SA’s major clothing firms backtrack on bargaining council system
EMBATTLED SOUTH AFRICAN clothing corporates are desperately trying to undo the stringent laws they helped write for their industry that have left them defenceless against the tsunami of cheap Chinese imports. In a major aboutturn they’ve reached out to small businesses that they’d effectively outlawed through sectoral bargaining and hired the architect of the bargaining council system – law Professor Halton Cheadle – to facilitate a new deal for the haemorrhaging industry.
The “Cheadle process” – as it’s known in the clothing industry – could have farreaching effects on the bargaining council system in SA.
However, bizarrely – and despite the crisis and the rethink – the industry’s self-governing body, the National Clothing Industry Bargaining Council (NCIBC), officially continues to prosecute more than half of all clothing businesses in SA for failing to comply with the high prescribed wage packages. A total of 831 cases are being processed against 704 firms, or 55,4% of all clothing businesses. That’s been brought down from 71% a few years ago.
Latest figures from the NCIBC show that the industry shed 21 265 jobs since January 2005. Last year alone, 8 625 jobs were lost: from 83 031 in January 2006 down to 74 456 in December last year.
Reeling from the shock of cheap Chinese imports, precipitated by falling import duties and a strong rand, dominant clothing companies called outlawed, unrepresented small businesses to a bosberaad to try to rethink the system.
Up until then, big business had fought side by side with the unions to close down small businesses that could not or would not pay the wage packages agreed to at the NCIBC and made law for everyone in the industry by the Minister of Labour, whether they were party to the agreement or not.
The industry became deeply divided between “party-employers” – those organ- ised, resourced and established enough to take part in the annual bargaining council negotiations, and “non-party employers” – smaller, less established firms which don’t have the resources, including time, for representative politics.
At the first historic bosberaad between “party” and “non-party” employers in Cape Town last year, the dominant firms apparently took a conciliatory, apologetic stance for pricing the South African industry out of the market. Says a senior observer: “They (the party employers) apologised and said: ‘Listen, we made a mistake in the past’.”
In a frank interview, Johan Baard, spokesman for the employers’ caucus in the NCIBC, says: “The employers and the unions should, in my opinion, shoulder much of the blame for what’s been written in those agreements.”
But then Baard dished out some more blame for the union: “Business as usual isn’t an option – it’s suicide. As long as we carry on doing things the same way, we can only expect the same outcomes. And the current outcome is an industry in decline, an industry that doesn’t facilitate small business growth and entrepreneurs. Between 70% and 80% of registered employers in the clothing industry don’t comply with the provisions of the agreement.
“The union knows that and so do we. Then we ask the union: ‘What do you want us to do, close down 80% of the industry? We can. Legally, the processes do exist. But do you want to tell us that it’s really an option from a political, economic, social and moral point of view? So now we’ve being doing a soft-shoe shuffle in that
regard for the past five years,” says Baard.
But why did the captains of this industry allow the ship to drift so close to the rocks by giving in to union demands year after year? Baard says that it’s politics. The militancy and politicisation of the South African Clothing & Textile Workers’ Union (Sactwu) under apartheid were cemented when the ANCCosatu alliance came to power. Sactwu has a direct line to the Minister of Labour. The large firms in the industry thought it politically wise to concede to high union demands, Baard says.
Cheadle, who declined to speak about the clothing industry specifically due to his mediation role, did say that the ultimate weapon of a union was strike action. If employers perceive a strike as a bigger threat to an industry than high union demands, they’ll give in to those demands.
Others, including many of the non-party employers, believe that the truth is more complicated than simple union power.
The Labour Relations Act allows the players in any industry to come together and negotiate wages and conditions of employ- ment in a bargaining council, a forum where the employers and unions have equal representation. The Labour Minister then makes the agreement reached at a bargaining council law for the entire industry if he believes that the council is sufficiently representative of the sector. It’s effectively a form of selfgovernment, with the industry players themselves writing their own labour laws.
Critics of the system say an established company is more able to afford higher wages than an emerging one. The result is that wellrepresented, established firms tend to agree – though not necessarily consciously – to wages too high for emerging businesses.
But others say that, in the clothing industry at least, it was a conscious strategy. “They (established clothing firms) made a deal with the union. They forgot about international competition and thought they could squeeze everybody out. They could push wages up and therefore cut out competition from smaller firms. It worked for a while (but not) any more.
“(Then) the large firms said: ‘It can’t carry on like this, because we’re getting killed by smaller firms and we’re getting killed by China and India and Bangladesh, etc, etc. The system doesn’t suit us anymore’,” says the observer at the Cape Town bosberaad.
Conscious or not, everybody but the union seems to agree that the reason for the agreement becoming unworkable was that the parties to the clothing bargaining council negotiate about actual wages and not minimum wages.
However, the union agreed to the Cheadle process, which has to produce an in-principle agreement between the union and the employers before March this year.
Says Baard: “We’re not going to refine that and polish that and tamper with this and tinker with that. We’re starting with a clean slate.”
The success of the Cheadle process will hinge on whether the union can be persuaded to accept in principle that the bargaining council negotiates a national minimum wage and that actual wages are left to be negotiated at each workplace.
Been doing the soft-shoe
shuffle. Johan Baard