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For the remaining 90 percent of the Industry, it’s
‘back to basics’

Press release by Gerhard Papenfus

Certain misconceptions were created following the agreement by Seifsa and five trade unions – covering only 10 percent of employers in the Industry – during the course of last week.

NEASA has been criticised for referring to this agreement as the Seifsa/Numsa agreement. We have done so, and will continue to do so, because the other four trade unions were not involved in these Seifsa/Numsa discussions. The outcome was simply presented to them for their signatures.

While the Seifsa/Numsa agreement is not an Industry agreement, it is indeed being portrayed as one. The signatories to this agreement represent less than 10 percent of employers in the Industry. Although NEASA is singled out for not signing the agreement, the agreement was also not signed by the South African Engineers and Founders’ Association (SAEFA), Consolidated Employers’ Association (CEO), Kwa Zulu Natal Engineering Industries Association (KZNEIA), South African Fasteners Manufacturers’ Association (SAFMA), Border Industries Employers’ Association (BIEA), Federated Employers’ Organisation of South Africa (FEOSA) and the South African United Employers’ Organisation (SAUEO).

One can hardly refer to this agreement as an ‘Industry agreement’ while 90 percent of employers in the Industry and by far the majority of employees are not covered by it.

The Steel Industry faces major challenges. One of the challenges is the high minimum wages forced upon the Industry. These wages, which are on average double the wage paid in other Industries, is the result of utterly poor negotiations by the federation Seifsa over many years. Although NEASA has been able to set aside these agreements through numerous Labour Court actions – all agreements since 2011 – the damage has been done.

These market unrelated wage-agreements, enforced by business hostile agents (mainly ex-Numsa officials), contributed not only to bringing employment in the Industry to a standstill, but also to tremendous job losses: according to the Industrial Development Corporation (IDC), 25 000 job losses and 500 business closures occurred during the previous year and an unprecedented 140 000 job losses during the 10 years prior to that.

Prior to the 2017 negotiations, all employer bodies, including Seifsa, agreed that something had to be done to turn the tide on unemployment in the Industry. We all agreed, among others, that a new entry level wage, for new entries into the Industry, had to be established. All employer bodies agreed that, in order to bring sanity to the issue of Steel Industry wages, which have already spun out of control, increases had to be based on the new minimums. All agreed that a one-size-fits-all approach could never be the appropriate arrangement for the Industry.

Not surprisingly, Seifsa walked away from the broader employer caucus and started secret talks with Numsa. From the moment Seifsa left the negotiations, taking Numsa with them, negotiations practically came to a standstill. The fact that Seifsa and Numsa negotiated and eventually agreed on certain terms, is only relevant to them and nobody else.

To suggest (as Numsa is doing) that the combined employer proposal in respect of a new entry level minimum wage was based on the new minimum wage proposed by government, is simply not true. What both Seifsa and Numsa however prefer to ignore, is the fact that Numsa is also the major employee role player in the Motor Industry where the entry level wage is more than 50 percent lower than what they have agreed to now with Seifsa.

They also prefer to ignore the fact that, in 2014, Numsa reached an agreement with NEASA on a 50 percent reduced entry level wage for newcomers. Therefore, when Numsa insists that they won’t agree to this type of arrangement, they are simply not honest. They have already done so in the Motor Industry and with NEASA. What they mean is that they won’t come to such an arrangement with Seifsa – simply because they don’t have to. Seifsa is simply in no position to negotiate this kind of settlement with Numsa. That is why they are Numsa’s preferred negotiating partner: compromises from Numsa is never required when negotiating with Seifsa.

It is claimed that an agreement in the Seifsa/Numsa style sets uniform Industry standards and that it exempts companies from negotiating on shop floor level. This argument gives rise to two points. To set a ‘one-size-fits-all’ industry wage is simply not appropriate as the sector consists of approximately twenty different industries, all with different economic drivers, different size businesses and situated in different areas – in the economic hubs vs rural areas. All employers, including Seifsa, agreed that the ‘one-size-fits-all’ approach is not appropriate. The Seifsa/Numsa wage agreement, however, not only again applies this ‘one-size-fits-all’ approach, but sets the wage on the level of the highest common denominator, the level of the unaffordable wage. This is the worst possible arrangement.

The second point is this: the fact that wages are negotiated centrally, denying business owners the opportunity to engage directly with their own workers, is perhaps the single most prominent reason for the distrust between South African employers and employees, rated by the World Competitiveness Report as the worst in the world.

It is further claimed that the Seifsa/Numsa agreement is a ‘compromise’ settlement. Who has compromised though? Only Seifsa did. They got nothing out of these negotiations. To say that a 7 percent increase, based on the already highest wages in South Africa is a victory, simply suggests that they do not understand the meaning of the word. Also, in respect of the 7 percent increase, within the state of the economy and the dire state of the Industry, 7 percent is simply unaffordable to most companies. That is why the Seifsa affiliated companies are encouraged to apply for exemption. This in itself is an admission that the deal is unaffordable. There’s no element of victory contained in it. All it is, is a bizarre arrangement.

It is also no victory where nothing is achieved to address the downward spiral the Industry finds itself in, with the resulting job losses. Labour peace does not mean the absence of a strike; sustainable labour peace means a dispensation where businesses grow and jobs are created. This is currently not the case and not addressing these issues is only delaying the inevitable – eventual large scale social unrest; in this Industry and beyond that. The unemployed will demand more – considering that a job, even a lower paying job, still remains by far better than no job at all, and even better than any form of grant.

The Seifsa/Numsa agreement has a bizarre consequence. Although it affects only 10 percent of employers in the Industry, it has bound all trade unions into the agreement. The remainder of employers, 90 percent of them, have no union to negotiate with. This leaves the Industry with a very interesting dilemma.


What is the use of living, if it be not to strive for noble causes and to make this muddled world a better place for those who will live in it after we are gone?
Winston Churchill