Chinese threaten job cuts

Published Jan 20, 2011

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Members of the Newcastle Chinese Chamber of Commerce have threatened to retrench unskilled workers, shut down factories and relocate to Swaziland and Lesotho if a resolution to force clothing factories to comply with the minimum wage within 16 months was implemented.

Yesterday Alex Liu, the chairman of the Newcastle Chinese Chamber of Commerce, said the minimum wage, which was expected to increase to R336 a week by the end of March before rising to R465 by the end of the year and then topping R516 by April next year, was not sustainable for members of the chamber.

“If you look at the resolution, it is different to our proposal,” he said. “We proposed to the (bargaining council) that they should lower the entry wage to accommodate more workers and to allow the operator to operate.”

Three months ago, the chamber proposed that a general worker be paid R220 a week in rural areas and R300 in metro areas. A qualified machinist from a non-metro area would earn R280 a week, while the metro-based counterpart would take home R450, the chamber said.

In terms of agreements at the National Bargaining Council for the Clothing Manufacturing Industry the current minimum weekly wage for a qualified machinist working in a city is R740 and in a town it is between R451 and R522.

Compliance varies, with companies paying anything between 25 percent and 90 percent of the prescribed wage.

The phased-in compliance stipulates that companies be at least 70 percent compliant with all prescribed minimum wage levels by March, 90 percent compliant by January next year and fully compliant with the minimum wage by the end of April 2012.

Wayne van der Rheede, the deputy general secretary of Southern African Clothing and Textile Workers Union (Sactwu), said Sactwu proposed the phased-in approach to save jobs, especially given the debate last year about closing down non-compliant companies.

By the time full compliance is expected, some in the industry hope other interventions will have put producers on a firmer footing. Rajen Naicker, the vice-chairman of the Coastal Clothing Manufacturing Association (CCMA) that supports the phase-in plan, said in the run-up to April next year “we hope to achieve monthly meetings with Sactwu to work on issues such as skills and productivity”.

He said the CCMA would also focus on possible government intervention through support from its agencies such as the Productivity Institute, as well as support from the bargaining council.

Others agreed to the plan reluctantly. Johann Baard, the executive director of the Apparel Manufacturers of SA (Amsa), said Amsa was facing 385 writs of execution against companies for non-compliance, so “we had to face closure or accept the phased-in approach”, especially as the moratorium on the writs expired in December. The closure of these companies would have meant 15 000 lost jobs. Amsa represents 450 companies that employ about 45 000 people.

It was previously reported that the bargaining council shut non-compliant factories in Newcastle and the Free State in August last year, which at one stage led to a total shutdown of factories in the northern KwaZulu-Natal town.

Amsa’s preferred model is lower wages for new entry-level workers, but Sactwu would not support it. “Come March we predict that many companies will not be able to comply and we think unions will reopen discussions on the entry-level wage,” Baard said.

But Van der Rheede said Sactwu would not consider a different wage model for entry level as workers in the clothing industry were already among the lowest paid.

The bargaining council could not be reached for comment yesterday. - Business Report

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