Working Paper No. 32 International Labour Office (ILO) DIALOGUE Route des Morillons 4 CH -1211 Geneva 22 Switzerland Collective bargaining in times of crisis: Tel.: (+41 22) 799 70 35 Fax: (+41 22) 799 87 49 A case study of [email protected] www.ilo.org/dial South Africa Renee Grawitzky Industrial and Employment Relations Department (DIALOGUE) December 2011 ILO DWT for Eastern and Southern DIALOGUE Africa Working Paper No. 32 Collective bargaining in times of crisis: A case study of South Africa Renee Grawitzky Industrial and Employment Relations Department International Labour Office • Geneva ILO DWT for Eastern and Southern Africa December 2011 Copyright © International Labour Organization 2011 First published 2011 Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to ILO Publications (Rights and Permissions), International Labour Office, CH-1211 Geneva 22, Switzerland, or by email: [email protected]. The International Labour Office welcomes such applications. Libraries, institutions and other users registered with reproduction rights organizations may make copies in accordance with the licences issued to them for this purpose. Visit www.ifrro.org to find the reproduction rights organization in your country. ILO Cataloguing in Publication Data Grawitzky, Renee Collective bargaining in times of crisis: a case study of South Africa / Renee Grawitzky ; International Labour Office, Industrial and Employment Relations Department. - Geneva: ILO, 2011 xxx p. (Working paper ; No.32) ISBN: 9789221257783 (print); 9789221257790 (web pdf) International Labour Office; Industrial and Employment Relations Dep. collective bargaining / labour relations / social dialogue / labour legislation / comment / economic recession / South African R 13.06.5 The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers. The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors, and publication does not constitute an endorsement by the International Labour Office of the opinions expressed in them. Reference to names of firms and commercial products and processes does not imply their endorsement by the International Labour Office, and any failure to mention a particular firm, commercial product or process is not a sign of disapproval. ILO publications and electronic products can be obtained through major booksellers or ILO local offices in many countries, or direct from ILO Publications, International Labour Office, CH-1211 Geneva 22, Switzerland. Catalogues or lists of new publications are available free of charge from the above address, or by email: [email protected] Visit our web site: www.ilo.org/publns Printed in Switzerland Foreword This paper is one of a series of national studies on collective bargaining and effective responses to the crisis under the Global Product on ‘Supporting collective bargaining and sound industrial relations’. The national studies seek to examine the impact of the crisis on industrial relations and collective bargaining institutions; identify the ways in which collective bargaining was used to mitigate the effects of the crisis and the outcomes as they relate to employment wages, working time, and employment relations. They identify good practices in this regard and consider the implications for balanced and effective recovery. This study analyses the context in which social dialogue and collective bargaining took place in South Africa during the crisis. Inequality, poverty and unemployment are among the biggest challenges facing development in South Africa’s post-apartheid era. These created highly adversarial bargaining relations and placed constraints on the types of measures that could be agreed upon. Collective bargaining during the crisis was instrumental in terms of protecting wages and ensuring better treatment for contract workers; however, its role was limited in terms of saving jobs. The paper provides an analysis on key intervention measures used during the crisis, one of which is the Training Layoff Scheme (TLS). The objective of the TLS was to avoid retrenchment by reskilling workers through training during downtime. It was implemented through a collective agreement between the union and the employer. While some sectors did use this innovative scheme, it did not have a significant impact on keeping workers in employment during the economic downturn. This study analyses the factors that placed restraints on collective bargaining. Capacity issues, lack of trust and lack of access to information and resources have weakened collective bargaining and its potential outcomes. The high number of industrial strikes experienced across key sectors in 2007, 2008 and most notably in 2010, indicates that employment relations are highly adversarial. DIALOGUE working papers are intended to encourage an exchange of ideas and are not final documents. The views expressed are the responsibility of the author and do not necessarily represent those of the ILO. I am grateful to Renee Grawitzky for undertaking the study and commend it to all interested readers. Vic Van Vuuren Moussa Oumarou Director, Director, ILO DWT for Eastern Industrial and Employment and Southern Africa Relations Department iii Contents Foreword .............................................................................................................................. iii Executive summary............................................................................................................... 1 1. Methodology ................................................................................................................. 4 2. Socio-economic background to the crisis ..................................................................... 4 2.1 Employment ........................................................................................................ 6 2.2 Income inequality ............................................................................................... 8 3. Legislative overview of South African collective bargaining system ........................... 9 4. Response of social partners to the economic crisis .................................................... 10 4.1 Negotiating the National Framework Agreement (NFA) ................................. 10 4.2 Implementing the NFA ..................................................................................... 11 4.3 Role of the social partners in the NFA.............................................................. 12 5. The role of collective bargaining during the crisis ..................................................... 13 5.1 Overview ........................................................................................................... 13 The bargaining environment during the recession ............................................ 15 5.2 Wage settlements during the crisis ................................................................... 18 6. Outcomes of collective bargaining during the recession ........................................... 19 6.1 Collective bargaining and employment security ............................................... 19 6.2 Earnings ............................................................................................................ 22 6.3 Innovative agreements ...................................................................................... 22 7. Responsiveness of institutions to the crisis ................................................................. 24 7.1 Bargaining councils .......................................................................................... 24 7.2 CCMA ............................................................................................................... 27 7.3 NEDLAC .......................................................................................................... 28 Conclusion .......................................................................................................................... 29 References ........................................................................................................................... 31 Annex 1. Legislative framework for collective bargaining and social dialogue ................. 35 Annex 2. Negotiated responses during the crisis: 2008–2010. ........................................... 40 Annex 3. Overview of collective bargaining across bargaining councils and other centralised and enterprise level arrangements: 2008–2010 ........................ 50 v Executive summary This paper, commissioned by the International Labour Organisation (ILO, forms part of a multi-country study which seeks to build on the work initiated by the Global Jobs Pact adopted during the ILO Conference in June 2009. The Global Jobs Pact proposed a range of crisis responses and measures aimed at placing employment, social protection and incomes at the heart of recovery. These included looking at social dialogue, collective bargaining