South Africa has one of the most progressive labour relations frameworks in the world that provides for structured and orderly collective bargaining. However, in practice collective bargaining exhibits symptoms of dysfunctionality. These include prolonged wage negotiation processes, protracted industrial action marred by intimidation and violence, challenges to negotiated outcomes, escalating adversarialism and conflict in the labour market and extreme situations such as the tragedy that was Marikana. The environment in which collective bargaining takes place, the parties involved in collective bargaining, and the way they interact at the process level may share varying degrees of responsibility for this dysfunctionality.
We have observed the following five challenges facing collective bargaining in South Africa:
1️⃣ We negotiate in an environment of socio-economic complexity
Negotiating in an environment of socio-economic complexity poses unique challenges. South Africa grapples with the world’s highest income inequality (Gini coefficient of 0.67) and an unemployment rate exceeding 30%
The slow delivery of a social wage has led to a merging of employment and socio-economic demands. Employers are increasingly facing demands that extend beyond the traditional scope of labor negotiations. Issues such as housing, healthcare, transport, and education, typically falling under government jurisdiction, are now surfacing at the collective bargaining table. What falls through the cracks of the ballot box, is falling squarely (and unfairly) on the collective bargaining table.
This shift is further exacerbated by burgeoning unemployment and inadequate social security, contributing to an increase in the average employee’s network of financial dependence. The average blue-collar worker finds themselves financially supporting a wider circle of dependents. This has resulted in employees increasingly demanding wage increases wages far higher than the inflation rate. Faced with a broader spectrum of financial responsibilities and obligations, employees seek compensation adjustments that can better address their multifaceted economic needs and challenges in the prevailing economic landscape.
The situation that culminated in the Marikana tragedy was not a labour dispute per se. Instead, it stemmed from the mounting pressure of years of socio-economic frustration that found a fault line in a fragile labour management relationship and erupted into the extreme and unprecedented conflict witnessed.
2️⃣ We have no agreed basis to determine wage demands and offers
The needs of employers and workers will always be diametrically opposed. Employees will try to increase gains, while employers will try to curb costs. The absence of a standard to inform wage demands and wage offers presents a huge challenge. It leaves negotiating parties at liberty to base their demands and offers on standards of their choice. If these standards are not compatible, it places undue pressure on the negotiation. Parties enter negotiations with opening positions (in respect of wages) that are conceptually different and artificially distant. A common standard agreed upon prior to commencing negotiations (whether this is the CPI, food inflation, PPI or any other agreed upon measure), will enable parties to negotiate on the same plane even though they may have different expectations in terms of outcomes.
3️⃣ We have inefficient negotiation practices
Despite the advent of democracy and the legislative improvements it brought, collective bargaining in this country has remained largely unchanged. Parties adhere to positional bargaining that is adversarial and power-centric, playing out a Sisyphus-like ritual each time they negotiate. This approach has led to inefficient negotiations requiring substantial effort and resources. Yet, some forward-thinking parties have embraced modern, progressive negotiation practices like interest-based bargaining, reaping the expected rewards.
The vast disparity in the negotiation capacity of negotiating teams further complicates the situation.
4️⃣ We have an unhealthy reliance on statutory dispute resolution
Ineffective negotiation processes has led to an unhealthy reliance by parties on statutory dispute resolution. Collective bargaining processes, more often than not, have become a race to statutory dispute resolution. Delegating the responsibility of achieving a collective agreement to the statutory dispute resolution body.
To be sure, statutory dispute resolution has consistently delivered excellent results in resolving collective bargaining disputes. However, this has had an unintended consequence. It has directly contributed to a diminished capacity by parties to actually negotiate without third party assistance.
5️⃣ Negotiated outcomes are vulnerable to challenges
A constant risk to negotiated outcomes in the South African labour market arises from a structural element. The majority of workers are non-unionised. Private sector trade union density sits below 30%. These non-unionised workers feel no obligation to accept collective agreements negotiated by trade unions on behalf of their unionised colleagues. In recent times, this group of workers has been increasingly vocal in expressing their disagreement. Unionised workers too, are sometimes less accepting of outcomes negotiated by their trade unions. Both groups have expressed their dissatisfaction by resorting to unprotected industrial action from time to time.
Some organised employer and interest groups, pursuing a free-market agenda, have legally challenged the extension of collective agreements. These agreements are typically reached through centralised collective bargaining.
Conclusion
The challenges facing collective bargaining in South Africa are complex and multifaceted. It is in the interest of parties engaging in collective bargaining to take cognisance of these matters (at least those that are within their control) and to make the necessary changes for a better bargaining experience. While certain solutions, like adopting shared wage-setting principles and embracing modern negotiation practices, appear promising, the question remains: can we overcome the deep-rooted socio-economic inequalities and power imbalances that continue to constrain constructive dialogue and equitable outcomes? Only time will tell if South Africa’s progressive labour framework can translate into a truly functional and transformative collective bargaining system that benefits all.
For more information, please email info@perispec.co.za