Bus companies threaten collective bargaining

In an unprecedented move, some of the five companies that have applied to be exempted from complying with the recent bus sector wage agreement want the agreement declared unlawful, unfair and unconstitutional.

The country’s biggest passenger bus companies — Algoa, Golden Arrow and Putco — have along with Amogelang and Phumatra Transport Enterprise requested the South African Road Passenger Bargaining Council (Sarpbac) to exclude them from some of the agreement’s terms.

In May, the companies engaged in wage negotiations with unions and following a 26-day strike agreed that workers would receive a 9% wage hike in the first year and 8% in 2019.

The strike has, according to the Sarpbac, set workers back, after they lost portions of their wages due to the no-work, no-pay rule. Now the likelihood was that some would never see a cent from the increases they sacrificed their wages for.

However, it is the effect of seeking to declare the deal unlawful and unconstitutional that has unions and some in the council spooked.

Should the applications succeed after presentations are made to the Sarpbac’s exemption council, this would mean that the months spent negotiating the deal would have been a waste. It would also set a precedent that could see the erosion of collective bargaining.

UNFAIR DEAL

Although some companies have said financial difficulties have prevented them from paying higher salaries, others said in their applications that the deal was unlawful and unfair.

Insiders said some company representatives even threatened to challenge the agreement in the Constitutional Court.

Shortly after the bus strike, the companies said they had incurred substantial losses due to the action, even though they still received government subsidies when workers were not behind the wheel.

Unions and council members have been bewildered and angered by the claims, describing them as “attacks” on not only the agreement but the entire collective bargaining process. This was because the companies were party to the wage talks and signatories to the wage deal.

Another sore point was that while the companies claimed they were not able to pay increases, they were also not prepared to disclose their financial situation. “If they are in trouble as they claim, they would open their books and be transparent, and not make comments that the agreement is unlawful and unfair,” an insider told Business Day on condition of anonymity.

While the exemption clause is included in the council’s constitution and provided for in the Labour Relations Act, unions felt the system was prone to abuse.

The South African Transport and Allied Workers Union said the trend undermines collective bargaining.

The exemption clause was designed to prevent firms from shutting down due to unaffordable labour costs or people being retrenched in the period following wage deals.

Putco has just finalised the retrenchments of 220 employees and abolished 380 positions.

The firm was likely to receive the outcome of its application this week following a hearing on June 29.

The fears expressed by the unions and council members were that if the developments are not handled with care, they could not only collapse the bus sector collective bargaining but set the tone for other industries.

Editorial:

Free-marketeers and small business proponents are likely to laud the news that five bus groups, including major players Golden Arrow and Putco, have applied to be exempted from recently negotiated collective bargaining agreements.

What makes the bus case interesting is that it is typically small employers and nonmembers of a bargaining council that apply for exemptions, with large employers usually blamed for using the bargaining process to reach agreements that are “unaffordable” for smaller players, thereby keeping competitors at bay.

That the large bus companies also want out on specific aspects of the agreement sends worrying signals about the likelihood of another bus strike and raises a red flag about the extent of the pressure the multi-employer collective bargaining system in SA is under — something likely to be praised by the free-marketeers.

The collective bargaining system allows for multi-employer bargaining with unions in a specific sector, with agreements on wages and working conditions then extendable to all other players in the sector, whether they form part of the bargaining council or not, where the council is seen to be “representative” of the sector. As a rule of thumb, if the council represents at least 50% of employees in the sector, deals can be extended.

The National Employers Association of SA and the Free Market Foundation have been vocal opponents of the system, both heading for court, with varying degrees of success, to test and try to change the legislation.

The main criticism is that bargaining councils’ “one size fits all” approach ignores the specific economic circumstances faced by individual companies. By making wages “unaffordable” for small firms, the system costs SA much-needed jobs, they argue. Highly publicised cases to this effect include the battle by small clothing manufacturers in Newcastle in 2013, where the council managed to shut down nonmembers that were not complying with agreements on wages and working conditions.

Proponents of bargaining councils believe the system works as it sets a minimum floor for wages and working conditions, thereby offering protection to workers. Employers benefit from a level playing field with their competitors, as unscrupulous players can’t undercut on price by exploiting their workers, a charge the noncompliant Newcastle clothing manufacturers faced. (The critics say that stricter rules lead only to more employers in the informal sector, where workers enjoy no protection at all.)

Organisations like the IMF have also argued that more flexibility in wage setting is one way to help boost job creation in SA, where 27% of the labour force is unemployed. In the latest Global Competitiveness Index, SA ranks 132nd out of 137 countries when it comes to flexibility of wage determination, and stone last on co-operation in labour-employer relations.

Something clearly has to be done. But merely scrapping the nearly century-old system of collective bargaining is unlikely to be the solution for unemployment, as pointed out by University of Cape Town academic Shane Godfrey in a new study for the UN’s International Labour Office.

Providing a comprehensive read on the history and state of collective bargaining in the country, the report, published in June, shows that collective-bargaining agreements cover only 18.6% of all employees in the labour market, based on 2014 data.

There has also been limited research done on the impact the extension of bargaining council agreements, which affects barely 3% of the workforce, have on employment, Godfrey argues.

Here’s the real challenge for union leaders, employer organisations and the free-marketeers, as summarised by Godfrey: SA’s labour market needs new forms of organisation and innovative institutions that go beyond the traditional.

The Putco matter offers a great opportunity for all parties to try to push the envelope — hopefully without another damaging strike.

SCRAPPING COLLECTIVE BARGAINING IS UNLIKELY TO BE THE SOLUTION FOR UNEMPLOYMENT