Are unions losing sight of the fight for workers’ rights in their quest for investments, asks Charlene Smith
In the rush to tap into the R250-billion held in retirement funds, are trade union investment companies at risk of selling their souls? If they manage to overcome the barriers employers are almost certain to set up, accessing that money will make them wealthy beyond the wildest dreams of most capitalists – and place under their control an amount similar to half of our gross national product.
But in the process, are they forgetting their raison d’tre – fighting for better worker rights – or will they become better equipped to ensure those rights?
This year has seen the lowest strike activity yet by unions, although the Council for Conciliation, Mediation and Arbitration is staggering under almost 50 000 cases in its first year. Are unions too busy playing the market to monitor worker rights?
Certainly job losses are looming very seriously, with about 100 000 jobs likely to be shed in the gold-mining industry soon, and 25 000 already lost in the second quarter of this year.
One economist, who did not want to be named because his organisation is working with unions, said: “There is a belief that unions will become corporatist and labour harmony will occur, but in Israel the Histradut, Israel’s powerful labour federation, controlled large slices of the economy and that did not lead to labour peace or entirely successful businesses.”
In fact, it led to some spectacular disasters. Joey Abraham, economic counsellor at the Israeli embassy, notes that the Histradut control of the economy began before Israeli independence in 1948 when unions became involved in businesses, including the Bank of Palestine. In large measure, he believes, this labour involvement in economic activities led to a smooth transition of power. By the late 1980s, the Histradut was an enormous economic force, controlling several major corporations and a number of medical aid schemes. Their problem, Abraham says, is that they controlled the company and the union. In the early 1990s there were a number of thundering crashes as union- controlled companies went bankrupt. Abraham says: “You can’t be a manager and a worker. While the kibbutzim appear to contradict this, they are different to managing corporations in a global environment. Decisions have to be taken fast by a single manager and not a show of hands.”
He says that although union investment companies in South Africa are important to boost affirmative action, potential problems in 10 to 20 years’ time have to be considered.
South African union investment companies are running on the yellow brick road as fast as they can, stopping only briefly to look into the latest pot of platinum (who wants gold?) proferred by an eager running mate – and not all are proceeding with the care or consultation necessary for mega- million deals. Watch this space for some spectacular crashes.
The exceptions are Hoskens Consolidated Investments (HCI) under Johnny Copelyn and Marcel Golding, who respectively head the investment companies of the South African Clothing and Textile Workers’ Union (Sactwu) and the National Union of Mineworkers. They were hit hard, however, by the recent market volatility and two poor investment decisions.
The most cautious and transparent group by far is the National Education Health and Allied Workers Union (Nehawu) investment company run by Washington-raised and South African-born Rudy Roberts.
Last week it held an unheard-of – in the notoriously secretive union investment circles – workshop with unionists and investors to cover everything from good corporate governance to presentations from would-be investors and stockbrokers, and a lot of healthy discussion between the parties. It was an education for both.
Majolo Slovo, assistant general secretary of Nehawu, the largest public-sector union, notes: “The business environment is almost foreign and is sometimes regarded with suspicion by unions. For a trade union to get involved in investment companies has its own dangers. We are quite cautious about how we balance that with the traditional role of unions.
“We want to get involved first to benefit union members. It is important for the trade-union movement to influence economic growth and for workers to get involved in the economic mainstream.”
But the benefits are slow to trickle through to workers. HCI made an R8-million contribution to the Sactwu education fund this year and pays half the tertiary education costs of 2500 members’ children, but R8-million for a R1-billion company is small potatoes. There have been other smaller donations, but nothing of much import.
The South African Rail and Harbour Workers’ Union (Sarwhu) Investment Fund, headed by Sandile Zungu, has ambitious programmes to set up business development programmes for its members who lose their jobs. “We want to say, you can invest your R40000 or so retrenchment package in a house or a taxi, but in a year’s time you will be queuing for piece work, So, rather invest in equities, money markets or your own business. If you open a spaza you must know how to read a balance sheet.”
But the problem is, Sarwhu’s investment company was set up only eight months ago, and there is no way it will be ready to put these programmes in operation for the estimated 20000 workers who will lose their jobs as the Transnet stable privatises next year.
Sarwhu has 50 000 workers, almost half employed by Transnet. It set up the investment company with seed capital of R400 000. With the help of some canny investments, including those in Johnnic, it is now worth about R400-million – but the repayments on preferential shares and investments mean no returns for at least three years. This dilemma troubles Zungu, but he says it is also a reason why Sarwhu is investing in companies in the transport sector as its focus.
“We can’t win in the market any more on the basis of being black and having contacts; everyone has that. We have to manage our assets better and make wiser investments.
“The transport industry is turbulent at present, we either get into it and influence the situation or we let others do it and rest with their choices – we would rather be part of the new direction it takes. Of course there is a conflict of interests in unionising in companies we have shares in, but through that process we can influence the way workers get treated and the creation and retention of jobs.”
Sarwhu Investment Fund is part of Union Alliance Holdings (UAH), formed a fortnight ago by New Africa Investments Limited and four major unions. It aims to bring the R50-billion in retirement funds controlled by the 500000 members of those unions into its ambit within three years and plans to tender for the management of public-sector pension funds.
Roberts says these processes would depend on decisions made by retirement funds – all of which have trade union representatives on their boards.
Nehawu Investment Company has a 14% stake in UAH. A similar amount is held by the investment trusts of the National Union of Metalworkers, the Communication Workers’ Union, and Sarwhu, with a further 14% being held by the Transformation and Development Trust.
UAH holds Union Alliance Asset Management (UAAM), run by Metlife, which has a 30% shareholding, and UAH holds the rest.
Raymond Ndlovu of Metlife and UAAM said the Asset Management vehicle has R1-million seed capital provided by Metlife and a R200-million portfolio under management.
“The muscle of the trade unions is retirement-fund assets. One union, one fund will be the key in arranging the assets of the pension fund industry,” according to Ndlovu.
UAAM intends providing top quartile, risk- adjusted returns to retirement funds; it will train black professionals in portfolio management to create skills capacity and offer specific, value-added products and services suited to the needs of the target markets. While most of the existing union investment companies are involved in paper chasing, Ndlovu said UAAM would begin examining ways of investing R400-million earmarked for greenfield development. Although slower to show significant returns, this sector is critical to job creation.
Whether union investment companies will provide a few members with gold cuff links and push them into the cocktail circuits of the waBenzi or bring real benefits to a working class fast losing its jobs depends on the decisions made now.