It is suggested that short-term solutions are not the answer although any movement towards an overall objective must be welcomed. South Africa really needs to focus on the organisational and cost structures of enterprises, value-exchange and proportional income differentials.
It seems that the agreement to reduce the wages for new textile sector staff incorrectly puts the emphasis only on wages.
Bekezela Phakathi has reported in Business Day today that an agreement has been reached in the Textile Industry to offer wages to new employees at 30% below the usual rate. The report was first published in Business Day and these are some extracts with the kind permission of Business Day. View or download the article or go to Business Day.
“Agreement in which new employees are offered 30% lower wages is being touted as model for reducing unemployment in SA”.
“CAPE TOWN — Textile industry employers yesterday concluded a landmark deal with a trade union to offer 30% lower wages to new employees, in an innovative bid to create more jobs and revive the fortunes of SA’s clothing sector”.
“The agreement, billed as a “first of its kind”, was negotiated by employers and the Southern African Clothing and Textile Workers Union (Sactwu)”.
“The South African clothing industry is set to create 5000 new jobs within the next three years after the ground-breaking agreement. Sactwu said yesterday the deal would incentivise employers to hire, creating wider opportunities for young people seeking employment and experience within the industry — without jeopardising existing jobs. ”
“Apparel Manufacturers of SA executive director Johann Baard said the wage deal would make the industry more competitive and “bring about significant repatriation of lost clothing units back to SA”. The association would monitor all members closely to ensure the agreement was not abused.”
“Cape Chamber of Commerce president Michael Bagraim said yesterday “it would be absolutely fantastic if other industries followed this example”.”
“When this brave concession is taken together with the scrapping of the 22% tax on imported fabric we have a recipe for the revival of the once-great Western Cape garment industry.”
“It is not easy for a union to agree to a reduction in starting wages but the union leaders have clearly taken the long-term view that it is necessary to bring new workers into the industry”.
An editorial was published in Business Day today – Wage deal may be a new beginning – commenting on the agreement in the Textile Industry to offer wages to new employees at 30% below the usual rate. These are some extracts form the editorial with the kind permission of Business Day. View or download the editorial or go to Business Day.
“THE signing of a landmark agreement between employers and the South African Clothing and Textile Workers Union has been met with a sigh of relief from the embattled clothing and textile industry, and created a valuable opportunity to test the efficacy of entry-level wage interventions on job creation”.
“The clothing and textile industry has been hard hit by cheaper foreign imports in recent years and has suffered considerable job losses. Many of these job losses have, however, also been attributed to high minimum wages in the sector. The new agreement, concluded on Wednesday, allows companies in the sector to hire new workers at a wage rate 20%-30% lower than the existing industry minimum wage”.
“The deal is designed to encourage employers to hire new workers — without jeopardising existing jobs — and will run as a trial until 2014. These apprenticeships are hoped to create wider opportunities for young people seeking employment and experience in the textile industry. The agreement is, however, subject to several stringent conditions, one of which is that employers create 5000 new jobs by the end of the trial period”.
“Although numerous analysts have confirmed the viability and cost-effectiveness of entry-level wage models — most notably a comprehensive report issued by the Centre for Development and Enterprise — this is the first test of whether it’s possible to increase employment by reducing the cost of hiring inexperienced workers”.
“It is probably too late to save the clothing and textile sector, but this type of intervention serves as an invaluable opportunity to forge new ground in South African industrial relations. This type of agreement between industry and unions should be promoted in other manufacturing sectors, such as the automotive and mining industry”.
“In a country with such high unemployment — especially youth unemployment — any innovation in job-creation policies should be roundly welcomed and given the space to be tested”.
Linda Ensor and Alistair Anderson have reported in Business Day today that ‘Cape Town clothing manufacturer to increase its workforce by 25% — the first significant employment growth in any metropolitan area in years’ – click on Clothing deal bears fruit as firm adds workers.
The report was first published in Business Day and these are some extracts with the kind permission of Business Day. View or download the article or go to Business Day.
“Cape Town clothing manufacturer to increase its workforce by 25% — the first significant employment growth in any metropolitan area in years”.
