Trade union and management negotiators have deadlocked in two of South Africa’s critical industrial sectors as they grapple with the country’s shift into an era of single-digit inflation.
“This is a huge paradigm change that South Africa has to move towards — an era of low inflation,” said Michael Keenan, market analyst at Econo- metrix Treasury Management. “I think it’s going to be a very bitter pill to swallow, because we have been used to double-digit increases since year dot.”
CPIX, the inflation measure on which wage demands are based, is running at 4,4%, down from 11,2% a year ago. The National Treasury expects inflation to average at 4,8% for the year.Â
The motor assembly industry and the giant steel and engineering in- dustries have been locked in wage negotiations with the National Union of Metalworkers of South Africa (Numsa) for the past two months. This week Numsa declared a dispute with the Steel Engineering Industries Federation of South Africa (Seifsa). Last week the union deadlocked with the Automobile Manufacturers Employers Organisation (Ameo). The negotiations in both sectors have been postponed until next week to allow both parties to reconsider their demands. Â
The dispute between Seifsa and Numsa was declared after the employer body rejected Numsa’s wage demands of 11% to 12% based on a sliding scale, and instead offered an increase of 5,7% to 6,7%.
Although the metal industry employers and the union concluded a two-year agreement last year when they settled on a 9,5% across-the-board increase, wage negotiations have become necessary again this year because the industry’s wage model — intended to obviate the need for pay talks in the second year of the agreement — contains a clause stipulating that wage increases must be renegotiated if the April 2004 CPIX falls below 5%.
Dave Carson, Seifsa’s director of industrial relations, said both parties had agreed to appoint a small committee to formulate recommendations to break the impasse. “We are not on the brink of a strike at the moment. There is a dispute but we are being sensible,” he said. The committee is due to meet next week. Dumisa Ntuli, the Numsa spokesperson, disagreed. “You can expect a mass strike before the end of the month,” he said.
Seifsa employs about 230 000 people.
Numsa and the motor industry are negotiating a three-year wage agreement, which deadlocked after Ameo rejected the union’s demand for a 9% across the board increase. The employer organisation, whose members employ 31 280 workers, is offering a 6,5% increase. In the last round of negotiations the parties settled on 8,5%.
Other demands include 100% maternity benefits, anti-retroviral drugs for people with HIV/Aids and the full-time employment of labour broker workers after three months.Â
Ntuli calls the Ameo’s 6,5% offer a “slap in the face”.
“We did a survey this year which revealed that workers spend 28,6% of their money on transport and 21% on food. This means that if we accept anything lower than our demands, and given the low inflationary pressure, we will be offering our members a negative wage increase,” he said.
Dave Kirby, Ameo spokesperson, said: “We’ve made concessions in respect of Numsa’s demands, but they have made no concessions in respect of ours … We are talking about a three-year wage agreement, which is extremely difficult to formulate in a way that is acceptable to both parties.”
Neren Rau, a senior manager at the South African Reserve Bank, said that given the inflation target range of 3% to 6%, high wage demands, together with the unpredictable oil price, had become one of the biggest threats to this target.
According to Jackie Kelly, a labour consultant at Andrew Levy & Associates, “the crux of these negotiations is that both sides are coming to terms with all-time low inflation figures, which have opened up the potential for disputes.
“Unions base their negotiations on what they settled on last year, which was a lot higher. Now suddenly they are confronted with low inflation, with most employers wanting to grant in the 6% bracket. It’s quite a difficult mandate for the unions to go back to their members and say: We settled at 8,5% last year and now we are settling two digits lower.”