Business Day here are some extracts but the article needs to be read in full by clicking above or going to Business Day itself.
“Southern African Clothing and Textile Workers’ Union claims that employers are set to annul a deal made last year to offer new employees 30% lower wages.”
“The clothing sector looks set for a strike after pay talks deadlocked this week, with the Southern African Clothing and Textile Workers’ Union (Sactwu) also claiming that employers were set to annul a deal made last year to offer new employees 30% lower wages.”
“The union’s opening demands amounted to an increase of 13,5% on total labour costs. Amsa did not table an offer. Instead, according to Sactwu, employers put forward a proposal to ‘significantly cut the wage rates of clothing workers’.”
“He said the union had referred the dispute to the clothing industry bargaining council, and if conciliation failed, Sactwu would conduct a ballot for industrial action.”
“’We were a bit puzzled (when employers suggested that the 30% wage deal would be cancelled), but we anticipated that they (the employers) would pull such a stunt.’ Mr Kriel said the union’s figures showed that about 500 workers had been hired on the entry-level wage since its introduction. ‘If the wage deal is cancelled, it means that the workers hired on that deal will have to be migrated upwards and should earn 30% more,’ Mr Kriel said.
Amsa director Johann Baard denied yesterday that employers sought to cancel the wage deal.”
“He said the union had rejected Amsa’s proposal for a new wage model and that its members would not entertain any reduction in the minimum-wage standards applicable in the sector.”
Business Day were the first to publish the following letter by André Kriel, general secretary, Sactwu – Union misrepresented
With the permission of Business Day here are some extracts but the letter needs to be read in full by clicking above or going to Business Day itself.
“We are amazed how the Apparel Manufacturers Association (Amsa) continues to publicly misrepresent the Southern African Clothing and Textile Workers Union’s (Sactwu’s) position on compliance enforcement in the clothing industry (Clothing industry wants realism, June 20).” [see above]
Business Day were the first to publish the following letter by Johan Baard, executive director, Amsa – Clothing industry wants realism
With the permission of Business Day here are some extracts but the letter needs to be read in full by clicking above or going to Business Day itself.
“As the organised voice of clothing manufacturers nationally and regionally, it is appropriate that I comment on some of the views recently expressed by Tony Ehrenreich and Western Cape MEC Alan Winde on the state of the clothing industry, as well as your editorial comment on job creation and developments in the clothing industry.”
“The survival and future sustainability of the clothing industry will depend on the co-operation and alignment of all interventions by its stakeholders. These include provincial and national government, as well as organised labour and employer bodies.
Two fundamental realities need to be highlighted in regard to the debate on appropriate policy measures needed to unlock the full growth and job creation potential of the sector.
First, that speed-to-market and fast-fashion supply chain models will not be sufficient to deliver on the promise of large scale job creation. The European Union is littered with examples of clothing industries that embraced the speed-to-market, fast-fashion business model, going back many years. The reality in countries such as Italy is that their manufacturing base had shrunk significantly and ultimately stabilised on the fast-fashion model, but on a far lower employment base. To leverage the industry’s employment creation potential, it will have to extend its competitiveness to core and commodity apparel products. That is where the jobs will be created.
The second fundamental truth we need to face is that market supply and demand ultimately trump policy and ideology. This is evidenced by the current refusal of the trade union to authorise the comprehensive enforcement of labour and wage standards it negotiated in the bargaining council.”
“The fact is our labour market policies are not aligned to our developmental needs and objectives. Ask the thousands of workers in Qwa Qwa, Newcastle and Botshabelo who are given a chance to enter the formal economy, get skilled, trained and earn a wage which can put food on the table of their families. Millions of unemployed citizens of our country live in regions and communities where the levels of poverty and deprivation are unspeakable. Apparel Manufacturers of SA is not an advocate of poverty wages or exploitation of labour. We are an advocate of realism and incremental progress towards the sustainable upliftment of communities by offering opportunities where none exist. This must, of course, take place under appropriate stakeholder governance oversight structures.”
Textile union opts for compliance over wage increases
Report by Lisa Steyn that first appeared in the Mail & Guardian on 20 July 2012 and needs to be read by clicking on the link or going to the M&G website.
QUOTE
Sactwu has abandoned its attempt to halt legal proceedings that could result in the loss of thousands of jobs in the clothing and textile industry.
Just three days after filing opposing papers submitted against an Apparel Manufacturers of South Africa (Amsa) application in the Labour Court, the South African Clothing and Textile Workers’ Union (Sactwu) confirmed it had withdrawn them.
