The result of an arbitration in which the powerful Metal and Engineering Industries’ Bargaining Council has admitted that it has been operating contrary to its constitution may cause other such councils to scurry to rectify irregular and unconstitutional practices into which they might have fallen.
In a settlement of the arbitration the council has been declared, by agreement of the parties, to have been operating without lawful regional councils or a management committee since November last year. This means that all the council’s regional councils will have to be reconstituted, followed by the management committee.
The dispute leading to the arbitration (and a prior court case, see “Court favours wage deal”) is primarily between the National Employers’ Association of South Africa (Neasa), on the one side, and the council, the Steel and Engineering Industries’ Federation of South Africa and labour unions in the industry on the other.
Gerhard Papenfus, chief executive of the association — South Africa’s largest for employers with 18 000 members — said the aim of his dispute with the council was to rectify bad practices that had developed in the council and resulted in it becoming dominated by big companies and the unions.
Papenfus said he hoped to correct this “imbalance”, thus giving smaller companies more of “their rightful say” in the council.
He believes other bargaining councils in South Africa are similarly dominated.
Lucio Trentini, operations director of the federation, confirmed that the arbitration settlement agreement required the council to dissolve and reconstitute from scratch, in strict accordance with its constitution.
“At the end of the day, the federation wants a bargaining council which is reflective of all the role-players — large and small — and the bargaining council will be stronger with the employers’ association on board.”
Trentini said the association represented about 22 000 employees in the industry, whereas the federation represented about 170 000.
He said that, on average, the association’s members employed 20 people each. Earlier this year, Finance Minister Pravin Gordhan said companies employing 50 people or less were giving jobs to about 68% of the workforce in South Africa.
Papenfus said the association was not “fundamentally against the bargaining council system, but it has become dominated by big business and trade unions”.
“Small businesses have lost interest in it, because they are always outvoted and bullied. They have developed an attitude that there is nothing they can do about it and they have to accept what is handed down to them. We want to show them that, acting through their employer organisations, this is not necessarily so.”
The association was particularly irked by the agreement for a 10% increase for the lowest-paid workers reached by the council in the July settlement, as well as the refusal to entertain the association’s proposal for a 50% reduced wage for new entrants.
“We are pushing for lower wages for new entrants to boost business and encourage employment.”
Papenfus said it was easy for big companies to accommodate high wage increases; on the other hand, smaller companies could accommodate longer strikes. “Why take a two-week strike to settle for 10%? If you had offered the union that in the beginning, they probably would have accepted it without a strike. We would have held out for much longer.”
Trentini said that it was a question of where you drew the line. By the time the strike was settled, there had been three deaths and Scaw Metals, for instance, had suffered R100-million in losses. Smaller employers were less unionised and could manage a strike for longer, he said.
Papenfus said another point of contention was the mandatory contributions made by employers and employees that are not parties to the council. These employees pay 1% of their wages to the bargaining council and employers pay about R185 a month. The funds support the work of the council and are also distributed pro rata to participating unions, whether employees are members of the unions or not.
Trentini pointed out that the funds were also paid out pro rata to support employer organisations such as the association.
On the outcome of the arbitration, Irvin Jim, general secretary of Numsa, commented that Neasa was trying to attack and undermine the bargaining council with technical arguments. He said that the arbitration settlement was a compromise, which would allow the parties to deal with technical problems without weakening the bargaining council. He said if there were employers whose businesses were under stress, they could apply for exemption from bargaining council agreements, but would have to go through audit procedures.
Court favours wage deal
The Metal and Engineering Industries Bargaining Council arbitration result followed a day after the National Employers’ Association of South Africa failed, in an urgent application to the Labour Court, to have set aside the three-year wage agreement reached by the council and extended by the minister of labour to non-parties to the council.
The judgment in that case was regarded as a victory by the Steel and Engineering Industries Federation of South Africa and the National Union of Metalworkers of South Africa.
The judge, Andre van Niekerk, found that Section 206 of the Labour Relations Act allows for and condones defective prior administrative acts, such as that of the then purported management committee of the council.
The three-year wage agreement was signed by the purported committee following a two-week strike in the industry in July.
The association said it was still considering appealing the judgment, given the large scale of the abrogation of the constitution of the council that was found by the subsequent arbitration.