Collective Bargaining Critical Thinking Forum

Collective Bargaining Critical Thinking Forum Presented by John Brand 2 December 2015

INTRODUCTION

INTRODUCTION There have been appeals for a radical change in the approach to collective bargaining in South Africa due to the high incidence of strikes and strike related violence These have included calls to curtail collective bargaining and the right to strike However, freedom of association, organisational rights and collective bargaining rights, including the right to strike, are enshrined in the Constitution and ILO Conventions 87 and 98 ratified by South Africa The rights are therefore legally inviolable, but perhaps more importantly, are essential for a free market economy

INTRODUCTION The problem at present is that I do not think that the rights are being properly exercised or regulated I therefore think that there is a need to regulate and exercise the rights more effectively In this presentation I intend to set out why I think there is a need to change our approach to collective bargaining and to explain what I think those changes should be In essence I am going to argue that instead of curtailing collective bargaining it needs to be deepened and strengthened

CONTENT Why change? Strike statistics Strike outcomes Strike violence Key problems What needs to change? Conclusion

WHY CHANGE?

WHY CHANGE? Strike Statistics

TRENDS IN THE NUMBER OF WORK STOPPAGES IN SOUTH AFRICA 2008 2014 120 114 100 99 88 80 74 60 67 57 40 51 20 0 2008 2009 2010 2011 2012 2013 2014 Source: Department of Labour, Strike Statistics

47,705,846.00 235,458,414.00 407,082,302.00 1,073,109,003.00 6,666,103,906.00 6,732,108,487.00 6,170,768,282.00 WAGES LOST DUE TO WORK STOPPAGES IN SOUTH AFRICA 2008 2014 8,000,000,000.00 7,000,000,000.00 6,000,000,000.00 5,000,000,000.00 4,000,000,000.00 3,000,000,000.00 2,000,000,000.00 1,000,000,000.00 0.00 2008 2009 2010 2011 2012 2013 2014 Source: Department of Labour, Strike Statistics

<1 day 1-5 days 6-10 days 11-15 days 16-20 days 21-30 days 31-40 days >40 days 0.5% 4.3% 3.8% 1.2% 1.7% 1.2% 2.1% 5.9% 9.1% 13.2% 12.9% 16.4% 14.6% 22.2% 38.5% 52.3% PERCENTAGE DISTRIBUTION OF WORK STOPPAGES BY DURATION, 2011 AND 2012 2011 Percentage work stoppages 60.0% 2012 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Source: Department of Labour, Strike Statistics

<1 day 1-5 days 6-10 days 11-15 days 16-20 days 21-30 days 31-40 days >40 days 0.0% 0.0% 1.7% 1.1% 2.1% 2.2% 5.9% 9.1% 15.1% 16.4% 14.5% 22.2% 19.8% 21.0% 26.3% 38.5% PERCENTAGE DISTRIBUTION OF WORK STOPPAGES BY DURATION, 2012 AND 2013 2012 Percentage work stoppages 45.0% 40.0% 2013 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Source: Department of Labour, Strike Statistics

<1 day 1-5 days 6-10 days 11-15 days 16-20 days 21-30 days 31-40 days >40 days 0.0% 0.0% 1.1% 0.9% 3.7% 2.2% 7.4% 10.2% 7.9% 15.1% 14.5% 19.8% 21.0% 26.3% 25.1% PERCENTAGE DISTRIBUTION OF WORK STOPPAGES BY DURATION, 2013 AND 2014 2013 Percentage work stoppages 40.0% 35.0% 2014 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Source: Department of Labour, Strike Statistics

WORKING DAYS LOST PER 1000 EMPLOYEES DUE TO STRIKES, 2010 2014 Rate of Days 1800 1600 1593 1400 1200 1000 800 600 670 400 200 0 208 244 131 2010 2011 2012 2013 2014 Years Source: Department of Labour, Strike Statistics

Transport Community Wholesale & Retail Finance Construction Utilities Manufacturing Mining Agriculture 1 2 2 2 3 5 5 5 6 6 6 9 12 23 26 25 30 34 INDUSTRIAL DISTRIBUTION OF WORK STOPPAGES - 2013 AND 2014 2013 Number of work stoppages 35 2014 30 25 20 15 10 5 0 Source: Department of Labour, Strike Statistics

