Steel coils. Picture: BLOOMBERG
Steel coils. Picture: BLOOMBERG

The labour court dismissed an urgent application by SA’s leading steel manufacturer Macsteel to interdict an ongoing wage strike, saying on Wednesday that the salary cut by the company’s bosses amounted to a change in terms and conditions of employment.

This after members of the National Union of Metalworkers of SA (Numsa) embarked on industrial action on May 28 after management cut workers’ salaries by 20% for the months of May, June and July as the effects of Covid-19 on their balance sheet began to bite.

“Salary is a quid pro quo for work rendered and any change that has the effect of changing an employee’s salary or remuneration package, constitutes a change to terms and conditions of employment,” the court said.

Macsteel has been operating at a reduced capacity since the Covid-19 lockdown began in March. The steel sector is one of the key industries of the embattled economy which was severely affected by the outbreak. The sector, which has been in decline since 2010 due to an increase in cheap imported steel, is responsible for 190,000 direct jobs in the country.

The manufacturing, construction and other industries were allowed to resume operations under level 4 lockdown in May, when more than 1.5-million people returned to work.

The construction sector, one of the most important steel-using industries, uses structural steel to build skyscrapers, bridges, tunnels, towers, industrial buildings, and road barriers, among other things.

Numsa views the court judgment as victory for its ongoing strike, which could further erode Macsteel’s operational capacity as most industries are switching to full production to counter the coronavirus’s negative effects on their financials.

According to research organisation Trade & Industrial Policies Strategies (TIPS), global steel production may decline by 13.3% to 1.63-billion tonnes, with China’s forecast to be down only 6% to 940-million tonnes. Global steel prices are forecast to plummet to $330 (R5,594) per tonne, compared to $505 per tonne at the beginning of the year.

The TIPS said the lockdown is devastating, “with an estimated, accumulative negative cash cost implication of about R1bn inclusive of labour and fixed costs”.

On Wednesday, Macsteel argued in court for the interdict to be granted, saying the salary cuts were necessary given the negative impact the coronavirus outbreak has had on its balance sheet.

Numsa general secretary Irvin Jim said the court decision was a victory for workers and their right to strike. “We hope that following this judgment management will realise the error of their ways and engage meaningfully with us on the challenges they are facing financially,” he said.

“Covid-19 is affecting all of us and it is in all our interests to find a solution which will be mutually beneficial to all parties.”

Macsteel Group CEO Mike Benfield said the company is disappointed by, but respects, the court ruling declaring the Numsa strike as protected.

“The company implemented actions that, by the judge’s standard, were reasonable under the circumstances the country and company found itself in. We respect the rights of our employees and will continue to be in negotiations with them and with the union with a view to ending the strike within the next few days,” he said.

“Macsteel informed staff of the emergency measures it had decided to implement in the efforts to safeguard the sustainability of the business and protect jobs, including a 20% salary reduction for the months of May, June and July 2020. This process was transparent and inclusive. We have already applied for the Covid-19 UIF Temporary Employer Relief Scheme relief on behalf of our employees.”

Update: June 4 2020
This article has been updated with comment from Macsteel.

mkentanel@businesslive.co.za