Covid-19 and the future relationship of employers and unions
Unions will be on the backfoot after the pandemic, but employees and employers will have to make major concessions and sacrifices
The Covid-19 pandemic had one initial positive impact in SA — labour, business and government representatives quickly reached agreement in the National Economic Development and Labour Council (Nedlac) on initial economic stimulus measures, thus promoting social cohesion.
Positive outcomes also came in the form of amendments to the Unemployment Insurance Fund (UIF) and pension fund regulations to accommodate employers that are experiencing severe financial pressure. The amendments offer UIF support to employees where salaries cannot be paid, or when an employer cannot keep up with pension fund contributions.
Covid-19’s biggest negative impact on labour relations will undoubtedly be job losses of 1-million or more, which have already started, although the floodgates will only really open after the lockdown as employees in almost every economic sector will be exposed to retrenchment, liquidation and business rescue processes. Similarly, Covid-19 may force trade unions to reduce their headcount because retrenchments mean a loss of union members or potential members.
This major concern does not apply to government employees, as the government as an employer has an established tradition of not retrenching workers. That is why public-service unions and workers will have to reflect on their positioning when it comes to their wage increase dispute arising from the government’s intention to amend the 2018 wage agreement. A judicial court will support their case, but the court of public opinion will come down on them like a ton of bricks.
I do, however, have sympathy with government employees who deserve a decent increase, and the ones at the forefront of the coronavirus struggle.
Another positive outcome is that Covid-19 has instilled a sense of reality among certain of my fellow union leaders (and the EFF), who have repeatedly threatened to bring the country’s economy to a halt by strike or protest action. Now they know what the consequences of such a threat are.
Due to Covid-19 and SA’s downgrade to junk status, the balance of power will swing, and unions will be on the back foot as job security for our members and the well-being of dependents will have to become a priority. Despite being watchful of employers that abuse the coronavirus as an excuse to downsize after the lockdown, unions will have to find creative solutions in partnership with employers to make up for lost production and employee remuneration, and to mitigate the retrenchment bloodbath.
To achieve this, employees and employers alike will have to make major concessions, and at various workplaces employees will have to temporarily commit themselves to sacrifices when it comes to salaries and longer working hours, which may well mean work on weekends and public holidays, or, alternatively, working short-time. In exchange, the senior executives need to make remuneration sacrifices, and companies will hopefully be able to bear the losses for longer during the transition period without having to drastically reduce staff or change their conditions of service in the hope of reaching financial break-even within a reasonable period.
Given the catastrophic effects of Covid-19, the emphasis will shift from above-inflation increases to the ‘social wage’, such as pension benefits, medical care, occupational health and safety, and skills-development
Such a give-and-take approach will pave the way for the implementation of a win-win, interest-based employer/union bargaining model that could replace the current positional bargaining model. The confrontational, positional model means unions submit endless lists of wage demands and employers kick off with an unrealistically low wage increase offer, while unions start with unrealistically high wage demands. That is followed by drawn-out power games.
In the interest-based model developed by Americans Roger Fisher and William Ury, which is being used successfully in the US and some European and Scandinavian countries, the focus is on shared interests and seeking mutual benefit.
Here, an interest refers to the basic need — such as employees needing job security and the employer’s need to be sustainable — that is addressed, and the objective measures used to find collaborative solutions in the absence of enforcing a self-centred interest. William Thomson, a respected Commission for Conciliation, Mediation and Arbitration (CCMA) mediator, has already been tasked to “market” this model locally among role-players.
Where the outdated positional model will live on, it should take a different form because at the start of negotiations after lockdown employers and unions will not only experience the pressure of the economic and financial legacy of Covid-19, but there will also be time pressures to conclude deferred negotiations as soon as possible. During the lockdown, unions and employers are starting to learn to deal with preliminary issues and wage demands, and the motivation and responses to the demands, in writing. If this practice can become established, it will speed up future negotiations.
Furthermore, given the catastrophic effects of Covid-19, the emphasis will shift from above-inflation increases to the “social wage”, such as pension benefits, medical care, occupational health and safety, and skills-development. Also, employers will inevitably need to start linking increases to output. And wage agreements should typically be multi-year in nature and mostly three-year agreements to increase long-term workplace stability and allow sufficient time to reach agreed production targets.
The Marikana incident of 2012 substantially altered the SA labour relations dispensation. The Covid-19 disruption of labour relations will be far more radical.
• Du Plessis is Solidarity general secretary.