TOP TEN TRADE UNIONS INVOLVED IN WORK STOPPAGES WORKING DAYS LOST BY TRADE UNION 2013 AND 2014 2013 WORKING DAYS LOST % 2014 WORKING DAYS LOST AMCU 134 064 7.3 9 464 385 92.2 BAWUSA 17 222 0.9 0 0.00 BCAWU 24 023 1.3 0 0.00 CAWUSA 350 0.01 0 0.00 CCRAWUSA 299 0.01 0 0.00 CEPPWAWU 7 668 0.4 15 791 0.15 CUWUSA 0 0.0 1 974 0.02 CWU 1 306 0.1 0 0.00 DENOSA 8 597 0.5 0 0.00 FAWU 26 968 1.5 54 635 0.53 % Source: Department of Labour, Strike Statistics

WHY CHANGE? Strike Outcomes

Outcomes in recent public sector bargaining

Public Sector Strike 2010 Municipal Strike 2011 Duration of strike 21 days Wages lost No work no pay [2% per week] 6% ANNUAL SALARY LOST Duration of strike 16 days Wages lost No work no pay [2% per week] 4.2% ANNUAL SALARY LOST Apparent gain/loss suffered [difference between employer offer at start of strike and settlement] (7.5 6.5) = 1% "GAINED" 0.0% Actual gain/loss [difference of wages lost and apparent gain] (1 6) = 5% LOST (0 4.2) = 4.2% LOST

Public Sector Strike 2010 Number of weeks for workers to recover actual loss using apparent gain 156weeks Municipal Strike 2011 Number of weeks for workers to recover actual loss using apparent gain Never

Outcomes in 2012 private sector bargaining

National Road and Freight Strike Metal Industry Strike Chemical and Petroleum Industry Strike Mining Industry Strike (Diamond) Mining Industry Strike (Coal) Mining Industry Strike (Gold) Cleaning Sector Strike Duration of strikes 6 Days 14 Days 21 Days 14 Days 10 Days 4 Days 21 Days % Wages lost [no work no pay] -2.1-4.0-6.0-4.0-2.3-2.0-6.0

National Road and Freight Strike Metal Industry Strike Chemical and Petroleum Industry Strike Mining Industry Strike (Diamond) Mining Industry Strike (Coal) Mining Industry Strike (Gold) Cleaning Sector Strike Apparent gain % [difference between employer offer at start of strike and settlement] +1.5 +1.0 +1.5 +0.5 +4.5 +0.5 +2.0 Actual gain/loss % [difference of wages lost and apparent gain] -0.6-3.0-4.5-3.5 +2.2-1.5-4.0

Outcomes in 2013 private sector bargaining

Automobile Industry Motor Gold Mining Construction SAA Bus Strike SAB Duration of strikes 15 Days 20 Days 3 Days 15 Days 15 Days 15 Days 30 Days % Wages lost +- [no work no pay] - 6% - 8% -1.6% - 6% - 6% -6% -12%

Automobile Industry Motor Gold Mining Construction SAA Bus Strike SAB Apparent gain % [difference between employer offer at start of strike and settlement] +1.5 +.5 +1.5 +6 0% +3% 0% Actual gain/loss % [difference of wages lost and apparent gain] - 4.5% - 7.5% - 1% 0% - 6% - 3% - 12%

2014 Platinum strike

2014 PLATINUM STRIKE - Deadlock at approximately 300% apart - AMCU s first move in the negotiation 2 months into the strike - 23 weeks of strike action - Extensive violence - 46% of annual wages lost by each striker - Total wages lost by workers R10 billion - Employees have lost R23 billion in revenue - Those workers still employed in 3 years time will only benefit then

WAGE SETTLEMENTS CONCLUDED WITH STRIKES IN VARIOUS INDUSTRIES 2O14 DISTRIBUTION OF WAGE SETTLEMENT IN VARIOUS INDUSTRIES Industry Sector / Employer Manufacturing Footwear industry Clothing industry Unilever s Tea Factory Imsofer Manufacturing Agreement Date Initial Request Employer s Offer Settlement Protected Unprotected June 7.5% 7.5% 7.5% Protected July 10% 4.5% 7.5% Protected January 10% 7.5% 7.25% Protected April 100% (R3026 to R6000) 11.5%, 8,57%, 10% over a period of three years 11.5%, 8.57%, 10% over a period of three years Protected Rooibos Ltd February 10% 7.5% 7.5% Protected Steel and engineering industry ILOVO Sugar Manufacturing July 12% 8% 10% Protected June 11% 8% 9% for the lowest paid, 9% middle band and 8.75% for high band employees Protected Carpet Sector June 8% N/a 7.5% Protected Coca-Cola (ABI) August 10% 7% to 8% 8% Protected Source: Department of Labour, Strike Statistics

