GIDEON DU PLESSIS: Long-term wage agreements promote labour peace

When the International Labour Organisation (ILO) released its latest collective bargaining report, the deputy general secretary of the European Trade Union Confederation, Claes-Mikael Stahl, indicated that while collective bargaining is regarded as the cause of labour disputes it should in fact be the solution.

Given the recent three-month strike at Sibanye-Stillwater’s gold operations, an unprotected strike at Putco and strike action looming at Transnet, in the public service, at private security companies and in the automotive manufacturing sectors, collective bargaining failures in important economic sectors appear to be an ongoing problem.

While there are instances when a strike will be justified when workers are not rewarded fairly, especially at profitable businesses, the paradox of a strike is that the financial prejudicing of a company should lead to the financial benefit of the workers, whereas ultimately it is the country’s economy that suffers. Consequently, many labour law amendments and codes of good practice to limit strikes have seen the light of day, but with little success.

The government’s discussion document “Framework for a social compact in SA”, which was tabled at Nedlac as an input to the social compact between the government, business and organised labour, is moving in the direction of a solution, with among other things a recommendation in favour of multiyear wage agreements. In those cases where one-year wage agreements are negotiated, a workplace may expose itself to the possibility of a strike every year, whereas multiyear agreements create labour peace over a longer period.

This multiyear agreement proposal makes sense, for example when considering the situation at Eskom where one-year agreements are negotiated that result in large-scale disruption annually. The Eskom unions may well be in favour of a multiyear agreement, but in light of Eskom’s unbundling plans, they do not want to commit themselves to a long-term agreement, preferring annual labour unrest at the expense of the economy.

Given its history of destructive strikes, the mining sector has taken the lead in starting to replace the one-year agreements and standard three-year agreements with longer agreements. This started in 2020 with Tharisa Mine concluding a four-year wage agreement with mining unions. In a notice to shareholders, the company indicated: “The agreement underpins the ongoing stability of Tharisa’s labour relations and allows the Tharisa Mine to focus on growing the business for the benefit of all stakeholders”.

In 2021, the Northam Platinum Zondereinde Mine signed a historic five-year agreement with mining trade unions, and this year Anglo American Platinum, Impala Platinum and Bushveld Minerals followed suit by concluding five-year agreements with the aim of creating labour peace and achieving operational stability.

Meanwhile, when Sibanye-Stillwater’s half-year results were released, its chief regional officer for Southern Africa, Richard Steward, indicated that, like its peers and in the interest of stability, Sibanye would attempt to reach a five-year agreement in its platinum wage negotiations. However, due to an uncertain inflation environment, Sibanye is not prepared to pay an above-inflation premium for a five-year agreement and as such it will require flexibility in a long-term agreement.

Employer resistance to long-term agreements stems precisely from uncertainty about whether a company will be sustainable enough to comply with the conditions of long-term agreements. This could be overcome by including a standard clause in the agreement to adjust increases in line with a company’s profitability or drastic changes in the exchange rate, inflation or commodity prices, among others.

Likewise, in the interests of workers, long-term agreements could also allow for a wage increase to be reviewed should inflation spike. Unfortunately, trade union resistance to long-term agreements comes from the ranks of those unions that subscribe to an outdated model in terms of which it is believed that annual collective bargaining processes and subsequent disputes keep them relevant.

However, the days of trade unions only focusing on collective bargaining and being unable to offer a range of individual services and quality training opportunities to their members are numbered. 

While long-term agreements create a period of labour peace, the further trick lies in taking the sting out of subsequent negotiations. After a long-term agreement has been reached, employers and trade unions should continue to resolve outstanding issues and explore alternative remuneration models, such as profit-sharing, through ongoing social dialogue, thereby promoting the principle of joint problem solving.

Successful dialogue means future wage negotiations only have to focus on a wage increase, while all other conditions of employment are resolved through dialogue. In this way, wage negotiations will become simpler, and as it will be preceded by a period of social dialogue, adversarial relations will dissolve and collective bargaining will finally become the solution and not the cause of labour disputes.         

• Du Plessis is general secretary of trade union Solidarity.