S. Africa’s Biggest Labor Group to Balance Pay, Job Security

  • Lower-paid workers should get increases above inflation
  • South Africa’s Cosatu may negotiate multi-year pay pacts

South Africa’s largest labor group said it will encourage its member unions that represent 1.9 million workers ranging from teachers to miners to balance wage demands with the need to preserve jobs when salary negotiations in their industries begin.

“You don’t want to get an increase and then thereafter people are retrenched and only a few remain to enjoy the benefits of that particular increase.,” Bheki Ntshalintshali, general-secretary of the Congress of South African Trade Unions, or Cosatu, said Thursday in an interview at Bloomberg’s Johannesburg office.

Cosatu member unions this year will be involved in pay negotiations for platinum miners at companies including Anglo American Platinum Ltd. and Impala Platinum Holdings Ltd. as well as for teachers and health workers. The South African Transport and Allied Workers Union, an affiliate of Johannesburg-based Cosatu, began talks last week and the Food and Allied Workers unions plan to conclude discussions with companies including SABMiller Plc in July.

“If they keep it round about inflation, a little bit above inflation but have an eye on job sustainability, then one can argue for that,” said Andrew Levy, the managing partner of Andrew Levy Employment who has advised companies on labor relations for more than 30 years, said by phone on Friday. “It’s quite a vague statement and if you look at the reality, I think it sounds better than the practice is.”

Above Inflation

Cosatu will advise pushing for above-inflation increases for lower-paid workers, Ntshalintshali said, while better-paid employees could settle for wage increases that are in line with inflation, which was 6.1 percent in May.

Controversy about excessive executive pay would make it difficult for the unions to reduce demands or accept lower increases, he said. If that does not change, then labor unions are inclined to put in demands that aren’t achievable.

“‘How can a single person get 71 million rand ($4.9 million) salary per annum and yet somebody else cannot survive,’ they will say,” he said. “There needs to be a change in attitude.”

High Unemployment

The talks come at a time when Africa‘s most industrialized economy is projected to grow at the slowest rate since a 2009 recession and has an unemployment rate of about 27 percent.

“For the lower grades, it really has to be inflation-plus,” said Ntshalintshali. “We don’t determine how much above inflation but it can’t be inflation, it can’t be below inflation.” 

While platinum workers, from a non-Cosatu union, stuck for five months in 2014, demanding monthly pay of 12,500 rand a month, compensation for the chief executive officers of the three biggest platinum producers ranged between 7.5 million rand and 18.5 million rand.

Cosatu, which is a member of South Africa’s ruling alliance, plans to encourage its negotiators to develop policies that will guide their long-term approach to salary talks, so multi-year deals can be reached to create stability, he said.

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