The application sought to compel the national bargaining council to execute writs on more than 400 clothing and textile companies, which were said to employ about 21000 workers but did not comply with the minimum wage.
“Our opposition to the Amsa application has unfortunately created the false impression that the union condones noncompliance. That is not the case,” Sactwu general secretary Andre Kriel told the Mail & Guardian.
He said the union’s position had always been that every company had to adhere to the industry ¬agreements.
Bargaining council
The basis of the ¬opposition was rather that the ¬application was premature because the matter was on the agenda of a bargaining council ¬executive meeting scheduled for April, which was unilaterally cancelled by Amsa when it walked out of the wage negotiations.
“The meeting has not been reconvened, despite numerous indications from the trade union that we require it to be reconvened,” Kriel said.
Johann Baard, executive director of Amsa, said now that the case was unopposed, the court was expected to make a ruling in the next few days to hopefully force noncompliant companies to settle their debt of¬ ¬several millions owed to the bargaining council in unpaid wages and ¬various employer contributions.
Companies in this deeply troubled sector would then be shut down and their assets seized and auctioned, Baard said.
Sactwu claimed the damage was nowhere near the reported numbers.
Proposed wage model
“Our initial information shows that the number of companies at risk is not even close to previous estimates,” Kriel said. “It is about 150 companies covering about 5 000 workers and we still have not finalised our verification.”
Baard said Amsa would not consider wage increases while its members still had to compete with companies that paid below the minimum wage – an estimated 40% of the industry.
Hence, Sactwu was faced with either a new wage model or companies would have to comply or be closed.
Sactwu, unwilling to accept the proposed wage model, chose the latter. “The union rejected the wage model and imposed wage demands on us,” Baard said.
Kriel said Sactwu was not opposed to changing the wage model. “We have agreed to change it many times. We are opposed to the downward variation of terms and conditions of employment. The proposed Amsa model amounts to that.”
Ahmed Paruk, chairperson for the United Clothing and Textiles Association, said the situation offered Amsa more political gain to force Sactwu to give in to a new wage model, because the “government can never allow this [closure of these companies] to happen”.
Representivity
Paruk’s association represents 128 employers – most of whom are noncompliant – but is more concerned with an application it filed in the Pietermaritzburg High Court late last year, which requested a full review of the clothing and textile sector.
Confident of its case, Paruk said a ruling in the association’s favour would mean the bargaining council would dissolve and a new wage model would be introduced by the department of labour “and it will be substantially lower.”
Paruk believes the case is guaranteed to succeed. “The representivity of the bargaining council is one issue,” he said.
When the bargaining council’s representivity certificate expired at the end of May, the department of labour refused to issue a new one because the employer associations on the council represented less than 28% of employers covered by the council.
Paruk said the playing fields were not level, because major companies contributed to decisions made by the bargaining council and subsequently all companies were obliged by law to adhere to them. Larger compliant companies could still ask for exceptions, he said, but noncompliant companies had absolutely no say.
Unsustainable
“We have made up our minds. Even if we lose this case we will take it on appeal,” said Paruk, whose ¬association received R2-million in donor funding to help it to pursue the matter.
Although seemingly on opposite sides of the fence, Paruk and Baard have a common view of sorts: they both feel the present wage model is unsustainable.
“At this point we have priced ¬ourselves out of the market,” Baard said.
Amsa members, consisting mainly of compliant companies, are struggling to combat costs and keep their heads above water. Clothing and textile conglomerate Seardel, for example, axed 1500 workers in the past three months, citing losses in its apparel business.
The department of trade and industry said, although labour matters and associated litigation did not fall within its mandate, it had encouraged companies that were noncompliant to take advantage of the clothing textile competitiveness programme to upgrade and become compliant as part of a win-win approach.
“Such an approach supports a race to the top that is based on product, process and people upgrading. As a consequence, labour productivity has been rising rapidly – by 73% between 2005 and 2010 in the clothing industry, and employment levels in the industry have stabilised.
“This is a far more compelling model than a race to the bottom to see who can offer the worst working conditions.”
UNQUOTE
Policy shift could help to make markets work (24 July)
This article by Dave Marrs, the Cape Editor, was first published in Business Day on 24 July and with thanks to Business Day here are some extracts but the articles needs to be read by clicking on the link of going to Business Day.
Informal trading
“The question of how to manage informal trading is a bit of a poser for genuine advocates of economic freedom (as opposed to those, such as the African National Congress Youth League, who have hijacked the term for their own ends). People should be free to make a living in whatever way they can, as long as it is within the law. And the law should be reasonable — excessive red tape and harassment can be as much of an obstacle to free trade as an outright ban.”
