Katlego Legodi | 14 May 2023
The economy is taking a toll on wage negotiations.
As the wage negotiation season gets underway, labour unions are calling on companies to refrain from using the current ailing economy as an excuse to give workers below-inflation wage increases.
They are also calling on the government to fast-track the Companies Amendment Bill aimed at ensuring that employers comply with their wage agreements and disclose their finances.
The average wage settlement for workers this year is around 6 to 6,5% but workers in various sectors are bargaining for inflation-linked wage hikes, while others are pushing for double-digit salary increases. Over the years wage negotiations have proven to be difficult and often protracted. This is mainly because of the current ailing economy and rising inflation.
The tough economic conditions and the rising cost of living have led to retrenchments and some businesses closing shop.
Congress of South African Trade Unions (Cosatu) Parliamentary Coordinator, Matthew Parks says, “Often workers are on the receiving end as employers would put workers at the very least in their to-do list but for employers. We would see them get an increase and even dividends for shareholders or invest the money elsewhere.
“We have to have employers negotiate in good faith, which is why we support the amendment in the Companies Amendment Bill which will require employers to be transparent with finances and disclose to the trade unions so we can really have a better understanding of what the employer can afford and can’t afford because often at the negotiating table, companies will say we don’t have money, we can’t afford it tough luck there is no money available… Whether it’s a state, SOE or private sector company, this will hopefully help us find each other without collapsing or retrenching,” Parks explains.
Wages below inflation
Cosatu says it sees anything below inflation as a wage cut. It’s also accusing employers of pushing for lower wage increases while racking in millions of rand in profits at the expense of the workers.
Parks says, “Workers spend a quarter of their salary on transport, petrol prices hitting smaller income households hard the 18% electricity increase, income household higher. “As unions, we try to look at inflation but the results vary. Most unions have been able to negotiate, at least, an inflation-linked increase. We’ve seen settlement in the clothing and textile industry inflation slightly above. We saw about a week ago. Recently in the security industry, they managed to get a 7.5% increase. A similar increase is happening in the mine.”
Labour expert Tom Healy says the affordability factor is a critical aspect with both public and private sector employees struggling to get the best out of the bargaining process. “There are a number of factors impacting the employer at the moment when it comes to affordability in relation to wage increment. For example, we are at the high end of an interest rate cycle, an unreliable electricity supply. Load shedding also the weakening of the rand against the pound, euro and dollar. These are the kind of issues that restrain and affect employers’ cash flow when they approach the wage negotiations but there are also factors affecting workers like the cost of living that make it harder for workers to make ends meet.”
Healy has described 2023 as a tense year of wage negotiations but says there are so far notable small victories for workers in some industries.
“Inflation has affected both the employer and employee. Workers have experienced household inflation that is higher than the average CPI and that puts pressure on union members but the employer is dealing with load shedding and an inflation rate in their day-to-day life and that puts pressure on unions member to claim wage increases that are twice the CPI. If we are looking for examples of settlement is what was reached yesterday. NUMSA workers at AccelorMittal managing to get 6.5% and CPI related. We’ve also seen a trend of once-off payments to employees which in this case is R10 000.”
Economists on the other hand have called for a balanced approach in wage negotiations. Professor Jannie Rossouw, an economist at Wits, says, “We understand that workers want to be compensated for price increases as reflected by the height of inflation, but we must make sure that the wage negotiations play out in such a way that existing jobs are not put in jeopardy. If companies cannot afford an inflation-related salary adjustment and trade unions insists on such adjustment, often company lay off and retrench and that is something we should avoid.”
Rossouw says as unions push for the Companies Amendment Bill, they too must be open about their finances.
“I have no problem with transparency, it is a reasonable request to ask for transparency in terms of the financial status of the company but then companies must be afforded the same transparency on the financial status of the trade unions. By the look of things, salary demands are all over the place. I mean in some instances, we’ve seen a salary demand of 15% at Eskom which is clearly outrageous, clearly unacceptable if one was to put such demand on the table in an environment where people are having difficulties in finding jobs.”
Experts say the more the economy takes the strain, the more difficult it will be to ensure smooth wage negotiations that will avert industrial action; and this often leaves workers compromised and the economy weakens further.
A silver lining, they say, will only come through an uninterrupted supply of electricity that they believe will immediately raise economic growth and lead to the creation of much-needed jobs.
‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.