WAGE SETTLEMENTS CONCLUDED WITH STRIKES IN VARIOUS INDUSTRIES 2O14 DISTRIBUTION OF WAGE SETTLEMENT IN VARIOUS INDUSTRIES Industry Sector / Employer Finance Intermediation Transport Community Agriculture Mining Steenberg Golf Estate Bombela Operating Company Life Mount Edgecombe Douglas Green Bellingham Lonmin Platinum Mines Northam Platinum Agreement Date Initial Request Employer s Offer Settlement Protected Unprotected October 10% 8% 8% Unprotected August 15% 8% 8% for workers earning R130,000 per annum and 8.5% to those earning R130,000 and above Protected February 8% 7% 7% Protected August 10% 7% 7% Protected July R12 500 8%, 7.5% and 7.5% over a period of three years January 22% to 43% Protected n/a 8.5% to 9.5% Protected Rand Refinery August 10% 9% 9% Protected Source: Department of Labour, Strike Statistics

WHY CHANGE? Strike Violence

E.G. - NUMSA STRIKE 2014 Workers lost just more than 8% of their annual wages in the strike At best workers gained 2% due to the strike The strike was marred by severe violence

NUMSA STRIKE 2014 Source: SEIFSA Survey

NUMSA STRIKE 2014 Source: SEIFSA Survey

WHY CHANGE? International comparison of working days lost due to strike action

THE FREQUENCY AND EXTENT OF STRIKE ACTION IN EUROPE Working days lost through industrial action per 1 000 employees, annual average 2005-2009. Denmark France Belgium Finland Spain EU 15 and Norway Cyprus Ireland Italy All countries Malta UK Norway Slovenia Portugal NMS 12 Lithuania Poland Germany Seden Romania Hungary Netherlands Luxembourg Slovakia Latvia Estonia Austria 43.6 39.3 38.5 34.8 30.6 24.6 23.8 20.4 16.9 11.3 11 8.1 6.5 6.2 6.2 6 5.8 5.7 4.1 2 0.8 0.1 0 60.4 78.8 72.9 132 159.4 Source: EIRO

All European countries 2005-2009 South Africa South Africa 2006-2011 2010-2014 Average working days lost per 1 000 employees 30.6 507 569 Maximum 159.4 1 593 1 593 Minimum 0 36 131

South Africa 2006-2011 International comparison of working days lost AMONG THE HIGHEST IN THE WORLD AMONG THE MOST VIOLENT IN THE WORLD

WHY CHANGE? KEY PROBLEMS The negotiation process

KEY PROBLEMS The negotiation process - Letter with a list of demands from the union - Rejection and low counter proposals by the employer - Assumption of eventual compromise - Lack of counter proposals by the employer - Superficial positional preparation

KEY PROBLEMS The negotiation process - Exaggerated motivation at the negotiation table - Demeaning of opponents - Threats to walk out and walk outs - Early declaration of disputes - Assumption that real negotiation will only take place with imminent or actual strike action

KEY PROBLEMS The negotiation process - Hope that an opponent will take fright and make concessions - Un-reciprocal concessions - Slow moves from concession to concession - Manipulation of information - Adversarial rhetoric

KEY PROBLEMS The negotiation process - Incremental removal of non-wage issues - Threats to use power - Benign uses of power - Widespread bad faith bargaining - All out strike action - Eventual compromise

Position Absurd Zone Insult Zone Position KEY PROBLEMS THE NEGOTIATION PROCESS Threat and Power Zone Position Haggle Zone Position PARTY A PARTY B COMPROMISE Position Position Position Position zone of potential agreement ZOPA Haggle Zone Threat and Power Zone Insult Zone Absurd Zone

