Three employer organisations and four companies are taking the minister of labour, Mildred Oliphant, and the Metal and Engineering Industries Bargaining Council (MEIBC), to court. Oliphant is accused of improperly extending collective agreements to so-called ‘non-parties’ – those who are not signatories to these agreements and have no say in what is being decided in their name. The case is set down for hearing next month.
The applicants in the case include the National Employers’ Association of SA (Neasa), the Plastic Converters Association of SA (Pcasa) and Border Industrial Employers’ Association. Should they win the case, it could strike a powerful blow to the extension of centralised bargaining agreements.
The employers say that in 2013 and 2014 the minister signed off on agreements, valid until 2017, in violation of the requirements of the Labour Relations Act. The agreements are alleged to prejudice non-parties, that believe they are being stitched up by big employers and trade unions that are able to force higher costs onto competitors.
Metal industry employers claim minimum wages imposed on them by these agreements are the highest of any sector in the economy, resulting in a “tragic but persistent decline in the industry.”
A study by the Steel and Engineering Industries Federation of Southern Africa (Seifsa), puts the sector’s job losses since 2007 at 45 000, and 11 000 in 2015. Production is about 30% below 2007 levels, with total metals and engineering plants operating at roughly 75% capacity – well below the 85% required to maintain a healthy industry.
These employers see a system that is rigged against them. The Department of Trade and Industry this year slapped 10% import duties on a range of imported steel products, which raises costs for downstream producers. Some of these higher duties apply to goods that cannot be produced in sufficient quantity to meet local demand. Then there is the collective bargaining system which raises the costs of employment. “The result is that companies have just stopped hiring and are trying to survive as best they can,” says Papenfus.
In her replying affidavit, Oliphant argues that Parliament has good reason to endorse the existing system of collective bargaining in pursuit of sound labour relations and that companies can apply to the minister for exemption from these agreements. Papenfus replies that in practice the exemption mechanism is unworkable and applicable only to those companies on the verge of bankruptcy.
The minister also argues that collective bargaining does not violate freedom of association, as “all employers and employees are encouraged (by the Act) to participate in the affairs of a (bargaining council) through membership of employee and employer organisations.”