A future insured

A future insured

On 15 April 2009, the road freight industry and the South African Transport Workers Union (Satawu) reached an agreement that effectively brought to a close the industry’s first wage dispute strike in over six years. NADINE VON MOLTKE looks at the cost of this agreement to the transport industry one year down the line. Last year’s strike had two major cost-to-industry implications for transport operators. The first and most obvious was a wage increase. The second was Clause 1.2 of the main collective agreement for bargaining: a victory on Satawu’s part for the extension of the scope of the industry’s bargaining council, which the union wants to include a range of jobs not traditionally associated with transport per se. Although not yet legislated, non-main agreement members can now voluntarily join the bargaining council while Satawu waits to once again put the issue on the table in 2011.

Following an agreement signed between the four trade unions involved in the negotiations and the Road Freight Employers’ Association (RFEA), an across-the-board 11% increase was immediately implemented. A further across-the-board increase of 9.5% became effective in March 2010. What makes these figures so interesting is the fact that, after a week of violent striking, Satawu agreed to RFEA’s original offer. So why go to all the trouble of striking just to settle for the offer RFEA tabled in the first place, especially bearing in mind that three of the four unions involved in the negotiations refused to strike?

The answer lies in Satawu’s declared commitment to extending the industry’s national bargaining council (NBC). According to Magretia Brown, RFEA’s labour relations manager, it was this issue that underpinned the union’s strike action. Satawu wanted to be able to negotiate on behalf of the original bargaining council members, as well as workers associated with the transport industry, such as data capturers, administrative staff and related workers who were not traditionally part of the main agreement: a request with which RFEA had problems from the start.

“We didn’t know who these additional people were,” explains Brown. “We firmly believe that until the unions can sufficiently prove joint representation of 43% of the workers who fall into these new categories, they cannot negotiate on their behalf. All we wanted was proof of representation. How can we negotiate a wage increase with unions for people we’re not convinced hold sufficient membership to mandate those unions?” she asks.

Brown has a valid point: the unions need to prove that they have the backing and support of the people on whose behalf they profess to be negotiating. Which is why, at the end of the strike in April 2009, both Satawu and RFEA agreed that the issue of extending the bargaining council had not been satisfactorily proved either way and would therefore be deferred until 2011.

So what does this mean for transport operators right now? Fiscal Tree Investments’ director, Derek McGowan, believes that the ramifications of Satawu’s drive to extend the bargaining council could be significant and potentially very costly for the average transport operator.

A future insured“Clause 1.2 of the main collective agreement for bargaining has been extended to include employees in operations, warehousing, fleet maintenance and administration, including supervisors and controllers,” explains McGowan. “This means that all employees associated with the road freight and logistics industry, regardless of status or position, fall within the registered scope of the council,” he continues. Previously, a wide range of employees in the road freight industry did not have the right to join the bargaining council because they were non-unionised and so were automatically excluded. This applied particularly to administrative staff.

Although it is currently up to each individual concerned to voluntarily exercise that right, this could change. The considerable period of time that will have lapsed between the end of the 2009 Satawu strike and the reconvening, in 2011, of negotiations on the issue of extending the bargaining council will have given the union ample opportunity to lobby non-unionised employees on the issue.

“Satawu wants Government to legislate that all employees in the road freight industry are automatically members of the bargaining council,” says McGowan. “They are trying to do this before Government’s own legislation comes into effect in 2014, making provision for every single taxpayer to belong to a retirement fund.” Currently, belonging to a bargaining council means that 10% of an employee’s salary is automatically deducted for a providence fund, a percentage that must be matched by the employer. In the case of the road freight industry, a further 0.5% of the employee’s salary is deducted for the wellness fund, a contribution that is once again matched by the employer. The extension of the bargaining council means that, potentially, transport operators will need to pay additional benefits for a much wider scope of employees than before.

As far as employees themselves are concerned, there are both pros and cons to falling under a bargaining council. Being part of a provident fund has obvious benefits, one of which is a 10% contribution from the employer. But not all employees necessarily want to match that contribution from their wages.

Peter Dixon, a labour law specialist, explains the implications of Government’s proposals: “The legislation will allow for private as well as public funds, but everyone must belong to a fund,” he says. “The unions realise that once this comes into effect they will have lost a bargaining chip. This will mean a loss of members, which in turn translates into a loss of power and revenue; so they’re putting a lot of energy into recruiting members now based on the benefits associated with a provident fund, and are focusing on the extension of the bargaining unit to achieve these goals as well.”

In addition, Government’s intentions will affect every industry in South Africa. However, according to McGowan there is a way for companies to prepare for this now; at the same time keeping employees away from bargaining councils.

“For many operators the 10% contribution to a provident fund is simply too high,” he explains. “Why not, instead, join an umbrella fund with a large, reputable corporation and offer employees in-house benefits? That way a contribution of, say, 5% can be agreed upon and both sides are happy with a more affordable option. Legislation will insist on these benefits in a few short years, and then companies will have no choice – and no control over contributions. Setting up a system now can ensure control over contributions as well as offer employees a viable and possibly less expensive alternative to joining a bargaining unit.”

McGowan maintains that bargaining council provident funds do not have the best reputation for paying out when their members need them. “Many members find that, after 15 years, they are paid out less than their contributions amount to; or they wait a long time for payouts. There are also complaints that no regular statements are received and members simply do not know what is happening to their money. Companies can use these problems to promote their own benefit schemes. The main thing is to ensure the fund is well managed and pays out promptly when needed. Smaller contributions will not matter if the fund is reliable, and everybody wins,” he insists.

In the case of the transport industry in particular, the extension of the bargaining council also means low-risk members being included into the same fund as much higher-risk members.

“Truck drivers in particular make up a much higher risk pool than administrative staff,” McGowan explains. “The contributions to provident funds with a higher risk base need to be greater because the risk is higher. The inclusion of administrative staff lowers the fund’s overall risk, which is obviously to the NBC’s advantage in managing the fund; but it also means that administrative staff are paying much higher contributions than they should as such a low-risk demographic. A 5% contribution ratio for low-risk members is more than enough and amounts to an extensive saving for operators and staff alike.”

Essentially, McGowan is recommending that transport operators take control of the situation themselves, preparing for government legislation in 2014 by proactively providing real value-add benefits to their staff now that will effectively diminish the power of the industry’s bargaining council as well.

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FOCUS on Transport and Logistics is the oldest and most respected transport and logistics publication in southern Africa.
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