With the kind permission of Business Day here are some extracts from an article by Tim Cohen, a contributing editor, that first appeared in Business Day today –Unions ride roughshod over firms — and logic.
The entire article may be viewed or downloaded by clicking on the heading or going to Business Day itself.
“The thing that brings this to mind is a bizarre strike at some of Xstrata’s South African businesses. Now, I truly believe in trade unions. They have a proud history of creating workplaces that are safer and free of child exploitation. They have won important rights such as overtime and maternity leave and they have supported the creation of pension schemes, and so on. Yet we know, too, that trade unions can destroy industries, as they did the UK’s car industry in the 1960s and 1970s”.
“Something fundamental has changed in SA ’s trade unions. They are so used to getting what they want, they are so powerful in the African National Congress, that they ride roughshod not only over companies but over logic itself. Somewhere, the sense of balance has been lost”.
“What happened is that Xstrata decided to introduce an employee share-ownership plan. This was at the request of the unions, who were supported by management for obvious reasons: it wants workers to share in the company’s profits and have a sense of alignment with its future. But it does mean shaving earnings by 3%, not just one year, but forever, something shareholders may be less enthusiastic about”.
“In normal circumstances, you would think everybody would say, fabulous, let’s go and have a great Christmas. But no. The company, which uses the Patterson pay-scale system, proposed 14 bands of participation in the scheme, dependent on pay grade. Those higher up would get more as they bear more responsibility for corporate success. The National Union of Mineworkers (NUM), amazingly supported by Solidarity, demanded an equal distribution”.
“The argument therefore started out of an ideological issue. Unions naturally have an ethos of egalitarianism, and management, equally obviously, has an ethos of differentiation based on performance and responsibility”.
“The simple solution would be to withdraw the scheme, which would nullify the reason for the strike. But now the NUM is threatening to make Xstrata’s operations “ungovernable” if it does so. This, for a gift the unions themselves turned down”.
“This all belongs to some strange world. Unions feel invulnerable even as they lose members. In short, the sense of balance and proportionality has been lost”.
As has been pointed out before the “Patterson” referred to in the article of Tim Cohen is actually Dr TT Paterson who is discussed in articles on the WorkScienceInstitute website and who visited South African many years ago.
Dr Paterson suggested decision-bands but never actual formulated a complete system himself. Various employers adopted schemes or structures based on the thinking of Dr Paterson. Even EEA9 contains references to Dr Paterson as if he formulated some grand scheme.
It also needs to be pointed out that our system of collective bargaining is far more extensive than the system in the USA. In the USA the only mandatory issues for collective bargaining are hours, wages and conditions of employment and then only with a trade union that has proved to enjoy the support of 50% plus one of the bargaining unit after a proper ballot has been held. There is also a duty to bargain in good faith over those issues and complaints can be addressed to the NLRB.
In South Africa there is no duty to bargain, let alone in good faith, and all matters of mutual interest must be resolved by power-play.
Even if Xstrata persists in arguing that the offer has been withdrawn or cancelled that does not prevent the employees from engaging in further protected strike action to force Xstrata to reinstate the offer.
If that happens and Xstrata is not prepared to give in to the demands the only option will be to ‘contemplate’ dismissing all those on strike and follow the statutory procedures in section 189A of the LRA. This includes consultations with the trade unions concerned.
If there are dismissals based on Xstrata’s operational requirements and the employees are offered their existing jobs and perhaps a type of share-ownership plan and they refuse to accept the offer, it seems that Xstrata would be entitled to terminate employment on notice but would not be required to pay ‘severance pay’ as required by section 41(2) of the BCEA.
BCEA section 41(4) provides that “an employee who unreasonably refuses to accept the employer’s offer of alternative employment with that employer or any other employer, is not entitled to severance pay in terms of subsection (2)”.
The moral of the story is that employers in South Africa have to accept that one of main objects of achieving the purposes of the LRA (including economic development) is collective bargaining with trade unions over any matter of mutual interest and that it is only power that determines the outcome. As there is no duty to bargain in good faith it is not possible for employers to complain to any court or other body about the legitimate tactics being used in the power –play or even the demands being made by the employees.
As the saying goes ‘if you cannot stand the heat stay out of the kitchen’.
It is not often I feel the urge to write a letter to Business Day but I did so last week and the letter was published yesterday – Playing Labour Games. You are encourged to visit Business Day as there are another couple of excellent articles.
Playing labour games
The “Patterson” referred to by Tim Cohen in his excellent column (Unions ride roughshod over firms — and logic, October 20) was actually Dr TT Paterson, who visited SA years ago and influenced management thinking on proportional wage differentials.
Collective bargaining in SA is not the same as in the US, where there are only three mandatory issues: hours, wages and conditions of employment. In the US, trade unions must prove that they have the support of 50% plus one in a bargaining unit. They then become the sole bargaining agents for everyone in that unit and the parties must bargain in good faith.
SA does not have any duty to bargain, let alone in good faith, and all employment matters of mutual interest must be resolved by a power play. Even if Xstrata persists in arguing that the offer has been withdrawn or cancelled, that does not prevent the employees from engaging in further protected strike action.
As part of a power play, employers may implement offers or make them to individual employees instead of the union. To protect their operations, employers may even “contemplate” dismissing protected strikers based on their “operational requirements”. Employers must then follow the statutory procedures in the Labour Relations Act , including consultations with the trade unions. Employees who are dismissed and refuse to accept their existing jobs forfeit the right to receive “severance pay” as required by the Basic Conditions of Employment Act, but must get notice pay.
The moral of the story is that employers in SA have to accept that one of the main objects of achieving the purposes of the Labour Relations Act is collective bargaining with trade unions over any matter of mutual interest. It is only power that determines the outcome and neither employers nor employees can complain to any court or other body about the legitimate tactics being used.
Until a duty to bargain in good faith is introduced into our law, it is to be hoped investors will learn to “play the game” and not pay any attention to the saying, “if you cannot stand the heat, stay out of the kitchen”.
Allan Seccombe’s report on the latest developments at Xstrata was first published in Business Day today under the heading Union, Xstrata locked in talks over employee share scheme.
View or download the report by clicking on the heading or go to Business Day. These extracts are reproduced with the kind permission f Business Day.
“XSTRATA, the world’s leading ferrochrome maker, and the National Union of Mineworkers (NUM) were locked in talks chaired by the Department of Mineral Resources late last night to resolve a dispute over an employee share ownership scheme”.
“The NUM embarked on a protected strike at Xstrata’s coal, ferrochrome, vanadium and platinum operations in SA to back its demands for an equal allocation of shares in the local business to all employees qualifying for the scheme. Xstrata has suspended the plan”.
“Four other unions represented at Xstrata have not joined the strike, which started on October 16 and has not abated, prompting Mineral Resources Minister Susan Shabangu to summon Xstrata and the NUM to the department’s offices in Pretoria yesterday to find a solution”.
“Xstrata wants the strike called off before it can resume talks for the scheme, which is worth about R2,6bn, while the NUM wants concessions from Xstrata before its members return to work. Xstrata created three bands of workers, with workers in each band being allocated a number of shares to give the South African workforce a 3% stake in Xstrata SA. The NUM said the scheme was racist as the top band was dominated by white workers “.
“’We understand the NUM’s dissatisfaction, since the employer will gain (economic empowerment) points due to the number of black workers included in the proposed scheme, but the employees who will receive the biggest reward out of the scheme will be those employees employed in the job categories above the job categories occupied by the NUM members,’ said Gideon du Plessis, deputy general secretary of trade union Solidarity”.