Financial Mail

Pol­icy doesn’t fit prac­tice

- Claire Bisseker Iceland · African National Congress · Austria · KwaZulu-Natal · Free State · Belarus · Belgium · Botshabelo

Govern­ment has been asked to solve the cri­sis de­vel­op­ing in the cloth­ing in­dus­try, where nearly half of all firms are fail­ing to pay the min­i­mum wage.

The is­sue is squar­ing up into a test for govern­ment’s com­mit­ment to “de­cent work” — a goal the ANC has placed at the cen­tre of its eco­nomic poli­cies — but the pol­icy im­pli­ca­tions are even wider.

Com­pa­nies are be­ing forced to make a choice be­tween up­hold­ing de­cent work­ing stan­dards and mak­ing thou­sands of peo­ple re­dun­dant. This ex­poses flaws in SA’s labour reg­u­la­tory model — one that in the cloth­ing in­dus­try was never flex­i­ble enough to al­low firms to cope with the in­ter­na­tional com­pe­ti­tion that came with trade lib­er­al­i­sa­tion.

Com­pli­ant firms claim they are los­ing big or­ders to non­com­pli­ant firms, many of which pay less than half the stip­u­lated wage, giv­ing them a con­sid­er­able cost ad­van­tage.

Over the past three years there has been a mush­room­ing of non­com­pli­ant fac­to­ries in non­metro ar­eas like north­ern KwaZulu Natal, and in Bot­sha­belo, ThabaNchu and QwaQwa in the Free State. Firms have taken ad­van­tage of ru­ral un­em­ploy­ment to pay sweat­shop wages.

De­spite an ex­haus­tive le­gal process by the Cloth­ing In­dus­try Na­tional Bar­gain­ing Coun­cil, 387 non­com­pli­ant man­u­fac­tur­ers have re­fused to hon­our min­i­mum wages and ba­sic con­di­tions of em­ploy­ment.

Last month, when the coun­cil at­tempted to ex­er­cise writs in ex­e­cu­tion against first of­fend­ers in New­cas­tle, des­per­ate cloth­ing work­ers threat­ened to as­sault of­fi­cials and burn their ve­hi­cles rather than lose their jobs, some pay­ing as lit­tle as R80/week.

Last week, the Free State pro­vin­cial govern­ment asked the coun­cil for a 30day mora­to­rium on ac­tion against the 85 non­com­pli­ant fac­to­ries em­ploy­ing 8 000 work­ers in the prov­ince.

The cloth­ing in­dus­try em­ployed 140 000 peo­ple 15 years ago. To­day it em­ploys 54 000 work­ers and the num­ber is drop­ping, mainly be­cause it can­not com­pete with im­ports from Asia.

This prob­lem is not con­fined to cloth­ing. Most do­mes­tic man­u­fac­tur­ers are ex­pected to com­pete in­ter­na­tion­ally with­out the in­dus­trial pol­icy sup­port and labour mar­ket flex­i­bil­ity that other fast­grow­ing mar­kets en­joy.

Man­u­fac­tur­ers warn that un­less there is align­ment over labour, in­dus­trial and trade pol­icy, SA will con­tinue to dein­dus­tri­alise.

“The cur­rent labour reg­u­la­tory model is more than 50 years old and out­lived its use­ful­ness many years ago,” says Ap­parel Man­u­fac­tur­ers of SA (Amsa) ex­ec­u­tive di­rec­tor Jo­hann Baard.

“It’s one thing to have a high-cost labour model if your trade pol­icy is pro­tec­tion­ist, but 15 years ago there was mas­sive lib­er­al­i­sa­tion of trade pol­icy in SA. We’ve only just started to see the in­tro­duc­tion of in­dus­trial pol­icy in­cen­tives but have yet to hear any ut­ter­ance from govern­ment that we need labour mar­ket align­ment.”

At a re­cent meet­ing with the Free State govern­ment, the depart­ment of trade & in­dus­try sug­gested a three-tiered wage model be adopted by the cloth­ing in­dus­try, al­low­ing small, medium and large firms to charge dif­fer­en­tial wages, as is done in the leather and footwear in­dus­try.

Amsa sug­gests al­low­ing a greater dif­fer­en­tial be­tween non­metro and metro wages (say 30%-40%) by low­er­ing the min­i­mum wage for new hires only.

“We need to con­sider if there isn’t space for a pa­tri­otic com­mer­cial re­sponse in which all the par­ties move out of their com­fort zones,” says Baard.

?? ?? Jo­hann Baard Pa­tri­otic re­sponse needed
Jo­hann Baard Pa­tri­otic re­sponse needed
?? ??

Newspapers in English

Newspapers from South Africa