The Steel and Engineering Industries Federation of South Africa (Seifsa) signed a three-year wage agreement with six trade unions on Monday, but said that the National Employers Association of South Africa (Neasa) did not endorse the settlement agreement.

According to Seifsa, Neasa did not sign the agreement because it felt that its demands for a lower entry level grade for new employees and its priority to create work were “brushed off the table”. The Federated Employers Organisation of South Africa also refused to sign the final agreement.

The Metal and Engineering Industries Bargaining Council (MEIBC) said the refusal of the two parties did not impact on the settlement agreement and would not materially affect the representivity of the council. The council has, therefore, resolved to proceed with an application to the Labour Minister to have the agreement extended to all nonparties in the industry.

The three-year settlement agreement is from July 1, 2011, to June 30, 2014, providing for wage increases from 8% to 10% for skilled and unskilled hourly-paid employees respectively. The National Union of Metalworkers of South Africa intiially demanded a 13% wage increase, while Seifsa originally offered a 7% rise.

The agreement also includes the establishment of an Industry Policy Forum (IPF).

Seifsa operations director Lucio Trentini described Neasa’s decision not to sign the agreement as a “disappointment” and also said that the employer body’s view was inaccurate. “The issue of the lower entry level grade, as well as the issues relating to the plight of small and medium companies, addressing unemployment and creating employment policies will be dealt with by the IPF.”

The IPF has been tasked with investigating a number of key strategic challenges facing the industry, in particular, creating sustainable employment and promoting competitive manufacturing capability in the domestic and global markets.

Trade union Solidarity deputy general secretary Dirk Hermann said while this year’s agreement made provision for training and retention of scarce skills in the industry, more needed to done to retain scarce skills.

“There is a critical shortage of skilled artisans and engineers in South Africa. Research has also shown that South Africa will need some 50 000 new artisans by 2015 to meet the demand. The skills shortage is a global occurrence and many South African artisans are lured away by opportunities in the international market,” he added.

But, Neasa CEO Gerhard Papenfus told Engineering News Online the cost of the agreement would “kill” the already declining small to medium-sized companies.

The wage agreement would result in “huge dismissals and retrenchment”, he said, adding that he predicts a 10% employment reduction in the next six months.

WAGE EXEMPTION

Seifsa said it was aware that the current economic environment might pose severe constraints on some member companies’ ability to implement the increases.

The industry is busy with a current wage exemption procedure.

A company that is unable to implement the agreed wage increase may submit an application to its regional council of the MEIBC for exemption to implement a lesser wage increase than that prescribed.

This meant that companies wishing to apply for exemption must do so without delay, or trade unions may refuse to consider any such late applications, Seifsa said.

Seifsa hopes the new wage agreement this year will be gazetted and extended by the Minister of Labour to all parties and nonparties in industry, but Neasa said it would oppose the extension to the agreement.

Seifsa represents 25.6% of employers, that is 2 279 companies, in an industry which collectively employs 53.1%, some 178 242, of all scheduled employees in industry.

Neasa says it has over 18 000 members in more than 80 industries, which made it one of the larger employers’ association.