Metals sector faces further ructions

A battle between South Africa’s largest union and big companies in the metals and engineering sector may be nearing an end, but the war between employer organisations, the bargaining council and the government is persisting and will prevent any deal signed between the National Union of Metalworkers of South Africa (Numsa) and the Steel and Engineering Industries Federation of South Africa (Seifsa) from being extended to the rest of the industry.

This week, Numsa and Seifsa, the largest employer organisation in the sector, moved closer to a wage agreement – but a dispute over membership verification and questions about the constitutionality of extending an agreement to an entire sector is coming to a head.

Seifsa claims to represent just 2 000 of 10 500 registered employers in the industry but, these being some of the largest employers, they represent about 200 000 out of an estimated 300 000 employees. According to the Labour Relations Act, Seifsa’s representation means it can broker and sign a bilateral wage deal with the largest union.

If a union represents 50% or more of labour in an industry, the Act states that the minister “must” extend the agreement to the entire sector. If the parties reaching agreement do not have more than 50% representivity, the minister can decide whether to extend the agreement.

But the National Employers’ Association of South Africa (Neasa) is challenging the constitutionality of the bargaining council system and gearing up for a fight should a new wage agreement affect its members.

The association entered the sector only a few years ago but already claims to have 3 000 small- to medium-sized companies on its books, although this only accounts for 70 000 employees.

Court challenge
In 2011, when the last wage deal between Seifsa and Numsa was extended to the sector, Neasa challenged it in court. The matter was last heard on July 2 this year and judgment is pending. Some Neasa members complied with the 2011 wage increase but others did not in the hope of a court victory.

Neasa has also challenged the constitutionality of the metal and engineering industries bargaining council (MEIBC) and the verification of its membership, which is made up of six employer organisations and six unions.

In a bid to establish the membership representivity of the council, an audit conducted in 2012 by KPMG was adopted by the council’s management committee, despite concerns raised by some of the council’s members. It was subsequently challenged by Neasa and the verification is now subject to an independent investigation by the department of labour, which will need to be completed before any wage agreement in the sector can be extended.

Ian Macun, the director of collective bargaining in the department, said it was still verifying information. “Once an agreement is reached in the current negotiations at the MEIBC, they are likely to formally request the minister to extend the agreement to non-parties. At that point, verification of the figures submitted to the department becomes necessary,” Macun said.


He said that the current verification process actually related to a request to extend an agreement dealing with registration and administration. Yet, if the department was asked to extend a new wage agreement reasonably soon, then the current process of verification could be used in dealing with this.

The general secretary of the council, Thulani Mthiyane, said he hoped the exercise would be completed very soon. “For the minister to extend agreement, the department will need the numbers. The ball is in their court now.”

Increase ceiling 
Neasa’s chief executive, Gerhard Papenfus, said its members could not afford more that an 8% increase. Bigger companies could pass on increased labour costs but smaller companies could not.

Papenfus said any wage offer that did not consider Neasa was a mistake. “Our view is that an agreement signed without Neasa will not fly and, if you don’t believe us, you do so at your own peril,” he said.

“They [the historically dominant parties] have negotiated this industry into an industry 40% more expensive than any other … If you want to pay R1-million for a Corsa, fine. But you can’t make us responsible for the repayments.”

The Free Market Foundation is challenging the constitutionality of section 32 of the Labour Relations Act (which provides for the extension of a collective deal concluded in a bargaining council) in the Constitutional Court and is awaiting a court date.

Mthiyane said the council would proceed carefully in order not to make any mistakes, knowing that Neasa was likely to challenge the extension of any new agreement in court. But a win for Neasa would be to the detriment of the council, Mthiyane said. “If there are people out there who are not legally expected to comply with the wage agreement, that would be the beginning of the collapse of the council.”

Numsa’s engineering sector co-ordinator, Vusumzi Mabho, said the union was negotiating with all parties in the bargaining council, although Seifsa represented the most employees in the industry.

Creating instability
Mabho said Neasa was creating instability in the sector. “There is nothing they don’t challenge. Instead of trying to be creative in finding solutions within the bargaining council, they want to go to court and nullify this and that,” he said.

“When it comes to the agreement that is extended to the rest of the sector, an employer who can’t afford it can apply to the department for exemption. Why they are they always fighting?”

He said the bargaining council was a way to centralise and normalise the industry’s activities and to have an “equitable way of doing business with common standards and rules in place”.

“The council has functioned for the past 70 years, being so stable, but because Neasa has come with this agenda of getting rid of the bargaining council then it is anarchy in the industry.”

But Papenfus said that the “convenient relationship” that big employers and labour enjoyed at the bargaining council was turning sour, which was evidenced by how the union continued to grow bolder in its demands.

“If you are cosy with a crocodile, it is only in the hope that he will eat you last,” he said.

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