The Congress of South African Trade Unions (Cosatu) is on a collision course with empowerment companies, which, it says, do little to advance workers’ interests or real broad-based black economic empowerment (BEE).
Two deals announced within the past month in the Western Cape have sparked Cosatu’s ire: the proposed sale of Cape Town’s Golden Arrow Bus Service (GABS) to Hosken Consolidated Investments, a union investment company, and a 25,1% proposed acquisition of KWV by an equity consortium headed by Gavin Pieterse, the chairperson of the South African Wine Industry Trust (Sawit).
At the heart of the dispute, explains Cosatu Western Cape chairperson Tony Ehrenreich, is that both deals will benefit only a few. ”Does it mean we will make a few more black millionaires? Workers must take a stand. We want to make sure economic empowerment is as broad-based as possible.”
A third dispute, the countrywide strike of baggage handlers against a black-owned company — now entering its 13th week — has also hardened union attitudes towards BEE companies they see as failing in their responsibilities towards workers.
Vuyo Jack, a director of Empowerdex, an independent economic empowerment rating and research agency, says it was ”interesting to see this activism in the drive to broad-based black economic empowerment”.
BEE has undergone a shift in focus from ownership acquisitions to employment equity and skills development — benefits that would trickle down to employees — explains Jack. ”That is the dynamic that the government is expecting and promoting,” he says, ”It’s difficult for some companies to accept and to grapple with it. It goes to the heart of transformation.”
What concerned him, he said, was that the large tranche of BEE partners are not driving empowerment and internal transformation in companies. ”One would expect the BEE shareholders to adopt a far more vigorous approach to social responsibility.”
Dispute 1
Cosatu is challenging the R270- million Golden Arrow deal in court, apparently by the end of the month. The labour federation also plans to back its demands with mass action. What has riled Cosatu most is that the Golden Arrow deal ignored a workers’ co-operative bid that had indicated its interest in September 2003, before a sale negotiation committee was established.
As the bus company had, since 1997, invested R100-million of workers’ pension funds in Golden Arrow, that alone should have given a workers’ co-operative a pre-emptive right to buy the company, says Ehrenreich.
Careful to point out Cosatu’s fight is not with HCI, a partly trade union-owned company, Ehrenreich said ”the workers’ co-operative would have been 100% BEE” and in line with the broad-based black economic empowerment law and the proposed co-operatives legislation. HCI is controlled by the National Union of Mineworkers and the South African Clothing and Textile Workers’ Union (Sactwu) investment arms and led by former unionists Marcel Golding and John Copelyn. HCI, which also has a stake in MidiTV, the company that established e.tv, has now started turning a profit.
This week Golden Arrow said it had no comment on Cosatu’s proposed legal and protest action. Earlier Golden Arrow Foundation executive director Barry Gie said the HCI offer was chosen because ”nothing concrete or substantive” was presented by the proposed workers’ co-operative.
Dispute 2
Cosatu has raised concerns over the funding of the KWV deal, including the possible use of Sawit funds meant for the whole industry. Sawit is a private-public initiative funded by payments from KWV arising out of its restructuring in 1997. Its aim is to drive transformation and the commercial development of the local wine industry.
According to press reports, the deal would include KWV employees, trade unions and ”a select group of business people”. But because of a non-disclosure clause details are not known. This lack of disclosure is what has irked Cosatu, which wants greater community and worker participation in the deal.
But Cosatu and the BEE consortium may yet find common ground on workers’ interests and transformation. An urgent meeting between Pieterse, a BEE luminary, and Cosatu is set to take place next week. Another meeting over the acquisition, between the trust and the Agriculture and Land Affairs Ministry, which appoints the majority of trustees, has yet to take place, says a senior ministry official.
Dispute 3
In the next week Cosatu plans to approach all the black economic empowerment shareholders of Equity Aviation Services — the private and empowered baggage handler that employs the workers — in an attempt to end what has become this country’s longest-running industrial action since 1994.
Eight hundred workers have been on strike since December last year when negotiations between the South African Transport and Allied Workers Union (Satawu), a Cosatu affiliate representing the striking Equity workers, and Equity about workers’ employment conditions collapsed.
Equity Aviation was formed at the beginning of last year when British multinational service giant Serco and a local black economic empowerment consortium, Equity Alliance, bought a 51% share of the previously state-owned Apron Services from Transnet. Transnet holds a 49% share in Equity.
The BEE partners are Arise in the Western Cape, Ubambo Investment Holdings in Gauteng, Univest Ltd in Durban, PWL Investments in KwaZulu-Natal, Philelana Holdings in Gauteng and Khulile Investments in the Eastern Cape.
Cosatu and Satawu say it is now time for the BEE partners to use their influence on Equity’s management, which is overriding labour legislation like ”brute and ruthless [profiteers]”, says the general secretary of the transport union, Randall Howard.