“THERE is something of a divine symmetry to Economic Development Minister Ebrahim Patel’s predicament. For 10 years, as secretary-general of probably the most inflexible union in the country, he presided over the precipitous decline of the clothing industry from more than 100000 to barely 50000 jobs. Now he has been put in charge of the Sisyphean task of creating 5- million jobs in the next 10 years.
The vengeful gods of politics seem to like synchronicity. Just as the Cabinet met for its recent lekgotla to fantasise about how Patel’s New Growth Path will create 350 000 jobs in manufacturing, the clothing industry bargaining council pushed the hara-kiri sword deeper into its own belly”.
Go to the Business Day website to read or download this important contribution to the current debate by Barrie Terblanche, a freelance journalist specialising in small-business issues.
The author suggests the only solution is to break with the pattern of central bargaining and to allow market forces to set considerably lower wages across the industry. This will only temporarily improve levels of employment as wages and conditions of employment sink. The effect will ultimately be to have less money passing to workers, less expenditure by them and a weaker overall economy. Far better to look at the implications of imposing some tariff protection for South African produced textile and clothing products and break with the religious faith in the free market that allows wages to fall to the lowest levels. Rather deal with the protection of local production in trade talks that will likely result in some preferences for South African production.
Andre Kriel, general secretary of Sactwu, responded in a letter in Business Day published today and it is published here in full.
“Barrie’s World
I refer to the article by Barrie Terblanche (Clothing industry: only a miracle will stop Sactwu’s suicidal trajectory, January 25). I refer to the article by Barrie Terblanche (Clothing industry: only a miracle will stop Sactwu’s suicidal trajectory, January 25).
Reading it, I realised we had all stumbled upon a bizarre parallel universe, called Barrie World.
The first obvious feature of Barrie World is the absence of any protection for workers, including bargaining councils and, in the words of the King of Barrie World, that time-waste of an institution called the Commission for Conciliation, Mediation and Arbitration, the CCMA. Also, in Barrie World, workers have little need for money, for there are no “onerous minimum wages”, such as the lowly R417 per week which clothing machinists receive in SA.
In Barrie World, the clothing industry competes with those of other countries on price alone. It does not matter that such a strategy is not sustainable, since as the workers of Barrie World are paid less, the wages of workers in other countries shall be cut, forcing Barrie World workers’ wages even lower, ad infinitum.
The South African Clothing and Textile Workers Union (Sactwu) has realised for some time that we cannot compete on price alone.
Thus, the union has worked with other stakeholders to move competition away from price alone to areas like lead times, innovation and quality (starting when Ebrahim Patel was Sactwu’s general secretary). It has done this in countless ways, including by linking part of clothing workers’ wages to productivity.
Interestingly, in Barrie World all small businesses disregard the law, and treat workers with contempt.
This is yet another distortion of the real world in which many small business owners are law-abiding, pay their workers the legal wages, and still thrive.
That Barrie World is so far from the reality of small businesses is surprising since its anthem is “Barrie World Buries Business Worries”. Either the King of Barrie World has much less small business knowledge than he proclaims or, in trying to make a point, the King was forced to omit facts which would undermine his argument. Whichever it is, if I owned a small business, I would think twice about asking for an audience with the King. The Joker may know more”.
This letter by R Albert that appeared in Business Day on 16 February 2011 (Competition hindered) seems appropriate to put here as a comment
“There are many in industry who see domestic competition law in SA, as practised here, doing more harm than good. Exactly as labour law is destroying our international competitiveness (read jobs), so is domestic competition law destroying competitiveness (and jobs). Coming as it does from the same labour stable, it does not understand business. Competitiveness has nothing to do with talking and meetings, and everything to do with functional and dysfunctional behaviour.
This does not mean there should not be such laws — but balance and perspective are required. Whereas strong labour kills jobs, strong industries create jobs — but that isn’t happening.
Domestic competition law in SA has been politicised, and is not about international competitiveness at all. It is too restrictive. Consequently, industry is no longer able to function as it should.
Typically, the biggest factor facing the clothing industry is how to compete against imports — and to this end discussions among companies need to take place, and agreements be reached how to increase productivity, synergies and share marketing, distribution and manufacture with each other.
Such discussions may not just be functional, but essential to good industrial management. SA would be better off with a strong industry than a weak one and let imports determine prices as they currently and invariably will do.
Protected from competition, those profiting from the competition law have no idea about international competitiveness, or what damage competition law is actually doing. SA (cannot develop) strong industries under such law.
The domestic competition authorities in SA don’t share our views as they have no idea how industry works, or what is required, or bother to find out. Hence the high level of deindustrialisation taking place.
The development of competition law is still very much in the formative stage internationally and SA’s laws are open to world criticism. It is an area of intense and considerable debate.
We believe international competitiveness is central to the national problem. Every time new taxes and costs arise, they affect the competitive edge. Be it toll roads, free electricity, healthcare, stealth taxes, legislation or whatever. Try adding value — industry can’t. It is all too expensive.
R Albert, Newlands”