Numsa general secretary Irvin Jim. Picture: SINO MAJANGAZA
Numsa general secretary Irvin Jim. Picture: SINO MAJANGAZA

Car sector employers have hailed the multiyear wage agreement reached with the National Union of Metalworkers of SA (Numsa), saying it creates stability and policy certainty in the embattled sector.

The parties signed a wage agreement on Thursday after months of intense negotiations that threatened to result in crippling industrial action.

The Automobile Manufacturers Employers Organisation (Ameo) described the successful conclusion of the wage negotiations as creating “much-needed stability and policy certainty in the motor industry”.

The industry body — which represents Mercedes-Benz, BMW, Toyota, Isuzu, Nissan, Ford and VW — said the wage agreement will help the companies conduct “long-term planning, model allocation and volume planning”.

A total of 610,854 vehicles were produced by the manufacturers in 2018, with 351,139 of them going to export markets in 155 countries globally.

The sector, which employs 87,777 people directly and 380,725 indirectly, contributed R178.8bn to the fiscus in 2018 through exporting vehicles and components, and about R52bn has been invested since 2010, Ameo said.

“In addition, the seven Ameo members have jointly forecast a total investment in capital and equipment of R39.4bn in the five years starting in 2019.”

Secret ballot

This was the third time that wage negotiations were concluded without Numsa, the largest trade union in SA with more than 450,000 members, embarking on a strike.

However, in line with amendments to the Labour Relations Act that came into effect in January it would have needed its members to vote through a secret ballot whether they supported downing tools.

Numsa has said it plans to challenge at the Constitutional Court the decision by the department of employment and labour “to tamper” with the right to strike.

As part of the wage agreement deal between Numsa and Ameo, workers will receive a salary increase of 9% in the first year. In the second and third years they will receive an increase in line with the consumer price index (CPI) or 7%, whichever is greater. The agreement will be backdated to July 1.

The parties agreed that in the first year the transport allowance be increased from R1,540 to R2,500, half of the R5,000 Numsa had initially demanded. The allowance will increase 7% or in line with CPI in the second and third year.

Numsa also managed to squeeze out a one-off gratuity payment of R7,500 for its members. However, the 9% wage agreement was significantly lower than the 20% increase Numsa had initially demanded when it tabled its wide-ranging demands to employers in June, which included morning, afternoon and night allowances of 10%, 20% and 30%, respectively.

However, the union did say at the time that it was open to trade-offs from employers and to toning down some demands.

Labour analyst Michael Bagraim described the wage deal as good news for the industry in general. “In essence, they have done themselves an enormous favour. It’s good for the industry because you won’t have strikes for the next three years and you won’t have investors getting shaky,” Bagraim said.

He said the multiyear wage deal is also good for the workers. “They are guaranteed salary increases for the next three years in a shrinking industry that’s been struggling to make a profit,” Bagraim said.

The industry has been dogged by poor vehicle sales and is considering other African countries for export opportunities.

According to figures released by the National Association of Automobile Manufacturers of SA, the demand for cars and commercial vehicles in August fell 5.1% from a year earlier.

mkentanel@businesslive.co.za