“On the other hand, formal businesses with overheads and municipal rates to pay have a right not to be undermined by informal traders setting up shop in close proximity and undercutting their prices. Questions of sanitation, petty crime, intimidation and the obstruction of pavements can’t be ignored either.”
“The city of Cape Town is now trying to find that elusive middle path by adopting a new policy towards informal traders. Up to now, ensuring compliance with municipal bylaws and fining transgressors has been the responsibility of the safety and security directorate’s informal trading unit, which has on occasion been accused of heavy-handedness. Rules may be rules, but there is something not right when poor, otherwise law-abiding people are fined what could be a few days’ takings, and have their stock confiscated, merely for trying to feed their families.”
“Primary responsibility for managing informal traders has now been handed to the economic and human development directorate, which is mandated to relocate illegal traders and help them get the necessary permits before resorting to sanctions. It has also identified a further 70 or more potential informal trading nodes around the city, which are too small to be markets but could accommodate a cluster of managed stalls.”
“If the policy shift works, Cape Town should in future be a little less vulnerable to accusations of being more like an enclave of Europe than an African city — and other South African cities that appear a little too much like downtown Lagos at present might want to follow suit.”
Clothing and Textile Industry
“I see the Apparel Manufacturers of South Africa has upped the ante in its dispute with the South African Clothing and Textile Workers Union over noncompliance with minimum-wage laws. About 450 small clothing companies face closure if the Labour Court grants an order compelling the National Bargaining Council to serve outstanding writs of execution.
The question of compliance is a bit of a red herring though, a symptom rather than the disease. The elephant in the room is the inflexibility and unworkability of legislated collective bargaining at industry level in the local clothing manufacturing sector, and the consequent unrealistic minimum wages given global competition.
Something will have to give. Nobody wants it to be hundreds of small businesses employing thousands of people, but if not, it will have to be the union and its accomplices in the Department of Labour.”
LETTER: Dumping hampers SA’s rag trade (26 July)
Johann Baard’s letter was first published in Business Day today and thanks to Business Day is posted here as part of the ongoing debate.
“Dave Marrs (Policy shift could help to make markets work, July 24) correctly points out that the turmoil in clothing manufacturing, where the employer and trade union parties are grappling with high levels of noncompliance, ‘represents a symptom rather than the disease’.”
Inflexibility and excessive labour costs are indeed some of the underlying causes — he refers to this as the proverbial ‘elephant in the room’.
An elephant does, however, have many features and can be unpredictable at the best of times. Consequently, the analysis requires more in order to arrive at a comprehensive and sustainable suite of solutions and regulatory adjustments.
An area thus far totally overlooked relates to the proliferation of small Chinese retail outlets across the length and breadth of SA.
A recent study found the number to be about 10 000 shops.
Space does not permit me to deal with this very important phenomenon in our domestic market, other than to point out that this growing retail footprint totally ignores a key cornerstone of the Industrial Policy Action Plan, which is to move away from a consumption-driven economic model to one driven by production or manufacturing.
Second, the prices of the goods offered at these shops, particularly the clothing, amount in many instances to what the rules of the World Trade Organisation call “dumping”, meaning that the selling price is less than the total cost of the raw materials required to manufacture the goods.
Not only does this undermine the developmental imperatives of our industrial policy, but it also plays a significant role in respect of the prices required by the larger domestic retailers of local clothing manufacturers. To stay in business and comply with the labour costs required by the Clothing Industry Bargaining Council requires adjustments across the entire behavioural profile of the elephant in the room, not least of which is the need for consumers, shareholders and investors to understand the consequences of their decisions.
Looking upstream in our value chain, the need for our fabric input costs to be globally competitive has remained a frustration in respect of decisive policy making over many years now.
Fabric is the single largest manufacturing cost for our sector. To pay an average duty of 22% on imported fabric because the fabrics required by our customers are not locally available is illogical and compromises the job growth potential of the local clothing manufacturers. I have previously addressed the challenges we face in respect of illegal imports and under-invoicing. Urgent and decisive action is also required in this regard.
We are currently in a Commission for Conciliation, Mediation and Arbitration conciliation process where our labour market imperfections and challenges are under the spotlight. I am confident that the constructive engagement with organised labour will in the near future culminate in adjustments, reform and compromise, which will again take the lead in labour relations practice locally.
The challenges beyond our labour market, some of which I have alluded to, are equally in need of action.
Creating jobs and fighting poverty is our collective responsibility.”