Financial Mail

Policy doesn’t fit practice

- Claire Bisseker

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.

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Johann Baard Patriotic response needed
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