THE Centre for Development and Enterprise (CDE) says a court case challenging an "alliance" of organised labour, the state and some clothing manufacturers over minimum wages will decide the future of 450 clothing companies and nearly 17,000 workers.
The case, which began in the Pietermaritzburg High Court on Tuesday, is an attempt to allow employers to create jobs in a labour-intensive industry.
The case was brought against Labour Minister Mildred Oliphant and the National Bargaining Council for the Clothing Manufacturing Industry by five small Chinese-owned clothing firms in Newcastle, in KwaZulu-Natal. The CDE says it highlights how the government’s high-technology, high-wage economic strategy marginalises and impoverishes millions of low-skilled work seekers.
The CDE on Tuesday released a report — titled Job Destruction in the Clothing Industry: How an Alliance of Organised Labour, the State and Some Firms is Undermining Labour-Intensive Growth — to coincide with the start of the court case.
The report said the "established" community of Chinese-South African entrepreneurs was an asset to South Africa. However, the state’s commitment to a "decent work" agenda meant the entrepreneurs had to deal with industrial and labour market policies that prevented labour-intensive production.
This would make it "impossible" to deliver on the government’s aim to create 5-million jobs by 2020, the Johannesburg-based independent policy research group said.
"We need to stop destroying jobs though policy choices. We need to stop closing factories," CDE executive director Ann Bernstein said on Tuesday. She said that rather than being "exploitation", the jobs in Newcastle’s clothing factories — where workers were paid less than the bargaining council’s minimum wages — were the "best opportunity" for workers who could not participate in a high-skill, high-wage economy. The jobs enabled them to gain skills, start businesses and feed their families.
"These are the best jobs available — and often the best jobs going for people with limited skills," Ms Bernstein said. The CDE said state policy on minimum wages would benefit clothing factories in China only, not those in South Africa.
It said if lower-wage, labour-intensive production in the clothing sector was a "race to the bottom", as the government said, then all clothing manufacturers would be situated in non-metro areas such as Newcastle, and not mostly in Cape Town.
The co-author of the CDE report, University of Cape Town economics professor Nicoli Nattrass, said raising minimum wages in labour-intensive industries that vied with low-wage factories in countries such as China and Lesotho "affected profit margins that are already tight".
But the Southern African Clothing and Textile Workers’ Union, which backs the bargaining council, said it rejected both the CDE’s and Chinese manufacturers’ claims.
"It’s a lie. The case is about them trying to undermine legitimate collective bargaining agreements … to perpetuate disgusting exploitative employment conditions and to undermine the decent work agenda of our … government," general secretary Andre Kriel said. "They (the Chinese manufacturers) are operating illegally and killing jobs."
He said the minimum wage in the clothing sector benefited job creation by establishing industry-wide terms and conditions of employment.
"This prevents competitive advantage being based on which group of employers is the best exploiter of vulnerable workers," he said.
Bargaining council CEO Sicelo Nduna said on Tuesday that he was not able to comment until the court case was concluded.
The CDE report said the bargaining council consisted mainly of about 100 high-end clothing manufacturers — many based in the Western Cape — who had benefited from R1bn in support from the Department of Trade and Industry.
"Recipients of these subsidies must comply with the terms of National Bargaining Council agreements, disqualifying Newcastle’s Chinese manufacturers who do not pay the minimum wage, although often pay more through productivity bonuses" the report read.
It said wages in the industry were therefore set by large, capital-intensive companies producing clothing mainly for high-income consumers.
Ms Nattrass and Ms Bernstein emphasised the need for minimum working standards and conditions in smaller, noncompliant factories.
However, with wages and costs rising in China, South Africa needed to "capitalise" on the chance to attract new factories.
"To do this, we need to make some of the ‘tough choices’ the National Development Plan talks about," Ms Bernstein said. "We urgently need to create the regulatory framework, employment relationships and wage regime that can compete for the investors and associated jobs moving out of China. Until we have a situation where workers are competing for jobs, it is an employers’ market."
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