“The pioneering 30% wage cut agreement signed last week between employers and the South African Clothing and Textile Workers Union (Sactwu) has already resulted in a decision by a Cape Town clothing manufacturer to increase its workforce by 25% — the first major employment growth in any metropolitan area in many years”.
“The industry has shed about 50000 jobs in the past 10 years as a result of pressure from cheap Chinese imports and the relocation of factories into neighbouring Lesotho and Swaziland where labour costs are lower. However, this trend has slowed in recent years largely as a result of government interventions such as the production incentive to improve competitiveness and promote modernisation”.
“Cape Town-based manufacturer Peter Blond & Associates announced at the weekend it planned to add new 100 new workers to its 400-strong workforce by the end of December. CEO Eckhardt Oelz said had the deal not been struck, his company would probably have had to reduce its workforce in Cape Town over the next three years. He just hoped it was not ‘too little, too late’.”
“Analysts suggested the agreement could offer an alternative to the youth wage subsidy proposed by Finance Minister Pravin Gordhan as a way to accelerate employment of young people. The Congress of South African Trade Unions opposes the subsidy, saying it would create a two-tiered labour market”.
“Labour analyst Andrew Levy said the agreement was a ‘great deal’ which could hopefully be extended to other industries”.
“Trade unions outside the industry said further investigation was required to see whether the clothing agreement could serve as a model for other industries”.
“All unions try different ways to protect their members. In the leather industry they structure wages based on turnover. This measure was brought into action about three or four years ago,” he said.
“Katishi Masemola, general secretary of the Food and Allied Workers Union , said he would consider a measure like the 30% wage cut for food and beverage workers because rising prices were beyond employers and unions’ control”.
“’We do not have much control over the prices. We have to change what people are paid. But we do not face the pressures that the clothing industry does. We expect job creation in our industries because people have had to eat during the recession,’ he said “.
View or download the complete article by clicking on the link or go to Business Day itself. Extracts are included here with kind permission of Business Day.
“Call for a wage cut for entry-level jobs is a bid to revive a key industry which has lost nearly 100 000 jobs since the recession.
THE National Employers Association of SA (Neasa) yesterday called for a 50% cut in the minimum wage for entry-level jobs in the metal and engineering sector, in a bid to revive a key industry which has lost nearly 100 000 jobs since the recession.
This comes after the South African Clothing and Textile Workers Union and textile industry employers concluded a landmark deal last week to offer new employees wages of 30% less in a bid to boost employment and turn around SA’s ailing clothing industry sector”.
“Neasa CEO Gerhard Papenfus said yesterday during the 2008-09 recession, the metal and engineering sector lost 100 000 of its 450 000-strong labour force with only a few thousand jobs added in the subsequent recovery.
He expected a further 10% reduction in the workforce by the end of next year if the current labour relations agreement for the sector, negotiated by the Steel and Engineering Industries Federation of SA (Seifsa) implemented on July 1, continues.
Mr Papenfus said if Labour Minister Nelisiwe Oliphant withdrew the existing agreement and implemented a new wage and benefits agreement which included the 50% wage cut for entry-level workers, people could be employed again in his industry. ‘We are more expensive than the clothing and textiles industry but a wage cut would help. An entry-level cleaner costs R6 500 a month and employers cannot afford that,’ he said”.
Labour market: SACP’s demand for equality of income – what – no differentials? (Masondo in Business Day)
Today Business Day published an article by David Masondo, a South African Communist Party central committee member and Limpopo treasury MEC, Equality of income the key to economic expansion and I must confess having had great difficulty in understanding what point he was trying to make.
View or download the article by clicking on it or go to Business Day where it was first published.
Here are some extracts with the kind permission of Business Day.
“The economic crisis requires bold leadership, political will and militant, working-class movements to tackle the structural inequalities rooted in the unequal ownership of the key strategic resources”.
“LEVELS of income inequality are rapidly growing in SA. About 48% of the population earns less than R11 a day, while whites earn eight times more than Africans”.
“Surprisingly, the recent 5% salary increase for public representatives and judges, and textile union Sactwu’s concession of a 30% wage cut for new labour entrants into the textile industry, did not attract much outrage from the left”.
