Victory for smaller companies

An interim settlement agreement between disputing employers in the Metal and Engineering Industries’ Bargaining Council has resulted in increased representation for smaller businesses in the council.

The council is South Africa’s largest bargaining body and the agreement may prompt changes in its counterparts in other industries. An estimated one-third of the South African manufacturing industry is ruled by bargaining councils.

The settlement follows a dispute between the National Employers’ Association of South Africa and the bargaining council over the latter’s constitutionality. It gives the association a slight majority of the seats reserved for employers on the regional councils and 50% of those in the top management committee of the bargaining council.

This is despite the fact that another employers’ body, the Steel and Engineering Industries’ Federation of South Africa, employ the majority of employees in the industry. This federation previously dominated the bargaining council.

According to the bargaining council’s constitution, the allocation of employers’ seats goes by the number of employers rather than the number of employees. In the bargaining council system, employers and trade unions are required to be represented on an equal basis on all committees and councils.

Bargaining council’s bad practices to be rectified
Gerhard Papenfus, chief executive of the employers’ association, said he believed the settlement, which followed intense negotiations between the association and the steel and engineering federation in February, would start a process to rectify the bad practices that developed in the bargaining council over many years, which resulted in it being dominated by big companies and the unions.

Papenfus believed the change would give smaller companies “their rightful say” in the bargaining council. He said other bargaining councils in South Africa were in a similar position, with big businesses and large trade unions dominating their affairs.

Both the bargaining council’s constitution and the Labour Relations Act require representation of small and medium enterprises in bargaining councils, but neither gives practical detail about how this representation should be achieved.

Following the settlement, Papenfus said “the fight between employers is over” and the division of seats would recede as an issue because they would try to speak with one voice. He said this was “essential if much-required changes in this industry are to be brought about”.

The federation’s operations director, Lucio Trentini, said the settlement was an interim one to allow the bargaining council to be properly constituted and that a different seat allocation formula might be reached.

Papenfus said the provision in the settlement that the employer organisations must be represented directly and not collectively by employers’ federations was as important as the allocation of seats between employer organisations. He said this would improve the quality and quantity of the representation of employers on the bargaining council.

Dispute led to major Labour Court case
The dispute between the employers’ association and other parties in the bargaining council resulted in a major Labour Court case last year in which the association brought an urgent application for the reversal of the industry wage agreement reached in the bargaining council. The agreement followed a two-week strike in the industry in July. It was later extended by the minister of labour to nonparties to the agreement. Extension to nonparties is a controversial feature of the bargaining council system.

The agreement was for an average 8.5% wage increase last year: 10% for the lowest-grade workers and 7.5% each year for two years thereafter.

Papenfus believes that if the bargaining council had been structured so that there had been a stronger voice for small employers, they would have held out longer against the unions and achieved a different settlement. He said “compulsory higher wages” were a big barrier to job creation.

The association is still pursuing an application in the Labour Court or the Labour Appeal Court to review the validity of the minister’s extension of the agreement to nonparties.

A mid-year court date is likely.

Union federation Cosatu has condemned the association’s actions as an attack on “the very foundations of constitutionally entrenched labour rights of workers in this country”.

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