Employers in SA’s automotive industry have offered workers nearly three-quarters less than the pay increases they are demanding.

This underlines the weak finances and sales in the sector, which is grappling with lower consumer spending on big items.

The National Union of Metalworkers (Numsa), which is demanding pay rises of 20% over three years, has agreed to run the 4.5% offer from the Automobile Manufacturers Employers Organisation (AMEO) by its members for approval, potentially reducing the prospect of a strike in this vital economic sector.

Should the parties not find common ground, the resulting disruption in the sector will have a severe effect on the economy.

The automotive sector contributes more than 7% to GDP, which contracted 3.2% in the first quarter of 2019.

In his state of the nation address in June, President Cyril Ramaphosa said that SA had to revitalise and expand its productive sectors if it was to meet its GDP growth targets of 1.3% in 2019 and 1.7% in 2020.

On Thursday, Numsa’s automotive and tyre co-ordinator, Vusumuzi Mkhungo, told Business Day that the talks got under way this week.

"We have laid out the road map for these negotiations. The employers are saying their opening position is a 4.5% wage increase," he said.

"We are now reporting back to our members as to what is the attitude of employers, and we shall get a fresh mandate from them on the way forward."

SA’s automotive industry has been struggling to grow sales faster in recent months as debt-laden consumers battling job losses put off buying cars and other big-ticket items.

The latest industry figures show that new-car sales continued to lose ground in June, falling 1.6% and bringing the decline so far this year to 3.7%.

AMEO spokesperson Andile Dlamini said that because the formal national bargaining forum wage negotiations with Numsa began earlier this
week it would be premature
to comment.

Numsa’s other demands include morning, afternoon and night allowances of 10%, 20% and 30%, respectively.

In addition, the trade union is 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 a month. Numsa also wants clerks, welders, spray painters and metal-finish workers to be paid a 20% allowance.

In 2016, Numsa, with 450,000 members, emerged from protracted wage talks with a three-year agreement for a 10% increase for the first year and 8% for each successive year.