“Strict control of capital outflow is also necessary to ensure that the investable surplus stays in the country. In South Korea, international financial transactions are made through state banks. SA does not take extreme measures such as those in South Korea, where illegal capital flight is punishable by death. But policy sticks to keep the investable surplus in SA must be found”.
“Locking investable surplus into the national economy will not inherently lead to productive consumption. Applied on its own, this instrument will not curb the elites from engaging in luxurious consumption within the nation state. This is why there is a need for anti-luxurious consumption tariffs and domestic taxes, as well as investment imposed through an interventionist industrial policy aimed at bolstering economic development”.
“Income earning is determined by ownership of economic and political assets. The principal assets that enable the state and business elites to maintain these income inequalities are economic power and incumbency of state office”.
“The only asset that workers have in order to claim the surplus they produce is their ability to organise and fight for their interests. It remains to be seen if the leftist organisations are up to the task of organising not only against income inequalities, but also for the working people to win political power and for the equitable redistribution of strategic economic assets”.
“The economic crisis requires bold leadership, political will and militant, working-class movements to tackle the structural inequalities rooted in the unequal ownership of the key strategic resources”.
“Unfortunately, we do not have all these in SA. So business can relax”.
Here are some extracts but the entire article should be read by going to the article in Busienss Day.
“In fact, it’s a tragedy, but it’s been a tragedy for so many years that what is least understandable is why we go on mourning it. This country’s textile industry is stuffed, period. We cannot compete with China. Doing so is an invitation to get knocked down repeatedly. Getting out of the ring and finding something else to do, now that would be clever — but it’s probably asking too much of employers and union officials.”
“In October last year, employers and the dominant South African Clothing and Textile Workers Union reached a landmark deal in terms of which new employees would start on wages 30% lower than the previously agreed norms. The development was seen as a genuine attempt by all sides to rescue the clothing sector.”
“Employers agreed to employ 5000 more people over three years. They arrived at this compact as a result of the union’s rejection of a new wage model proposal put forward by the Apparel Association of SA. It had concluded there was no alternative to the industry’s endemic problems other than to arrive at an entirely new arrangement.”
“The union has now turned up at the annual bargaining table. It wants a 13% wage increase, which association executive director Johann Baard says translates into a 20% raise for non-metro employees.”
“In any event, employers have disengaged from the process. They consider it grossly unfair that as many as 40% of employees registered with the sector bargaining council are being paid substantially below the regulated minimum wage.”
“Baard tells me he is sitting on 450 writs of execution against companies that are paying less than the minimum wage. They owe workers millions in unpaid contributions to provident funds and medical aids. The association doesn’t want to move the process to the Labour Court because the outcome would be that thousands of workers would end up on the streets. They would add to the 61 000 who have lost their jobs since 1992.”
Option #1
“According to Baard, the industry has few options. One is to accept the disconnect between factory costs and the minimum wage, introduce a new (lower) wage model and legitimise overnight many of the companies that are non compliant.”
Option #2
“A second is to enforce the current agreement, which would mean closing down around 450 companies and leaving thousands without work.”
Option #3
“A third would be to dissolve the national bargaining council, recognising that it hasn’t come to terms with the hard commercial reality.
It would need to be replaced with an alternative such as plant-level bargaining, or individual company or even regional negotiations.”
“The textile industry presents exceptionally low barriers to entry. It offers the lowest ratio of any sector anywhere in terms of the capital required to generate jobs. In SA, Baard estimates a R10m investment in textiles would create 485 new jobs; the nearest challenger is agriculture, which would create just 48 jobs.”
“Baard says the South African industry has not been “out-competed”; it has been “out-subsidised”. It doesn’t seek protective tariff barriers, but it wants equal treatment. He claims China offers as many as 60 different subsidies by national, provincial, local and city governments.”
“Given the wage structure in SA, it isn’t difficult to see why the industry is up a creek minus a paddle.”
It is suggested that short-term solutions are not the answer although any movement towards an overall objective must be welcomed. South Africa really needs to focus on the organisational and cost structures of enterprises, value-exchange and proportional income differentials.
