Strike season needs urgent rethink

The judgment last week by the Supreme Court of Appeal (SCA) that trade unions can be held liable for damage caused by violence as a result of strike action, could substantially add to the already clear net loss to workers from what has become known as South Africa’s strike season. They are already registering an effective net loss on individual direct income, but are by far not the only losers. In fact there are no winners in the present wage negotiating patterns.

What last week’s ruling, written by justice Mahomed Navsa on behalf of a full five-judge bench of the SCA, did was to confirm an earlier ruling by the Western Cape High Court that the Regulation of Gatherings Act is applicable to strike action.

The original ruling followed legal action by aggrieved parties after strike action by the South African Transport and Allied Workers Union (Satawu) in the Cape Town CBD turned riotous in May 2006. Section 11(2)(b) of the Act provides that an organiser of a demonstration is liable if any riot damage occurs. Satawu appealed the ruling on the basis that the particular section of the Act is inconsistent with the constitutional right to assemble and demonstrate peacefully.

Although the claim in the original action is for only R70 000, the latest SCA-ruling has far-reaching implications for trade unions. This year’s strike season has seen a marked escalation in riotous behaviour and increase in damages caused and the City of Cape Town, for one, has indicated that it is considering instituting damage claims. Claims are likely to run into the millions.

The trade union federation Cosatu has indicated that it might challenge the latest ruling in the Constitutional Court. The tide however seems to be running against them and unions will for now have to be a lot more careful in their management of strikes to avoid the possibility of potentially crippling damage claims.

The latest development on this front, however is only a further underlining the extent to which the present pattern of adversarial and confrontational wage negations has become counter-productive and even destructive for all concerned – not least of all for the workers themselves.

Figures from the latest Reserve Bank Quarterly Bulletin indicate that the average wage settlement during the period under review at 7.5% was not only way below what unions were initially demanding, but close to the 6% on average that employers were offering in the first instance. It was also above the rate of inflation, which rose during this period from 3.7% to 5%.

More importantly, some analysis indicates that where strike action was involved, in most instances the workers, due to the no-work-no-pay rule will be making a net annual income loss of around 2%. In some instances the loss is as much as 4% of total annual  income.

It will take such workers 18 months to recover the income that they have lost during the strike action. And, if the pattern holds, by then they will have another strike season behind them, trapping them in a vicious cycle.

This situation might go some way in explaining why there seems to be a growing tendency for strikes to be called in the absence of proper balloting of workers. In some instances there were also clear indications that the majority of workers in relevant sectors were not supportive of the strike action, which in turn leads to tensions and, in many instances, confrontations and incidents of intimidation of non-strikers.

But the strike season also means massive losses for employers. In the case of the gold mining industry alone it is estimated to have been R2.8 billion this year.

To this can be added the indirect cost to the country of reputational damage, and the loss of foreign investment opportunities and the potential job opportunities that go with it. There are also strong indications that in the midst of the present global economic slump, above inflation wage demands and settlements are inhibiting the creation of new job opportunities the country so desperately needs and is supposedly a top priority of the government.

Collective bargaining and dispute-resolution specialist of Bowman Gilfillan, John Brand in an article for Business Day of 29 September, makes an interesting observation  about the present collective bargaining regimen in South Africa saying it “…. faces unique challenges because of SA’s history and circumstances. Those challenges require sophisticated bargaining structures and skilled negotiators to address them. Both are lacking. Our collective bargaining structures have their origins in the 1924 and 1956 Industrial Conciliation Acts, which were designed for a very different time and very different circumstances.

“We nee a review of these structures to ensure that they meet the needs of a 21^st-century world and economy.”