2024 MEIBC Negotiations Concluded

By Gerhard Papenfus

The decline of the Steel Industry is set to continue.

Today, the employer federation Seifsa (representing a mere 10% of employers in the Industry) signed an agreement, on primarily wages, with the majority trade union, NUMSA, and a few other trade unions.

Due to de-industrialisation, this Industry is at least 37% smaller than what it was 15 years ago. Not only does this agreement do nothing to address this downward spiral, but it also ensures that it is to continue on this devastating trajectory. 

Since the exorbitantly high wages in the Industry are a fait accompli, NEASA retained only one demand as a condition to become a party to the agreement: business growth-orientated criteria in the exemption policy. However, the trade union parties rejected that outright, and for Seifsa, it was not a priority. 

The Steel Industry’s current wage agreement is by far the highest of all industries governed by collective bargaining agreements in South Africa. In terms of entry-level wages (where the unemployment crisis is most severe), the Steel Industry wage is 90% higher than that of the Motor Industry, and 60% higher than the Road Freight Industry. Simply put, the wage demands in this Industry are far too high to allow for any prospect of job creation.

As a result of a bizarre and entirely undemocratic legislative arrangement, provided for in the Labour Relations Act, this agreement can be extended to non-signatories - the remaining 90% of the Industry. Quite incredulously, this extension is possible with the help of the Plastic Convertors’ Association of South Africa (PCASA), an employer body that has no employees in this Sector and consequently will not be affected by the outcome of these negotiations.

Another severely detrimental provision in this agreement, is the fact that, for many negotiation cycles in the Steel Industry, in order to appease the demands of NUMSA (which mainly represents entry-level employees), the wage increases for artisans were lower compared to wage increases of less skilled employees.  This practice is perpetuated by this new agreement.

This is extremely short-sighted in a country where skilled employees are a scarcity and are lured abroad with lucrative offers. It severely contributes to the South African ‘brain drain’ which has a detrimental effect on all levels of employment.

NEASA remains of the view that the current structural dispensation of collective bargaining, which favours big business to the detriment of the downstream, is inappropriate for the South African economy, and damaging to business investment, -growth, and -survival.

Unless the parties to this bargaining council adapt to the economic realities facing South Africa and this Sector in particular, the socio-economic crisis will worsen. Unfortunately, there is clearly no appetite to address the pressing need for substantial reform. What will remain is a continuation of short-term benefits for the dwindling number of current employees, while the unemployed, and indeed the Sector itself, are offered at the altar of socialist ideology. 

Gerhard Papenfus is the Chief Executive of the National Employers' Association of South Africa (NEASA).