It seems that the agreement to reduce the wages for new textile sector staff incorrectly puts the emphasis only on wages.
Bekezela Phakathi has reported in Business Day today that an agreement has been reached in the Textile Industry to offer wages to new employees at 30% below the usual rate. The report was first published in Business Day and these are some extracts with the kind permission of Business Day. View or download the article or go to Business Day.
“Agreement in which new employees are offered 30% lower wages is being touted as model for reducing unemployment in SA”.
“CAPE TOWN — Textile industry employers yesterday concluded a landmark deal with a trade union to offer 30% lower wages to new employees, in an innovative bid to create more jobs and revive the fortunes of SA’s clothing sector”.
“The agreement, billed as a “first of its kind”, was negotiated by employers and the Southern African Clothing and Textile Workers Union (Sactwu)”.
“The South African clothing industry is set to create 5000 new jobs within the next three years after the ground-breaking agreement. Sactwu said yesterday the deal would incentivise employers to hire, creating wider opportunities for young people seeking employment and experience within the industry — without jeopardising existing jobs. ”
“Apparel Manufacturers of SA executive director Johann Baard said the wage deal would make the industry more competitive and “bring about significant repatriation of lost clothing units back to SA”. The association would monitor all members closely to ensure the agreement was not abused.”
“Cape Chamber of Commerce president Michael Bagraim said yesterday “it would be absolutely fantastic if other industries followed this example”.”
“When this brave concession is taken together with the scrapping of the 22% tax on imported fabric we have a recipe for the revival of the once-great Western Cape garment industry.”
“It is not easy for a union to agree to a reduction in starting wages but the union leaders have clearly taken the long-term view that it is necessary to bring new workers into the industry”.
An editorial was published in Business Day today – Wage deal may be a new beginning – commenting on the agreement in the Textile Industry to offer wages to new employees at 30% below the usual rate. These are some extracts form the editorial with the kind permission of Business Day. View or download the editorial or go to Business Day.
“THE signing of a landmark agreement between employers and the South African Clothing and Textile Workers Union has been met with a sigh of relief from the embattled clothing and textile industry, and created a valuable opportunity to test the efficacy of entry-level wage interventions on job creation”.
“The clothing and textile industry has been hard hit by cheaper foreign imports in recent years and has suffered considerable job losses. Many of these job losses have, however, also been attributed to high minimum wages in the sector. The new agreement, concluded on Wednesday, allows companies in the sector to hire new workers at a wage rate 20%-30% lower than the existing industry minimum wage”.
“The deal is designed to encourage employers to hire new workers — without jeopardising existing jobs — and will run as a trial until 2014. These apprenticeships are hoped to create wider opportunities for young people seeking employment and experience in the textile industry. The agreement is, however, subject to several stringent conditions, one of which is that employers create 5000 new jobs by the end of the trial period”.
“Although numerous analysts have confirmed the viability and cost-effectiveness of entry-level wage models — most notably a comprehensive report issued by the Centre for Development and Enterprise — this is the first test of whether it’s possible to increase employment by reducing the cost of hiring inexperienced workers”.
“It is probably too late to save the clothing and textile sector, but this type of intervention serves as an invaluable opportunity to forge new ground in South African industrial relations. This type of agreement between industry and unions should be promoted in other manufacturing sectors, such as the automotive and mining industry”.
“In a country with such high unemployment — especially youth unemployment — any innovation in job-creation policies should be roundly welcomed and given the space to be tested”.
Clothing deal bears fruit as firm adds workers (Business Day)
Linda Ensor and Alistair Anderson have reported in Business Day today that ‘Cape Town clothing manufacturer to increase its workforce by 25% — the first significant employment growth in any metropolitan area in years’ – click on Clothing deal bears fruit as firm adds workers.
The report was first published in Business Day and these are some extracts with the kind permission of Business Day. View or download the article or go to Business Day.
“Cape Town clothing manufacturer to increase its workforce by 25% — the first significant employment growth in any metropolitan area in years”.
