The bargaining council is sitting on in excess of 480 writs of execution against companies that have not even complied with the 2010-11 agreement.
Here are some extracts but the entire article should be read by going to the article in Business 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.”
“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.”
“A second is to enforce the current agreement, which would mean closing down around 450 companies and leaving thousands without work.”
“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.”
“Mr Baard said minimum wage levels would have to be reduced even further if factory closures and job losses were to be avoided. ‘Invariably, that Rubicon has to be crossed. Our wages, our cost of labour is simply too expensive, in terms of global competitive realities’.
And if a labour-intensive labour industry such as the clothing industry is going to contribute significantly to the government’s job-creation initiatives, we are going to have to break out of our traditional policy parameters. Labour will have to break out of its traditional policy mandate of only adding to the cost of labour. Amsa is on record that the current wage model … is out of step with the realities of supply and demand … and is not sustainable’.”
A report by Sbu Mjikeliso – Wage deal out of touch, says clothing industry first appeared in Business Day today and I have kindly been allowed to upload a few random extracts from the report. But the entire report should be read by clicking on the above link or going directly to Business Day.
Some months back I posted another blog on the same subject – Labour market: Two-tier wage rates – focus should be on value-exchange and there are five responses to that blog.
“The executive director of the Apparel Manufacturers of SA has warned the current minimum wage model in the clothing and textile industry is out of step with the realities of the industry, and is the main reason that companies are not complying with wage agreements.”
“The current minimum wage model in the clothing and textile industry is out of step with the realities of the industry, and is the main reason that companies are not complying with wage agreements, says Johann Baard, executive director of the Apparel Manufacturers of SA (Amsa).”
“His comments on Friday came days after about 3000 members of the Southern African Clothing and Textile Workers Union (Sactwu) downed tools in protest against manufacturers in the Isithebe region of northern KwaZulu-Natal, which allegedly paid workers wages far below the stipulated minimum.”
“Mr Baard said noncompliance with wage agreements was likely to persist despite a landmark agreement signed in October designed to boost job creation in the sector by lowering the minimum wage for new entrants by up to 30%. Amsa represented clothing manufacturers in that agreement, while Sactwu signed on behalf of workers. The minimum wage for clothing machinists is now about R550 per week.”
“’The fact we have such widespread noncompliance … demonstrates the market realities that our wage model is out of step with current market conditions,’ Mr Baard said. ‘There are many employers who aren’t even complying with the previous year’s agreement. The bargaining council is sitting on in excess of 480 writs of execution against companies that have not even complied with the 2010-11 agreement’.”