X3 models built in SA will be sold here and exported to Europe. Picture: SUPPLIED
X3 models built in SA will be sold here and exported to Europe. Picture: SUPPLIED

Possible protracted wage talks in the automotive industry could hamper efforts to revive SA’s economy, which declined by R56bn in the first quarter of 2019.

On Friday, the National Union of Metalworkers of SA (Numsa), the largest trade union in SA, with more than 450,000 members, issued a stern warning to industry captains that the upcoming negotiations will be difficult. The union’s national treasurer, Mphumzi Maqungo, said the effect on the economy would be huge. 

A multiyear wage agreement between Numsa and the Automobile Manufacturers Employers Organisation (AMEO) comes to an end on June 30.

While the National Association of Automobile Manufacturers of SA (Naamsa) represents all 42 brands in the country, the AMEO is the collective bargaining body that is currently negotiating with Numsa. 

Numsa fired the first salvo on Thursday when it declared that opening discussions with the AMEO had already collapsed after the organisation refused to accept a precondition that workers receive back pay in the event of protracted wage talks.

The AMEO wanted the matter to be tabled as a demand. However, Maqungo told Business Day that the debate about back pay has never been an issue in the automotive industry, and warned employers not to dictate to the union what to demand.

As a prelude to how tough the negotiations will be, Numsa rounded up industry CEOs from BMW, Ford, Isuzu, Mercedes-Benz, Nissan, Toyota and Volkswagen (VW) under one roof two weeks ago, though it said no bargaining issues were discussed. Rather, the future and direction of SA’s manufacturing industry was the topic. 

Numsa has yet to table its wage demands and would not say if it would settle for a multiyear agreement, which is favoured by employers as it brings stability to the industry, which contributed more than 7% to the GDP in 2018.

“Difficult negotiations lie [ahead], that I can tell you without any fear,” Maqungo said, explaining this was because the automotive and tyre wage agreements are also coming to an end in June, while the motor sector is due for wage talks around August/September.

Maqungo was cautious not to reveal what kind of action Numsa would take to force employers to accede to their demands.

“They want us to say we will shut down the automotive industry so that we are viewed as irresponsible,” he said. “We are not overzealous over a strike. We are going to these talks with cool heads because the strike’s impact will be felt by the entire country.”

Naamsa executive director and CEO Mike Mabasa said the outlook for the year looks gloomy. “We think it’s going to be a very flat year. We are not anticipating any growth in vehicle sales in 2019.” 

Mabasa said Naamsa had an idea of what Numsa’s demands would look like. He said they wanted to improve industrial relations so that demands from labour are not unreasonable.

“We are one of the most expensive markets in terms of labour costs,” said Mabasa, noting that there was a bargaining agreement with labour signed 15 years ago that has never been reviewed. “A lot has happened since it was put in place. We told Numsa two weeks ago that the times have changed.”

In 2016, Numsa emerged from protracted wage talks with a three-year agreement of a 10% increase for the first year and 8% each for years two and three.

CORRECTION: June 18 2018

An earlier version of this story stated that multiyear wage agreement was between Numsa and Naamsa, when it was in fact between Numsa and AMEO. 

mkentanel@businesslive.co.za