“The pioneering 30% wage cut agreement signed last week between employers and the South African Clothing and Textile Workers Union (Sactwu) has already resulted in a decision by a Cape Town clothing manufacturer to increase its workforce by 25% — the first major employment growth in any metropolitan area in many years”.
“The industry has shed about 50000 jobs in the past 10 years as a result of pressure from cheap Chinese imports and the relocation of factories into neighbouring Lesotho and Swaziland where labour costs are lower. However, this trend has slowed in recent years largely as a result of government interventions such as the production incentive to improve competitiveness and promote modernisation”.
“Cape Town-based manufacturer Peter Blond & Associates announced at the weekend it planned to add new 100 new workers to its 400-strong workforce by the end of December. CEO Eckhardt Oelz said had the deal not been struck, his company would probably have had to reduce its workforce in Cape Town over the next three years. He just hoped it was not ‘too little, too late’.”
“Analysts suggested the agreement could offer an alternative to the youth wage subsidy proposed by Finance Minister Pravin Gordhan as a way to accelerate employment of young people. The Congress of South African Trade Unions opposes the subsidy, saying it would create a two-tiered labour market”.
“Labour analyst Andrew Levy said the agreement was a ‘great deal’ which could hopefully be extended to other industries”.
“Trade unions outside the industry said further investigation was required to see whether the clothing agreement could serve as a model for other industries”.
“All unions try different ways to protect their members. In the leather industry they structure wages based on turnover. This measure was brought into action about three or four years ago,” he said.
“Katishi Masemola, general secretary of the Food and Allied Workers Union , said he would consider a measure like the 30% wage cut for food and beverage workers because rising prices were beyond employers and unions’ control”.
“’We do not have much control over the prices. We have to change what people are paid. But we do not face the pressures that the clothing industry does. We expect job creation in our industries because people have had to eat during the recession,’ he said “.
Alistair Anderson wrote the following article – Metal employers’ body seeks 50% starter-wage cut – which was published for the first time in Business Day today.
View or download the complete article by clicking on the link or go to Business Day itself. Extracts are included here with kind permission of Business Day.
“Call for a wage cut for entry-level jobs is a bid to revive a key industry which has lost nearly 100 000 jobs since the recession.
THE National Employers Association of SA (Neasa) yesterday called for a 50% cut in the minimum wage for entry-level jobs in the metal and engineering sector, in a bid to revive a key industry which has lost nearly 100 000 jobs since the recession.
This comes after the South African Clothing and Textile Workers Union and textile industry employers concluded a landmark deal last week to offer new employees wages of 30% less in a bid to boost employment and turn around SA’s ailing clothing industry sector”.
“Neasa CEO Gerhard Papenfus said yesterday during the 2008-09 recession, the metal and engineering sector lost 100 000 of its 450 000-strong labour force with only a few thousand jobs added in the subsequent recovery.
He expected a further 10% reduction in the workforce by the end of next year if the current labour relations agreement for the sector, negotiated by the Steel and Engineering Industries Federation of SA (Seifsa) implemented on July 1, continues.
Mr Papenfus said if Labour Minister Nelisiwe Oliphant withdrew the existing agreement and implemented a new wage and benefits agreement which included the 50% wage cut for entry-level workers, people could be employed again in his industry. ‘We are more expensive than the clothing and textiles industry but a wage cut would help. An entry-level cleaner costs R6 500 a month and employers cannot afford that,’ he said”.
Labour market: SACP’s demand for equality of income – what – no differentials? (Masondo in Business Day)
Today Business Day published an article by David Masondo, a South African Communist Party central committee member and Limpopo treasury MEC, Equality of income the key to economic expansion and I must confess having had great difficulty in understanding what point he was trying to make.
View or download the article by clicking on it or go to Business Day where it was first published.
Here are some extracts with the kind permission of Business Day.
“The economic crisis requires bold leadership, political will and militant, working-class movements to tackle the structural inequalities rooted in the unequal ownership of the key strategic resources”.
“LEVELS of income inequality are rapidly growing in SA. About 48% of the population earns less than R11 a day, while whites earn eight times more than Africans”.
