By David Jarvis

This article considers some of the key challenges highlighted by recent research that will have to be pursued by labour in their negotiations at the Engineering Sector Summit. A collaborative research report done on the metals and engineering industry for NEDLAC’s Fund for Research Into Industrial Development Growth and Equity (FRIDGE) has pointed to issues for negotiation at the engineering Sector Summit to ensure the creation and retention of quality jobs. This article considers some of the key challenges highlighted by the research that will have to be pursued by Labour in their negotiations.

Challenges

The need to address import parity pricing such as the practice of domestic suppliers pricing their products on the basis of the cost of imports, was a consistent result of the research. This could be tackled either through collaboration between upstream suppliers of raw materials and their customers or by direct government intervention (for example through the removal of tariffs on primary input materials). The challenge for Labour is to achieve a balance between the needs of the upstream producers with their highly unionised workforces as well as a strategic role in the industry and the employment creation potential of downstream sectors.

The research also showed a marked shift away from permanent labour towards atypical forms of employment. Interestingly it was found that it is not only Labour that has negative experiences of atypical employment but that employers too, were often not happy with their new, flexible workforce. The challenge for Labour will be to seek ways to stem the trend towards insecure employment by highlighting the benefits of permanent employment within a perspective that understands why businesses are increasing their flexible workforce.

In terms of skills development, the research revealed a disparity between developments in the sector and skills development. The challenge for Labour is to seek ways to promote skills development in the workforce in a manner that assists their membership and overcomes the legacy of the apartheid workplace. The role of the SETA as well as internal company training will need to be emphasised and Labour will need to push for more stringent means of ensuring that their members receive adequate and relevant training.

The research found that despite the Employment Equity Act and associated legislation, the sectors within the industry remained wholly untransformed. Although it seems that companies are fulfilling their legal obligations, the combined effect of increased skills requirements, increase in atypical labour and the retrenchment of unskilled workers has left most companies with profiles that reflect the colonial and apartheid legacy. Labour’s challenge at the Sector Summit will be to enforce recommendations that will see the adoption of targeted programmes to fast-track employment equity. Further recommendations will see the establishment of a means of monitoring transformation. The survey of 750 companies that formed part of the research provides a benchmark by which progress can be measured.

Labour has consistently pointed to import penetration brought about by rapid liberalisation of the country’s trade regime as a major cause of job loss. The research found that, for certain industries, tariff liberalisation had indeed led to rapid import penetration and therefore job loss. While seeking to reverse trade liberalisation will be difficult, there is a potential for some room to manoeuvre. For example, certain products can be identified and given temporary relief in association with other support measures and some tariffs may be temporarily lifted to their WTO binding rates. This process can be enhanced through the proposed development of an early warning system linking the Department of Trade and Industry (DTI), industry associations and individual companies. Labour needs to push for mechanisms to improve not only these information flows but also the means for companies to apply for protection.

One of the most important findings of the research was confirmation of Labour’s long argued position that too much emphasis has been placed on export growth, at the expense of the domestic market. Labour will need to drive strongly proposals to acknowledge this domestic focus. Amongst other initiatives that have been proposed is that parastatal, national, provincial and local government procurement from local manufacturers be mandatory and that in instances that they choose to source from foreign sources they be required to prove that no local capacity exists to meet the order.

There are also recommendations that large government contracts be smoothed to develop existing local capacity, that dti and industry associations develop a database of industry capacity and that all government departments be compelled to report on the breakdown of their expenditure between South African and foreign sources.

In the end it will be Labour that will have to drive recommendations to ensure that employment creation becomes part of the daily performance of government, company and trade union officials. The biggest challenge at NEDLAC will be to ensure that despite all the economics, the demands of various stakeholders and the red herrings, quality job creation and retention remains the focus throughout the negotiations towards the Engineering Sector Summit.

[David Jarvis is Senior Researcher at NAledi’s Sector Job Summit Project and is Naledi’s Acting Director]