SAEFA’s Angus on tackling collapse of employment in SA industry: It’s Pretoria’s regulations, stupid!

Employment in South Africa’s engineering sector has fallen sharply over the past two decades to half of where it should be. In this interview, Gordon Angus of the employer association SEAFA explains why, putting the blame squarely on idealistic but hugely destructive government regulations which are heavily weighted against entrepreneurs – every economy’s lifeblood. He shared the uncomfortable ‘Uber Truths’ with BizNews editor Alec Hogg.

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Relevant timestamps from the interview

  • 01:04 – What the South African Engineers and Founders Association is?
  • 02:00 – How the scale of the sector has changed
  • 03:27 – The South African economy
  • 05:43 – What’s happening at Arcelor Mittal right now
  • 07:01 – Advice to turn it around
  • 11:24 – The response/anger of the public
  • 13:36 – Collaboration between Big Business and the government
  • 16:11 – Two types of business leaders
  • 19:42 – Conclusion

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Edited transcript of the interview ___STEADY_PAYWALL___

Alec Hogg: It has been several decades since the engineering sector in South Africa faced immense pressure. Recent news highlighted the closure of ArcelorMittal, the largest employer in my hometown of Newcastle. Gordon Angus, from the South African Engineers and Founders Association, has a deep understanding of these challenges. Today, he shares insights into the deindustrialization of a country that prides itself on industrial policies that seem ineffective.

Gordon Angus: Thank you, Alec. I entered the industry in 2003 and have been involved in collective bargaining and industry-related matters since. The South African Engineers and Founders Association is a significant employer organisation in the metal and engineering industry. We represent our members at both company and industry levels, engaging in setting terms and conditions of employment, wage rates, and more.

Alec Hogg: In over 20 years since 2003, how has the sector’s size or scale changed?

Gordon Angus: I analysed employment figures, revealing a sad story. In 2006, there were 287,916 employees in the industry. Fast forward to 2023, and we now have only 228,823 employees, a loss of nearly 60,000 jobs.

Alec Hogg: The contraction doesn’t come as a surprise, but why is it happening?

Gordon Angus: The collective agreement negotiated in the industry sets very high minimum wages, a significant contributing factor. The industry’s diverse nature, covering small fabrication enterprises to large companies like ArcelorMattel, leads to uniform minimum wage rates, disadvantaging smaller companies.

Alec Hogg: What about ArcelorMittal? Does its situation reflect this trend?

Gordon Angus: To some extent, yes. While ArcelorMittal isn’t our member, its challenges have a knock-on effect on manufacturers downstream, particularly concerning our specific membership.

Alec Hogg: With elections approaching, what solutions do you propose to reverse this trend?

Gordon Angus: Two key points need attention. Firstly, addressing the violence and intimidation associated with industrial action, a growing concern. Secondly, reforming the Labour Relations Act to consider overall industry size when extending collective agreements, empowering companies to determine their own destiny.

Alec Hogg: Are there countries that have successfully tackled similar issues?

Gordon Angus: Countries like Singapore and South Korea have shown success by collaborating with businesses, particularly small ones, creating an environment that encourages growth and employment.

Alec Hogg: Given the frustration evident in social media, do your members share similar sentiments?

Gordon Angus: Yes, to a certain extent. The imbalance in bargaining power, favouring big employers, creates challenges for smaller businesses and fuels perceptions of collaboration between big business and government.

Alec Hogg: The conversation touches on the importance of distinguishing between entrepreneurs and professional managers. Entrepreneurs, especially in small businesses, drive employment growth, while professional managers may focus on profit maximisation and retrenchment.

Gordon Angus: Indeed, entrepreneurs are a special breed with an unmatched capacity to overcome challenges. However, addressing unemployment requires creating an environment for companies to employ people without imposing excessive costs.

Alec Hogg: The frustration lies in knowing the truth but witnessing its neglect. Perhaps post-May 29th, a genuine examination of solutions will replace mere dialogue. It was enlightening to speak with Gordon Angus from the South African Engineers and Founders Association.

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