Analysing the Numsa strike with SACCI’s Pietman Roos

There have been some developments in talks between South Africa’s striking Numsa union and employers over a wage offer that could end a walkout in the metal and engineering sector. Pietman Roos, Senior Policy Consultant at SACCI joined Alec to discuss the strike, and what can be expected with regards to its resolution, which cant’t come soon enough. The game of politicised striking that comes with far more of an agenda than simply securing higher wages for union members is in its fifth week, and is having a dire impact on manufacturing enterprises in the country. Pietman has a wealth of fascinating insights to offer as he analyses the Numsa strike. The stark reality is that no matter the outcome, job losses will be a reality, especially in smaller businesses. In a globally competitive environment, business cannot pass on the cost of increased wages to its clients, which will either result in retrenchments or going out of business. It really does make one wonder if the short-term gain is actually worth the long-term impact of handicapping industries? – LF 

ALEC HOGG: Welcome back to Power Lunch. Quite interesting, the point that Sasha was making a moment ago, about Spur and its results. Well, Famous Brands is up one percent this morning, perhaps in reaction to the fact that they are grabbing or clawing market share away from Spur. We’ll wait for the Spur final financials though, to be able to make an assessment on that one. Well there’s been some development in talks between South Africa’s striking NUMSA Union and Employers. This is over a wage offer that could end a walkout in the metal and engineering sector. It’s been going on for five weeks now. Pietman Roos is the Senior Policy Consultant at SACCI, South African Chamber of Commerce and Industry.

PIETMAN ROOS: That’s correct, yes, hi.

ALEC HOGG: Your members, I guess, would be on the phone to you, complaining like crazy about the strike now going into five weeks. It was only supposed to last a week or so.

PIETMAN ROOS: Absolutely.

ALEC HOGG: There’s lots of confusion. What are we expecting the next step to be, presumably when NUMSA makes an announcement this afternoon?

PIETMAN ROOS: Well we are hoping for a resolution of the negotiations, obviously. It is somewhat dramatic to host the press conference at 4:00pm when you could just say, “We accept or we decline,” so it may suggest they are going to go into detail on the double-dipping issue.

ALEC HOGG: What’s that?

PIETMAN ROOS: Okay, so collective bargaining implies that there’s a wage negotiation. If there’s an agreement on how much it should increase, say eight or ten-percent, that is instituted across the board. However, what NUMSA is pushing for, is to keep on with the double-dipping. On a firm level or on a factory level, the Union can still come in and then, again, restart the industrial action.

ALEC HOGG: So you can have collective bargaining and then you can have individual bargaining?

PIETMAN ROOS: Absolutely. Now it’s a problem because if you are in negotiations, you assume that when you end and when there’s some kind of agreement, you can stick to it, but this puts it in peril.

ALEC HOGG: So what’s the point of collective bargaining if this is going to be the new way of doing things?

PIETMAN ROOS: Exactly, and I think the problem is it hints at other motives that the unions are pushing for, you know, there’s a political motive and they want to seem strong to their members. The problem is that smaller firms are already suffering. I’m not sure if smaller firms in the metal working sector can afford a ten percent increase as is, and some of them are actually trying to get out of collective bargaining. It’s like a double whammy for a lot of those smaller firms.

GUGULETHU MFUPHI:  Pietman, it’s Gugu here at the headquarters. I just want to explore that issue on the small firms a little bit further. NEASA as well as SEIFSA are the two business organisations trying to approach the labour disputes in different ways and not finding synergies between themselves.

PIETMAN ROOS: Yes, I guess it is a problem. It’s a principle within organised business that we want to present a unified front as much as possible to avoid the so-called ‘divide and conquer’ strategy that our other social partners may use but I think they also may speak for specific industries or specific companies within those industries.

ALEC HOGG: But isn’t NEASA more small business and SEIFSA bigger business?

PIETMAN ROOS: I’m not sure but I think that’s the case.

ALEC HOGG: And the small businesses are the guys that are going out of business.

PIETMAN ROOS: Absolutely.

ALEC HOGG: Big business somehow has got the resources to battle through.

