LUCIO TRENTINI: Extension of bargaining council agreements is key to labour market certainty

A lot has been written about the extension of collective agreements, particularly those covering terms and condition of employment in the metals and engineering industries.

The starting point in responding to these criticisms is to acknowledge that the extension of a bargaining council’s collective agreement is not unconstitutional. This view was upheld by justice John Murphy on behalf of a full bench of the high court in Pretoria in the 2016 Free Market Foundation vs Minister of Labour & Others judgment.

The argument that collective agreements adversely affect non-party employers by requiring them to pay higher wages than they would otherwise have done may well be correct. Labour law is derived from our constitution, which is dedicated to the achievement of social justice, and fundamental to this — as Marikana reminded us — is the reduction of inequality.

Collective bargaining is a cornerstone of the system and the reduction of disproportionate income differentials is one of its purposes. Add to this the right to strike, which is constitutionally entrenched for the purpose of allowing workers to exercise economic pressure, forcing employers to pay higher wages than they would otherwise have done. In this context it becomes less obvious why collective bargaining aimed at achieving the same outcomes should be regarded as being reprehensible.

The point is that section 32 of the Labour Relations Act expressly empowers — indeed, requires — bargaining councils and the employment & labour minister to follow a specific procedure for extending bargaining council agreements. This procedure was agreed upon in 1995 by the parties to the National Economic Development & Labour Council, including the representatives of business. Twenty-seven years on, the system stands accused as being unfair. In reality, arguments supportive of this view are at best inconclusive and at worst speculative.

No less contentious is the belief that the extension of bargaining council agreements is a barrier to job creation, and that the millions of unemployed South Africans stand to gain employment if collective bargaining — and, implicitly, the extension of collective agreements — were to be done away with. Less than a third of SA’s workforce is subject to bargaining council agreements, and less than 5% is affected by extended agreements, thus leaving the greater part of the economy free from this real or imagined evil.

As the court put it in the Free Market Foundation case, collective bargaining at industry level “will be undermined if bargaining agents in a majoritarian setting were uncertain at the outset of negotiations about whether their agreements would be extended”. That is precisely what parliament, in enacting section 32 of the Labour Relations Act, set out to achieve: in essence, to oblige the minister to extend a bargaining council agreement at the behest of the parties (employers and trade unions), provided the formal requirements set out in section 32 are met.

In particular, these requirements are that one or more registered trade unions whose members constitute the majority of the members of the trade unions that are party to the bargaining council vote in favour of the extension, and one or more registered employers’ organisations, whose members employ the majority of the employees employed by the members of the employers’ organisations that are party to or a registered with the bargaining council, vote in favour of the extension.

According to the latest department of employment & labour determination of the representativeness of the Metals & Engineering Industries Bargaining Council, issued in terms of section 49 of the Labour Relations Act, the following representative determination has been made:

• The trade unions party to or registered with the bargaining council represent 153,873 (32.81%) out of 468,874 employees engaged in the industry;
• Of the 468,874 employees in the industry a total of 308,605 (65.81%) are employed by the members of the employers’ organisations that are party to or registered with the bargaining council;
• Steel & Engineering Industries Federation of Southern Africa (Seifsa)-affiliated employer associations alone represent 56.15%, the National Employers Association of SA represents 19.15%, the Plastics Convertors Association of SA represents 10.81%, the SA Engineers & Founders Association represents 6%, the Confederation of Employers Organisation represents 4.6%, the SA United Commercial & Allied Employers Organisation represents 2.56%, and the Federated Employers Organisation of SA represents 0.73% of these employees.

After a bruising round of collective bargaining last year, culminating in a three-week strike that cost the industry in excess of R300m in lost wages per week and well over R600m in lost revenue, all five trade unions that sit on the bargaining council signed the 2021-2024 settlement agreement supporting its extension to non-party employers and employees.

In terms of current law and in line with section 32 of the Labour Relations Act, where an agreement is negotiated and concluded by bargaining agents who represent and employ the majority of employees falling within the bargaining council’s coverage, the extension of a bargaining council agreement is seen as a reasonable and necessary mechanism of collective bargaining and is a key ingredient in ensuring labour market peace, stability and certainty.

After all, this is the legislative model the social partners agreed on in 1995 and that parliament duly enacted. Preventing, delaying and/or litigating against extension may delay the implementation of higher wage increases for nonparties, but the indirect effects are no less important. For the affected workers and their unemployed family members this would almost certainly translate into greater distress. It is hard to reconcile this with the goal of social justice.

• Trentini is CEO of Seifsa, which represents 18 independent employer associations in the metals and engineering industries with a combined membership of 1,375 companies employing 173,306.