Picture: SUPPLIED
Picture: SUPPLIED

SA’s largest union says it is willing to revisit its demand for higher wages in the automotive sector, which analysts say would scare away investors and add to SA’s unemployment crisis.

On Monday Vusumuzi Mkhungo, co-ordinator of the auto and tyre sector in the National Union of Metalworkers of SA (Numsa), said the union is willing to tone down its demand for a one-year 20% wage increase across the board.

But that will depend on whether the Automotive Manufacturing Employers Organisation (AMEO) accedes to some of Numsa’s wide-ranging demands. These include morning, afternoon and night allowances of 10%, 20% and 30%, respectively. Numsa is also demanding an annual bonus increase from 8.33% to 12%, six months’ paid maternity leave and 10 days’ paid paternity leave, as well as a transport allowance of R5,000 per month.

Numsa also wants clerks, welders, spray painters and metal-finish workers to be paid a 20% allowance, among other demands.

A new wage agreement between Numsa and AMEO will replace the three-year agreement that came to an end on June 30.

“We are hoping for the best and we are willing to negotiate with them on the demands we have tabled, if they give in on some of our demands,” said Mkhungo.

“That includes relooking or revisiting our demand for the 20% wage increase because it’s tied to some of our demands and they are not cast in stone.”

Mkhungo said AMEO has not yet “moved forward” to pronounce on the tabled demands.

AMEO spokesperson Andile Dlamini has said that until the parties have met and shared their demands at the negotiation table, the organisation is not in a position to comment.

Economists.co.za chief economist Mike Schussler said Numsa’s 20% wage demand was “four times the inflation rate”.

“It’s probably a tactic Numsa uses where they go with these high demands and tell everybody how they have compromised,” he said. In reality the 20% demand was not possible as the industry “is in dire straits”.

In June aggregate domestic-vehicle sales fell to 45,939 units from the 46,663 units sold in June 2018, a decline of 724 units or 1.6%, according to data released by the National Association of Automobile Manufacturers of SA (Naamsa) on Monday.

Naamsa said the June 2019 new-passenger-car market had registered a decline of 942 cars or a fall of 3.2% to 28,885 units compared to the 29,827 new cars sold in June 2018.

Schussler said Numsa was “pushing the envelope” and knew it was demanding more than the industry could afford.

“Quite frankly, there is no business case for a 20% wage increase. I don’t think you can ask for 20%. Inflation rate is 4.5%. They are pushing the envelope because the economy is just not in that sort of shape to afford a 20% wage increase.”

Numsa has warned that the wage talks will be difficult and could hurt the economy, which grew 0.8% in 2018 and is projected to grow 1.3% and 1.7% in 2019 and 2020, respectively, should they become protracted.

Labour analyst Michael Bagraim said Numsa’s demands would push employers over the edge. 

“At a certain point they will say: ‘Thanks, but no thanks, we’ll leave and set up shop elsewhere, or we’ll retrench  and computerise everything.’”

He described the automotive sector as the “one industry that you can’t fiddle with”.

mkentanel@businesslive.co.za