If you think the inner workings of ANC-Cosatu-SACP alliance politics are difficult to understand, try figuring out our clothing and textile industry.
Last week Minister of Economic Development Ebrahim Patel sanctioned a government-brokered discussion between employers and labour to turn around a crippled industry and reach a new accord between parties that, until now, have consistently failed to see eye to eye.
The South African Clothing and Textile Workers’ Union (Sactwu) reported this week that 29 500 jobs had been lost in the sector since July 2007 — or close to 10 000 job losses a year. The fact that these figures marked a 23% decrease in job losses compared with the previous three-year period is not, one might venture to suggest, a cause for celebration.
Indeed, according to figures released to the Mail & Guardian by textile and clothing manufacturers this week, the 41 200-strong textile subsector has shed 23 800 jobs during the past decade, whereas the 56 700-strong clothing subsector shed an almost identical number of jobs in the same period.
In addition, Patel’s call for talks is effectively a stay of execution for another 20 000 workers whose jobs are under threat from the national bargaining council’s drive to close down 385 factories that have not complied with minimum wage stipulations.
Under the Labour Relations Act, employers and unions come together on a 50-50 basis to form a bargaining council, which sets conditions of employment, including minimum wages.
When ratified by the minister of labour the conditions of employment apply across the entire industry sector and are enforced by the bargaining council’s compliance mechanism.
According to the latest minimum wage structure agreed upon by the bargaining council, effective from September 1, an unskilled entry-level worker should earn R408 a week and a qualified machinist with 18 months’ training should earn R479 a week.
But two predominantly Chinese and Taiwanese factory owners’ associations — the Free State Clothing Manufacturers’ Association and the Newcastle Chinese Chamber of Commerce and Industry — say they have been excluded from the bargaining council, and cannot afford to pay the set minimum wage.
They have instead asked the bargaining council to sanction paying unskilled and skilled factory workers between R200 and R280 a week, or face a mass exodus of non-compliant factories and, ultimately jobs, to neighbouring countries, such as Lesotho and Swaziland.
Alex Liu, spokesperson for the Newcastle chamber, cited a number of prevailing conditions that make it difficult for textile and clothing manufacturers to remain financially viable in South Africa. These read like a microcosm of the broader economic challenges the country faces in 2010 and include:
- Illegal imports of garments that undercut local manufacturers;
- The unbeatable export subsidies China offers to its textile and clothing industry;
- Insufficient import duties to protect the local industry against cheap imports;
- An overvalued rand that makes it difficult, if not impossible, to export goods;
- The willingness of South Africa’s neighbours to pay lower wages to their workers (up to 250% less in Lesotho and Swaziland), and their workers’ willingness to accept them;
- The costs associated with training unskilled workers to the required levels; and
- The impact of the HIV/Aids pandemic on staff turnover.
Despite the scale and scope of these problems, labour union Sactwu says non-compliance with minimum wages is not an option and only makes matters worse.
‘If one is to look at the industry right now, you have 550 factory owners paying their 40 000 workers the minimum wage under diffi cult conditions. So those factories that continue to pay their 10 000 to 15 000 workers less than the minimum are putting further strain on those who do comply,” said union spokesperson Wayne van der Rheede.
He questioned whether the proposed R220 to R280 minimum was anything more than “a below-poverty wage”. “If you factor in the cost of transport, an entry-level factory worker will work a 45-hour week and take home about R120 to feed his or her family afterwards. When you consider that the state old-age pension is R1 200 a month, are you telling me that a retiree can earn more than a worker? It’s ridiculous,”
Van der Rheede said. Although Sactwu is sticking to its guns on the bargaining council’s minimum wage, calling for all non-compliant factories to be closed by the end of 2010, Van der Rheede conceded that a long-term remedy for the sector’s woes will depend on “a package of solutions and not a piecemeal approach”.
Given the complexity of the problem, Sactwu has called for a six-month discussion window in which to consider possible remedies and broker a new accord, Van der Rheede said.
But Johann Baard, executive director of the Apparel Manufacturers of South Africa (Amsa), the largest clothing manufacturers’ association on the bargaining council, said that “we have been debating the problems for years, as our industry has steadily shrunk, while the solutions are clear”.
“In 1994 we liberalised our market system, but not our labour system. While our market system has moved with the times, the architecture and design of our labour system is more than 50 years old. There’s no way you can play on the global field without wholesale reform,” Baard said. Baard made the point that there is a difference between productivity and competitiveness.
“Our clothing manufacturers, as a rule, remain highly productive and still outperform factories in mainland China. But we are uncompetitive compared with China because our government cannot afford to give local industry the same level of direct and indirect subsidies — and we have committed to a collective bargaining labour model whereas they have not.”
Baard’s proposed labour market reform is unlikely to go down well with the union, which relies on collective bargaining to negotiate minimum wages for its members. But, like Van der Rheede, Baard speaks about “a package” of measures, none of which, on its own, will succeed in turning the clothing and textile sector around.
These include reforming our industrial policy, our trade policy and our labour market policy, as well as making our currency more competitive for exporters and cutting out customs fraud and illegal imports.
“If we get all fi ve of these half right, then we will be on-track to place the industry on a sustainable growth path,” Baard said, ‘but no amount of dialoguing and workshopping will help when what we require now is tough leadership and bold decisions.”
Over to you, Minister.