Numsa bracing for inevitable pending strike in the car industry.

DATE: 07 June 2004

Johannesburg Press release – for immediate release


Over the weekend, the wage talks between the National Union of Metalworkers of South Africa (NUMSA) and the Automobile Manufacturers Employers Organisation (AMEO) failed dismally as employers stick to a meager 5,5% wage offer. The employer organization requested another meeting to consider improving the wage offer. The union accepted the request and the parties will meet again on the 15th June 2004 for the final round.

At the same time , NUMSA will hold general meetings in all companies this week to mobilize workers for inevitable strike action. We gave employers enough chance to reciprocate on the union demands but to our disappointment they are only concentrating on the wage issue. Even the wage increase is too little to improve the living standards of motor car workers. The talks have gained momentum and we have reached a perilous phase with employers unprepared to change. The 5,5% is not impressive and borders on treacherous attitudes to continue limiting improvements of wages. We believe therefore that as employers continue to talk in parables, that under the current circumstances conflict is unavoidable. Conflict in this case will be functional, since it will prevent stagnation. We are not optimistic at all that the employer organization will address all the demands. Employers are still not prepared to re-look into the intricacies of the industry that affect workers. Workers in South Africa are producing world-class cars but are not remunerated accordingly.

The 5,5% wage offer flies in the face of upward labour productivity and downward trend in the remuneration of workers in the industry. Severe disparities in income distribution continue to pose a fundamental constraint to the attainment of sustainable growth. Low wages and high level of poverty among the automobile workers has led to their extremely limited purchasing power. The inability of the population to actively participate in the consumption of goods and services has resulted in a significantly uneven and underdeveloped home market for goods and services in South Africa. Workers are bearing the brunt of the unemployment crisis. Lower wages are a huge disincentive to the economy and have major negative effects for workers. High wages help in addressing apartheid wage gaps , poverty eradication goal , and stimulating local demand.

If we stretch below the surface, labour productivity has increased substantially. It was about 0.2% per worker in the 1980s. During the 1990s this jumped to 3,5% per worker. According to the DTI figures labour productivity rose by just over 3% in 2001. The result of both these is that profits rose substantially. Information provided by TISA a DTI department, showed that their combined profits improved to R4, 1billion – 10, 4% in 2002 following the significant profit increase of 189, 3% in 2001. New vehicle revenues in the SA market increased 18, 9% from R38,7 billion in 2001 to R46 billion in 2002. Further more vehicle sales last month soared by almost 17%. But the increasing profits have not been shared equally

Employers are always obsessed with linking wages with inflation targeting. This obsession is skewed if we have to consider that there is always big difference between the orthodox theory of inflation targeting and its practice. Controlling inflation is not an end itself but a means to achieve stable growth, with lower unemployment. In reality, the are serious derivatives that matter, ruthless pursuit of inflation targeting in terms of price stability actually harms economic growth and restrain wage increases.. Inflation targeting is not an absolute and accurate measure in South Africa taking into account the above 30% unemployment rate and low investments patterns. International experience has shown that inflation targeting is not good for the economies that are undergoing transition like South Africa. There are various difficulties that are associated with inflation targeting such as the issue of which measure of target to use , what level of inflation to target and the time frame in achieving the target, the problem of forecasting economic variables, the management level of resistance and support, the impact of shift in trade and the risk associated with targeting in terms of economic shocks. In this regard, therefore, to only focus on wage restraint is narrow and less useful.

The reality is that the petrol price has risen by 26% so far this year which has contributed to costs on commuting and increase in food prices. The price of petrol has increased by another 30c a litre this month. The increases in fuel prices and food prices will have a severe effect on the workers living standards. Consumer goods will be expensive for ordinary workers. Inflation eats on the pockets of workers and it always reveals uncertainties. So far, the employer organisation has not acted brilliantly with great appreciation of economic realities.

Numsa”˜s Demands.

-A guaranteed wage increase of 10 percent across the board;

– 3-year wage agreement;

-Training should take place during working hours;

-100% payment of maternity leave;

-For every artisan there must be four apprentices;

-Workers working under the labour brokers should be employed permanently after 3 months;

-Any bonus should be calculated at 11%;

-Provide anti-retroviral drugs to HIVAIDS sufferers and must be given 30 days sick leave circle;

-Negotiate additional categories of workers for level 5;

-5 days per occurrence for family responsibility leave.

For more information contact Dumisa Ntuli @ (011) 689 1700 or cell 0829737282