In a move that signals a new approach to the labour market, the Department of Labour is declining to issue a certificate of representivity to the National Bargaining Council (NBC) for the Clothing Manufacturing Industry.
The agreement governing the clothing industry expired on Thursday, June 30.
The decision by the Department of Labour not to extend the certificate of representivity means an end to the imposition of industry-wide agreements imposed by participants in the centralised bargaining for the industry.
It also means that non-parties to the agreements will be able to run their businesses without legal penalties that include arrest, imprisonment and the confiscation of assets by the NBC.
The NBC has 714 such orders against employers in the clothing industry, employing an estimated 40 000 workers.
Some employers said new flexibility in the industry could lead to substantial job creation, even in the face of cheap Chinese imports.
Len Smart, of the KwaZulu-Natal Clothing Manufacturers Association (NCMA), said consensus coupled with flexibility and certainty can lead to the creation of “tens of thousands of jobs”.
The NBC, representing 1 100 employers, has faced a crisis of representivity as its members or parties represent 44 000 workers compared with 47 000 represented by non-parties.
A spokesperson for the Department of Labour confirmed the certificate has not been extended. He said the decision was taken by the Registrar because “of a problem of representation”.
NBC secretary Robbie Roberts said it had received a letter from the Registrar questioning the representivity of the council. He said it would meet on July 1 to consider its response.
Roberts said the council would continue to function. It would be unable, though, to extend its agreements to non-parties.
Cyril Govender of the Cut, Make and Trim Employers’ Organisation (CMTEO) — which two weeks ago led a march of several hundred employers, many of whom have had compliance orders issued against them by the NBC — said it is the organisation’s intention to set up a bargaining council for the CMT industry.
The CMTEO said that it is not represented on the NBC even though the industry constitutes 60% of the workforce of the clothing sector. Govender said the CMTEO favours plant-level bargaining.
Tensions in the industry have grown in recent years as cheap Chinese imports have entered the market. The stronger rand has curtailed exports.
Smart said that 10 years ago the NCMA members made up 75% of the NBC. This has fallen to just 9%.
“There has been a need to reduce wages over the past two to three years because companies have not found it possible to break even if they pay the industry-agreed wages.”
There have been plant closures while some manufacturers have relocated from Durban, where gazetted minimums are R520 a week, to Newcastle/Ladysmith where the minimums are R288 a week.
Govender said the CMT industry typically pays wages of between R400 and R425 a week in the metropolitan areas.
President Thabo Mbeki said in his State of the Nation address to Parliament early this year that labour reform is one of the top policy goals.
“Before the end of the year, government will complete the system of exemptions for [small] businesses with regard to taxes, levies as well as central bargaining and other labour arrangements.”
Last month the African National Congress tabled proposals that envisage a special dispensation for small business in which firms employing fewer than 200 workers will be exempt from constraints facing larger businesses.
Smart said constraints facing the industry include being prevented by centralised agreement from operating multiple shifts to bring down costs.
Smart said that if new consensus can be achieved the industry can compete with China and create tens of thousands of jobs.
The NBC met on June 23 to attempt to get a new deal to replace the main agreement which expired on June 30, but could only muster 23 votes against a voting requirement of 38.
It is now likely that the employees of non-parties will be governed by the Basic Conditions of Employment Act.
Still unclear is the status of the 714 compliance orders that the industry has against non-parties.
Attempts to reach the South African Clothing and Textile Workers Union and Seardel for comment were unsuccessful. JSE Securities Exchange-listed Seardel, the largest player in both textiles and clothing, said in its last annual report “ultimate success of the NBC will be determined by the extent to which employers who do not pay legislated wages are brought into line”.