“Surprisingly, the recent 5% salary increase for public representatives and judges, and textile union Sactwu’s concession of a 30% wage cut for new labour entrants into the textile industry, did not attract much outrage from the left”.
“Strict control of capital outflow is also necessary to ensure that the investable surplus stays in the country. In South Korea, international financial transactions are made through state banks. SA does not take extreme measures such as those in South Korea, where illegal capital flight is punishable by death. But policy sticks to keep the investable surplus in SA must be found”.
“Locking investable surplus into the national economy will not inherently lead to productive consumption. Applied on its own, this instrument will not curb the elites from engaging in luxurious consumption within the nation state. This is why there is a need for anti-luxurious consumption tariffs and domestic taxes, as well as investment imposed through an interventionist industrial policy aimed at bolstering economic development”.
“Income earning is determined by ownership of economic and political assets. The principal assets that enable the state and business elites to maintain these income inequalities are economic power and incumbency of state office”.
“The only asset that workers have in order to claim the surplus they produce is their ability to organise and fight for their interests. It remains to be seen if the leftist organisations are up to the task of organising not only against income inequalities, but also for the working people to win political power and for the equitable redistribution of strategic economic assets”.
“The economic crisis requires bold leadership, political will and militant, working-class movements to tackle the structural inequalities rooted in the unequal ownership of the key strategic resources”.
“Unfortunately, we do not have all these in SA. So business can relax”.
An article by David Gleason was published for the first time in Business Day today – SA must just get out of textiles trap
Here are some extracts but the entire article should be read by going to the article in Busienss Day.
“In fact, it’s a tragedy, but it’s been a tragedy for so many years that what is least understandable is why we go on mourning it. This country’s textile industry is stuffed, period. We cannot compete with China. Doing so is an invitation to get knocked down repeatedly. Getting out of the ring and finding something else to do, now that would be clever — but it’s probably asking too much of employers and union officials.”
“In October last year, employers and the dominant South African Clothing and Textile Workers Union reached a landmark deal in terms of which new employees would start on wages 30% lower than the previously agreed norms. The development was seen as a genuine attempt by all sides to rescue the clothing sector.”
“Employers agreed to employ 5000 more people over three years. They arrived at this compact as a result of the union’s rejection of a new wage model proposal put forward by the Apparel Association of SA. It had concluded there was no alternative to the industry’s endemic problems other than to arrive at an entirely new arrangement.”
“The union has now turned up at the annual bargaining table. It wants a 13% wage increase, which association executive director Johann Baard says translates into a 20% raise for non-metro employees.”
“In any event, employers have disengaged from the process. They consider it grossly unfair that as many as 40% of employees registered with the sector bargaining council are being paid substantially below the regulated minimum wage.”
“Baard tells me he is sitting on 450 writs of execution against companies that are paying less than the minimum wage. They owe workers millions in unpaid contributions to provident funds and medical aids. The association doesn’t want to move the process to the Labour Court because the outcome would be that thousands of workers would end up on the streets. They would add to the 61 000 who have lost their jobs since 1992.”
Option #1
“According to Baard, the industry has few options. One is to accept the disconnect between factory costs and the minimum wage, introduce a new (lower) wage model and legitimise overnight many of the companies that are non compliant.”
Option #2
“A second is to enforce the current agreement, which would mean closing down around 450 companies and leaving thousands without work.”
Option #3
“A third would be to dissolve the national bargaining council, recognising that it hasn’t come to terms with the hard commercial reality.
It would need to be replaced with an alternative such as plant-level bargaining, or individual company or even regional negotiations.”
“The textile industry presents exceptionally low barriers to entry. It offers the lowest ratio of any sector anywhere in terms of the capital required to generate jobs. In SA, Baard estimates a R10m investment in textiles would create 485 new jobs; the nearest challenger is agriculture, which would create just 48 jobs.”
“Baard says the South African industry has not been “out-competed”; it has been “out-subsidised”. It doesn’t seek protective tariff barriers, but it wants equal treatment. He claims China offers as many as 60 different subsidies by national, provincial, local and city governments.”
“Given the wage structure in SA, it isn’t difficult to see why the industry is up a creek minus a paddle.”