PIETMAN ROOS: Yes, and the factory is all about scale, so the factory can absorb it but, essentially, when you look at it there are cost pressures for every business in South Africa, especially heavy industry, electricity, administrative costs, and now the wages. They can’t pass through that increases to the customers because we have an international competition so they either have to cut staff after a wage agreement has been reached or close business.

ALEC HOGG: It’s such an interesting time we’re going through as a country because the Trade Unions say ‘we are fighting to redress issues that happened in the past. We want a new, social contract’ if you like. The wage number – certainly the AMCU guys were saying – that the increase was not really the point, because they know that they lost a lot of money, by going on strike. Is it similar in the engineering sector?

PIETMAN ROOS: Yes, I think as well particularly because it is more unionised, therefore more politicised. ‘Interesting times’ is actually a curse for South Africa. We would like boring times but I also think there’s a subtext to these wage negotiations. It’s not so much about the increase. It’s about the living wages, so it is quite obvious that your ordinary worker in the factory or your platinum miner is facing incredible costs: transport, housing, schooling and all the rest, but that’s a broader issue. That’s also a Government responsibility. You can’t expect a mine, a factory, or a retailer to address the whole range of societal issues we’re facing.

GUGULETHU MFUPHI:  Pietman, does this perhaps highlight the need to review the duration of these wage agreements? One year versus three years?

PIETMAN ROOS: Well, I wouldn’t want to impose any kind of restriction on how people want to negotiate because then there’s going to be some welfare loss. There is definitely scope to introduce two key policy initiatives, and we’ve spoken about this previously. The first one is the Secret Ballot, and even the Deputy President has now come out in support of it. We also want to be able to give the power to the Government to say ‘the strike has been going on for two months. There’s no hope of resolving it. Let’s end it’, forcing people back to the negotiating table.

ALEC HOGG: How strong is NUMSA? How many members do they actually have? They claim 200.000. I saw reports the other day that it was under a 100.

PIETMAN ROOS: I have no idea but I think…

ALEC HOGG: Does anyone have any idea?

PIETMAN ROOS: I hope Irvin Jim has an idea but I think it’s an interesting question because the problem is also, I think, that Unions are under pressure. The rest of the world is going through mechanisation and so is South Africa. Now, as you go through mechanisation, your typical places to recruit union members (heavy industry and mining) is becoming less and less. You can’t really recruit in hair salons and geographically displaced industries, so it is almost as if they’re scrabbling for the last part of the action, and there are pressures from other unions as well.

GUGULETHU MFUPHI:  Pietman, doesn’t this call for a review of what should be on the negotiation table? There’s money, set aside, but what about skills upgrading? Does that responsibility lie with the unions or with business?

PIETMAN ROOS: Well, I think, again, do not restrict what they are going to negotiate about but if there are additional responsibilities on a business, housing for example or up-skilling, then make it easier for business to do that. If a business is going to give housing to its employees, it is, in a way, taking over the responsibility of Government, so allow for tax concessions. If it is going to up-skill individuals then fix the SETA system, because that is clearly broken.

ALEC HOGG: Yes, there are lots of good ideas, lots of nice thoughts but not that well implemented. Just to get back to the nub of all of this. It appears as though the wages are now an issue that everyone agrees with, but the whole collective bargaining process could be under threat.

PIETMAN ROOS: I think this year, in retrospect, is going to be the year of collective bargaining and rethinking the whole industrial action framework. Clearly, it is unsustainable. If this happens and, God forbid, next year again we are going to face severe unemployment and to such an extent, I think Governor Marcus also said ‘the people that’s unemployed now is unlikely to ever be employed ever’. If you lose your job in a factory now, how transferable are those skills?

ALEC HOGG: Pietman Roos is with the South African Chamber of Commerce, and Industry. Interestingly enough, I was reading through the old Berkshire Hathaway Annual Reports, and in the 1985 Annual Report Warren Buffet wrote a lengthy piece of why his group, Berkshire Hathaway, moved out of textiles. It should be required reading for everybody who’s watching what’s happening at the moment, even though the American textile groups were the biggest in the world, they were unable to compete with other textile groups, from other parts of the world, who had lower labour costs. Eventually, even the mighty Berkshire Hathaway had to call it quits, and move away from that. Very instructive that, if you want to push up your labour costs you are going to be uncompetitive and in a global environment, like the one we’ve got right now, well, you know what the consequences are.