Claimer Claimer = MEDIOCRE MEDIOCRE Outcome

Structural Collective Bargaining Problems

STRUCTURAL COLLECTIVE BARGAINING PROBLEMS - Failure to use statutory minimum wage fixing appropriately - Fixing sectoral minimum wages by centralised collective bargaining and extension - Failing to use centralised collective bargaining optimally - Prohibiting company level bargaining - Pattern bargaining - Too centralised, aggregated and removed from the workplace

Simple company level negotiation EXCO NEGOTIATING TEAM NEGOTIATING TABLE NEGOTIATING TEAM WORKERS

More complex company negotiation BARGAINING UNIT A BARGAINING UNIT B

Multi-employer negotiation COMPANY A B C D E F G H ETC EXCO ETC NEGOTIATING TEAM NEGOTIATING TABLE NEGOTIATING TEAM UNION A B C D

KEY PROBLEMS LRA Shortcomings

LRA SHORTCOMINGS - Lack of an appropriate organisational rights regime - discouragement of industrial democracy - No statutory duty to negotiate in good faith - No prohibition of pattern bargaining

LRA SHORTCOMINGS - No CCMA or Labour Court power to designate appropriate bargaining units within a workplace - No CCMA or Labour Court power to compel good faith bargaining in appropriate bargaining units

LRA SHORTCOMINGS - Facilitating the extension of collective bargaining agreements to non-parties both if representative and even if not - No statutory duty to hold independently monitored strike ballots

LRA SHORTCOMINGS - No Labour Court power to declare violent strikes unprotected - Lack of a properly resourced body to: - educate social partners about economics - train social partners in modern negotiation skills - provide reliable economic information

WHAT NEEDS TO CHANGE? Basic organisational rights must be granted easily with low thresholds of representativeness in appropriate constituencies to encourage a habit of coexistence between unions in the workplace Independently monitored ballots must be conducted to test representativeness In the absence of agreement the CCMA must be given the power to designate appropriate bargaining units within workplaces

WHAT NEEDS TO CHANGE? Unions must compete democratically for the status of representative collective bargaining agent in appropriate bargaining units The BCEA must be used to properly fix minimum wages A statutory duty to negotiate in good faith must be established Pattern bargaining must be prohibited

WHAT NEEDS TO CHANGE? Tiers of collective bargaining must be encouraged Substantive decentralisation and process centralisation must be encouraged Bargaining Councils must focus on economies of scale issues at central level and service to members at company level The statutory extension of multi-company collective bargaining agreements to nonparty companies must be prohibited

WHAT NEEDS TO CHANGE? Independently monitored strike ballots must be conducted The Courts must have the power to declare strikes that are accompanied by substantial levels of violence as unprotected

WHAT NEEDS TO CHANGE? Bargaining Councils or an independent institute to: Educate the social partners about economics and their rights and obligations in terms of the Bill of Rights and ILO Conventions Train the social partners in modern interest based, mutual gain, good faith negotiation and risk analysis skills Provide the social partners with reliable financial and economic information relevant to collective bargaining

WHAT NEEDS TO CHANGE? A specialised industrial action protection unit be established within the South African Police Service to protect workers and employers from criminal conduct during industrial action. Trade unions, trade union officials and office bearers be required to respect the right of non-strikers to work

WHAT NEEDS TO CHANGE? Trade unions, trade union officials and office bearers be required to take reasonable steps during industrial action to maintain public order, prevent violence, damage to property or intimidation of non-strikers by union members and their supporters provided that the right of trade unions, trade union officials and office bearers to peacefully incite workers to participate in a strike is respected. The Labour Court be given the power to grant appropriate and proportional relief for any breach of the law to any party whose rights are violated during industrial action. This may include suspending the protection of industrial action for limited periods of time in extreme cases.

WHAT NEEDS TO CHANGE? The Labour Court also be given the power to lift industrial action protection in the event of acute national emergency. In such event, compulsory arbitration must be substituted as the method of determining disputes. The Labour Relations Act must be aligned with South Africa s obligations in terms of ILO Conventions 87 and 98

CONCLUSION There is much that can be done by the social partners, without legislative intervention, to improve collective bargaining in South Africa There is also much that the Legislature could do to improve collective bargaining in South Africa Unless significant changes are made, Bargaining Councils will collapse and the South African economy will continue to fail South Africa cannot expect to continue with the same approach to collective bargaining but expect different results